HBC Takes Majority Stake in Flexible Office Provider Convene
By Celia Young April 12, 2022 1:09 pm
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The owner of the luxury department store Saks Fifth Avenue made a multimillion-dollar bet on flexible office space by taking a majority stake in coworking provider Convene.
HBC, the holding company behind Hudson’s Bay Co., partnered with private equity firm Ares Management and Convene shareholders for the investment, valued at $500 million, that closed last Friday, Ryan Simonetti, co-founder and CEO of Convene, told Commercial Observer. The Wall Street Journal first reported the news of the partnership.
As part of the deal, HBC will turn over its existing portfolio of SaksWorks flexible work spaces, located inside Saks department stores and managed by competitor WeWork, to Convene to manage and rebrand the outposts.
“Especially in the last two years [it’s been] tough to be in the business that Convene is in, and I think it’s a testament to our team and their resiliency,” Simonetti said. “There’s no question that the future of work is about flexibility and bringing lifestyle experiences into the workplace. Convene couldn’t be in a better position with this new round of funding.”
HBC and Ares are contributing cash equity and assets, according to a source familiar with the deal.
“We believe that this transaction will help accelerate Convene’s leadership position and we look forward to being a partner to them as they execute on future opportunities,” Craig Snyder, partner and co-portfolio manager of special opportunities at Ares, said in a statement.
HBC will also contribute about 18 buildings where Convene will open new locations, Simonetti said. While Convene rents its spaces for the most part, the partnership plans to focus on owning the properties where its flexible spaces operate going forward, WSJ reported. The newly formed business hopes to solve heightened retail vacancy rates and meet the needs of former office workers looking to split their time between home and work at the same time.
Convene currently manages 23 flex office facilities and will take over the three SaksWorks locations in the next 90 to 120 days, Simonetti said.
The firm started out as a caterer, meeting and event space manager when it was founded in New York City in 2009. Convene’s portfolio will grow as HBC converts empty department stores abandoned after Lord & Taylor’s bankruptcy into furnished office space and it plans to open more than 100 locations in the next six to seven years, according to the WSJ and Simonetti.
HBC did not immediately respond to a request for comment.
Celia Young can be reached at cyoung@commercialobserver.com.
