Image: Getty Images, additional design by Archi Banal
Image: Getty Images, additional design by Archi Banal

BusinessApril 1, 2022

WeWork’s New Zealand dreams have WeCrashed

Image: Getty Images, additional design by Archi Banal
Image: Getty Images, additional design by Archi Banal

An Auckland branch of global co-working giant WeWork was announced with great fanfare. Its Auckland demise has unfolded quietly.

It was definitely happening. The biggest player in the global co-working office space market was coming. Major renovation plans for a prominent central Auckland building were announced on February 13, 2020. WeWork, a $47 billion Silicon Valley unicorn that has since become the subject of a best-selling book, a documentary, a podcast and an Apple TV+ show called WeCrashed, was 100% planning on expanding into New Zealand.

New Zealand’s first WeWork operation was set to take over eight floors of 131 Queen Street, a heritage building and the former site of department store Milne & Choyce, smack bang in the middle of Auckland. In conjunction with the building’s owner Andrew Krukziener, and his company Krukziener Properties, WeWork’s renovation plans would take about a year, eventually allowing 1,300 people pay up to $1,000 a month for a small spot to work in 8,400 square metres of office space.

For their money, WeWork customers would be given access to a desk, chair, wifi and — reportedly — all-you-can-drink kombucha. They were here for the long haul. A lease was signed for 10 years. WeWork Auckland was expected to open for business in mid-2021. Major publications including Stuff, NZ Herald and NBR covered the news. “Struggling US co-working firm WeWork launches in NZ,” read RNZ’s headline.

At the time, WeWork’s Australia New Zealand general manager Balder Tol sounded buoyant. “We look at the vacancy rates and demand for real estate in general, and that shows a very healthy market in Auckland,” he told RNZ. With WeWork offices in 37 countries, including 19 locations in Australia, the company was continuing with its grand expansion plans, despite eccentric founder Adam Neumann being forced out of his own company in 2019 with a $1.2 billion payout.

SoftBank, which came to WeWork’s rescue in the wake of Neumann’s departure, had approved the company’s expansion into Auckland, Tol told RNZ. “Our performance on this side of the world is so strong so that we want to reinvest in the depth of those markets.” He downplayed the negative headlines surrounding WeWork’s failed IPO and its plummeting valuation. “What you have seen is sentiment around valuation and corporate governance, but not about the actual product and service that we deliver,” he said.

Two years on from WeWork’s lofty announcement, as the pandemic continues to send a wrecking ball through Auckland central and the co-working office market shrinks as more people work from home, WeWork’s Auckland renovations haven’t happened. Exactly when the company decided to pull the plug on Auckland isn’t clear. But one thing’s for certain: WeWork’s not coming. No press release was issued about it.

Covid wasn’t to blame, a WeWork spokesperson told The Spinoff. But they agreed the pandemic had fast-tracked the company’s decision-making. “WeWork has continued to rationalise its global real estate portfolio as a part of the company’s plan to achieve profitability,” they said. “As part of this, WeWork has made the decision not to advance with a location in Auckland at this time.” The Spinoff asked when the decision was made, but that question wasn’t answered.

Jared Leto and Anne Hathaway play Adam and Rebekah Neumann in the Apple TV+ series WeCrashed (Image: Supplied)

The news comes as WeWork’s story is turned into a big-budget TV show starring A-list actors Anne Hathaway and Jared Leto for Apple TV+. It tells the rise of WeWork in all its glory, from its scrappy startup beginnings in New York to its rapid global expansion backed by big money investors, to be valued at $47 billion by 2019.

Neumann, played by Leto, is portrayed as an intense, personable and kooky salesman, abled by his wife Rebekah (Hathaway), who spouts nonsense yoga-babble that’s turned into corporate rhetoric. It also follows its fall from grace, including staff abuse, financial misadventure and expanding corporate expenses, such as staff parties and private jets. Much of the detail, like Run DMC performing as Neumann fired staff, is accurate. (Lorde also performed for 8,000 WeWork staff at a retreat in 2018.)

More recently, WeWork has focused on making its current locations profitable and expanding options for existing members, including weekly, daily and hourly desk rates. It also launched Workplace, a platform that allows companies to manage their own office space and staff. That, says Marcelo Claure, executive chairman of WeWork and chief operating officer of SoftBank, has helped WeWork survive through Covid, with demand “higher than it was prior to the pandemic”, he said, according to a report by NBC News.

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