Brick-and-mortar retail has found a new exit strategy--co-working spaces.
Saks Fifth Avenue owner Hudson's Bay Co is partnering with WeWork to open co-working spaces in former Saks department stores in September, the Wall Street Journal reports. The locations, which are located in New York's tri-state area, will be managed by WeWork. The project, called SaksWorks, targets suburban workers who are working remotely either part time or full time. With its deal with Hudson's Bay, WeWork won't have to pay rent but will manage and staff the co-working spaces in return for a cut of the revenue.
"We think about, 'What can we bring to the suburbs that we used to serve with retail concepts where our customers still live?'" SaksWorks President Amy Nelson told the WSJ. Nelson is the founder of women's co-working company The Riveter and also an Inc.com columnist.
SaksWorks locations will include gyms and cafes for workers, and carry a $299 a month membership fee. The partnership could help Hudson's Bay Co fill vacant space that many retailers can no longer afford to lease. The growth of e-commerce over in-store shopping led to a record 12,200 store closures in 2020.
Beyond supporting commercial real estate owners, the partnership could also help repair WeWork's reputation. After layoffs, reports of toxic leadership, and a failed attempt at a traditional IPO in 2019, WeWork went public in a merger with BowX Acquisition Corp via a SPAC this spring. The deal valued the office-sharing startup at $7.9 billion, a far cry from its previous valuation of $47 billion.