According to a recent story at Racked, the most valuable asset some legacy retailers possess these days is the literal land they were built upon.
Lord & Taylor’s holding company, Hudson Bay, recently sold the retailer’s Fifth Avenue flagship building to WeWork for $850 million. And while the details of the deal are still being ironed out, it’s assumed that an abridged Lord & Taylor storefront will continue to operate out of two floors of the building (renting the space from WeWork, in a weird and ironic twist).
“Stores in general are shuttering,” Racked writes. “Foot traffic is down, and Credit Suisse predicts a quarter of American malls will be gone by 2022. Department stores, once a shopper’s paradise, are getting hit hard: As of September 2017, according to the Census Bureau, sales are at $12.6 billion, down from $14.2 billion in September of 2013.”
And because of the state of things, more buildings could soon be on the market. Hudson’s Bay is reportedly looking to sell another building they own in Vancouver, which Reuters says could be worth over $700 million. And both Macy’s and Sears have been selling off locations as well.
As Racked notes, liquidating real estate holdings might appear to be a last gasp effort to salvage cash in a hemorrhaging industry, but, it could also be considered a prudent move to make in troubled times, especially when the US is notoriously over-stored to begin with.
“The reality is that some department store companies have real estate holdings that are more valuable than the retail business itself,” said Garrick Brown, Cushman & Wakefield’s director of retail research for the Americas. “Selling off real estate to get capital is the way to ride current challenges, upgrade stores, or try to innovate.”
You can read more about it at Racked.