Canadian real estate, technology and retail holding company HBC and private equity group Ares Management Corp. today completed the recapitalization of flexible co-working and hybrid event space provider Convene, the companies announced. They also completed a parallel recapitalization of SaksWorks, a co-working, retail and dining 'lifestyle' club launched by Saks 5th Ave owner HBC in 2021. According to the Wall Street Journal, the deal is valued at $500 million and will position HBC as the majority owner of a merged entity that will rebrand all SaksWorks locations as Convene and turn over facility operations to Convene.
HBC launched its SaksWorks co-working spaces in partnership with WeWork, with its first and largest location in New York City in the penthouse of its flagship Saks 5th Ave store. It currently operates two other locations—a second in New York City and one in Greenwich, Conn.—with an additional location in development in Westchester County, New York. With the new deal, WeWork is out of the picture and Convene CEO Ryan Simonetti will work with a combined executive group to transition the SaksWork facilities and drive new development.
The combined portfolio currently includes 26 locations, according to a press release. Convene's website refers to 21 locations in the United States, concentrated in the Northeast in Boston, New York, Washington, D.C., and Philadelphia, but also extending to Chicago and with a pending location in London.
While SaksWorks has focused somewhat on the social aspect of co-working and providing a place for individuals to come together, Convene has doubled down on meetings and events and offering hybrid virtual meeting capabilities during the pandemic. How both models come together in the combined brand remains to be seen—as will whether one model will prevail for suburban locations with another model dominating urban markets.
According to the Wall Street Journal, HBC plans to place Convene facilities in traditional office towers and will convert real estate left behind by its bankrupt Lord & Taylor stores to furnished office space. The merged Convene entity will concentrate on owning, not renting, its space. According to the press release, the company already has "dozens" of facilities under development and expects to be the "largest premium flex space operator across the U.S., Canada and Europe."