A giant American commercial real estate company that leases offices has struck its first New Zealand deal, taking Auckland CBD premises owned by developer Andrew Krukziener.
Balder Tol, WeWork's Australia and New Zealand manager, said that business had leased premises at 131 Queen St beside the former BNZ premises near the Wyndham St intersection.
WeWork will transform all eight floors of the office block for its operations. The building is the former home of the Milne & Choyce Department Store.
The project is being developed by Krukziener Properties and will also see the creation of one of the highest-profile retail premises on Queen St which is targeted at international retailers seeking a flagship store in Auckland, a joint statement said.
Krukziener said: "We are looking forward to working with WeWork to bring a new sense of purpose to this iconic quality building. Milne & Choyce was established originally as a drapery business by two Irish immigrant sisters who grew the business into a large and respected department store."
The department store, built in 1924, was visited by generations of Aucklanders, he said. Work to convert it into WeWork offices is due to be finished around the middle of next year. The building backs onto Mills Lane.
Auckland Council lists the property as being worth $38m, of which $34m is the value of the 1353sq m block of land.
WoWork says it has offices in 140 cities and 37 countries but last year, it planned an initial public offering which was cancelled after investors raised questions about its valuation and corporate governance arrangements that gave its co-founder Adam Neumann too much control.
The business faced major financial woes and was ultimately rescued by shareholder SoftBank Group Corp in a US$9.5 billion deal that gave the Japanese group majority control.
Krukziener Properties says it has bought and developed more than 100 residential and commercial buildings in Auckland worth more than $1.3b.
The Herald reported in December 2010 how Krukziener was bankrupted following a $6m Inland Revenue application.
Last year, the Herald reported on the boss of WeWork, Adam Neumann's eye-popping deal with SoftBank to exit WeWork, described by corporate governance experts as a prime example of the issues with dual-class shares, where founders or early investors receive "high-voting shares" with voting rights disproportionate to their economic interest.
The news of Neumann's package, which would let him walk away with as much as US$1.2 billion (NZ$1.9 billion), as well as a loan to repay a credit line, comes amid increasing pushback from investors as start-up unicorns such as Lyft, Pinterest and Peloton continue to go public with such arrangements.
Adam Neumann will essentially get a king's ransom for grossly mismanaging the company on his way out," said Amy Borrus, deputy director of the Council of Institutional Investors. "This is a cautionary tale about the dangers of the dual-class share structure, it was reported last October.