Saks Fifth Avenue's Parent Company Is Betting Big On Real Estate As A Lifeline While Retail Sales Struggle

According to the New York Post, HBC is exploring expanding the Saks Brand into hotels and luxury apartments.

The strategic shift follows HBC's $2.65 billion acquisition of competitor Neiman Marcus. The company is already developing a hotel and residences in Beverly Hills and townhomes in Westfield, New Jersey, where an abandoned Lord & Taylor once stood.

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As department store sales continue to decline, HBC is looking to real estate to drive growth and diversify its revenue streams.

"The days are over when you can put up a mall with a food court that serves chicken fingers and fast food and expect to be an exciting destination," former HBC CEO Gerald Storch told The Post. "The department store is struggling to make ends meet. Any new retail development needs residential, office and retail."

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Although retail sales are projected to increase between 2.5% and 3.5% this year, that is slower than in 2023. According to the National Retail Federation, last year saw a 3.6% annual sales growth of $5.1 trillion.

HBC is seeking permits to transform its Beverly Hills property into a luxury complex. The project, spanning two blocks on Wilshire Boulevard, includes plans for dozens of high-end residences and a hotel with a private club, spa and restaurant. The development would replace parking lots and complement the recently opened Saks women's store.

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"The apartments will be magnificent with balconies that look toward Century City and the Beverly Hills community," HBC Development President Guy Leibler told The Post. "We believe our customers will live in the apartments and will want hotel services and be members of the club and spa."

The new Saks store, in the former Barney's building, is down the street from the company's former location, which will become the proposed hotel.

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HBC announced the project two years ago and is working with the community to get it approved. The Beverly Hills project will be the blueprint for future projects.

HBC’s executive chairman and CEO said extending the Saks or Neiman Marcus brand into hospitality would resemble what Italian designer Giorgio Armani has done. Armani operates hotels in Milan and Dubai and nearly two dozen Armani-branded restaurants.

Leibler said that while the hotel could be branded as Saks, the company has received inquiries from many upscale hotels.

According to the news release announcing the merger, which is pending approval, Saks and Neimans have a combined real estate portfolio worth $7 billion.

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