The iconic Lord & Taylor flagship building on Fifth Avenue in Manhattan will soon be WeWork's new headquarters, per the WSJ. The seven-year-old startup is buying the building, which was officially named a city landmark in 2007, for $850 million in a deal that Lord & Taylor's parent company, Hudson's Bay, hopes will help reduce its debt.

Why it matters: The deal is the latest example of the heightened pressures that have slammed the retail industry in recent years. And while retail giants once did well in grandiose shopping spaces, that real estate has now proven to garner more value in serving the needs of millennial workers.

More on the sale:

• Lord & Taylor has operated out of its Fifth Ave store since 1914. When it opened, "it drew 75,000 visitors, who were treated to music from a pipe organ on the seventh floor and could chose to dine in one of three restaurants on the top floor," per the New York Times. But after Christmas next year, the retailer will only control the bottom floors, and the rest of the 12-story building will be converted into office space.
• Growing trend: Other retailers across the U.S., such as Macy's and Sears, have also been rethinking their building space as consumers increasingly choose to shop online or at specialty stores.
• Meanwhile, WeWork has become one of the world's wealthiest startups with a valuation of more than $20 billion. As of Monday, Lord & Taylor's valuation is less than a tenth of that at $1.7 billion.
• WeWork's joint venture real estate partner, Rhône Group, will also invest $500 million in Hudson's Bay, which will given the parent company more than $1 billion to help pay off its debt.

Go deeper: The debate over the "death of retail"; Retail workers are being displaced in droves