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WeWork Buying Lord & Taylor's Manhattan Flagship As Its New Headquarters

WeWork Buying Lord & Taylor's Manhattan Flagship As Its New Headquarters

The iconic Lord & Taylor building on Fifth Avenue will soon be overrun by millennial startup employees.

Hudson's Bay Co. has a $1-billion deal to sell its Lord & Taylor flagship store in NY to WeWork Cos and team up with the office-sharing business to run its operations in parts of HBC's stores.

The Lord & Taylor flagship store building is seen along Fifth Avenue in the Manhattan borough of New York City, U.S., October 24, 2017.

The Lord & Taylor flagship store will continue to operate through the end of the 2018 holiday season, upon which it will be converted to WeWork's NY headquarters, though HBC will continue to operate a 150,000 square-foot Lord & Taylor store in the location.

Lord & Taylor will lease the bottom floors of the building, taking less than a quarter of its current space.

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"WeWork could not be what it is today if it wasn't for our NY roots", WeWork co-founder and CEO Adam Neumann added.

Neumann continued: "As a business with an emphasis on human connections in physical spaces, we will continue to create jobs within this city while simultaneously re-energising the traditional retail experience". Companies like Macy's, Nordstrom and Sears have closed dozens of stores in recent years as more shopping has moved online.

As part of the deal, WeWork will also lease space in Hudson's Bay stores in Toronto, Vancouver and Frankfurt.

The transaction comes as Hudson's Bay or HBC is under intense pressure from activist shareholder Land & Buildings Investment Management LLC to evaluate all strategic options to maximize value for shareholders, including monetization or repurposing of the company's real estate. "By leasing its excess, lower rent, retail square footage to substantially higher rate, traffic driving, shared office space, Hudson's Bay will generate higher revenue and be more productive". That could be followed by up to 20 more WeWork locations in HBC businesses around the world, Baker said.

The store will maintain its current size until after the 2018 holiday season, according to the release.