WeWork eyes king-sized hub on Queen Street
WeWork deepened its losses in the year to December 2018. Photo: WeWork

WeWork eyes king-sized hub on Queen Street

Global co-working giant WeWork is eyeing one of its largest hubs yet in this country, with plans mooted to take out a large section of ANZ’s former headquarters on the corner of Queen and Collins Street, a prime site in the Melbourne CBD.

The major move in downtown Melbourne comes as worldwide attention turns to WeWork’s efforts to launch an initial public offering for a business that was valued at $47 billion at the start of this year.

The Melbourne site combines a 34-storey commercial tower on Queen Street – where WeWork is mulling a tenancy – with historic Gothic-style buildings that continue from Queen Street around into Collins Street.

ANZ staff have since exited and GPT is pursuing a far-reaching refurbishment of the 30,000-square-metre tower at 100 Queen Street. It is expected to complete that in 2021.

The mooted deal could see WeWork take up as much as half the main tower, or around 15,000 square metres, according to multiple market sources.

Both WeWork and GPT declined to comment on the proposed tenancy, which has been the talk of the town in recent days. GPT has its own co-working operation, Space & Co, including a number of hubs in Melbourne.

Net face rent on the lower rise in the neo-Gothic styled Queen Street tower could hit as much as $630 per square metre, according to market sources.

The proposed tenancy, if finalised, would surpass the largest hub WeWork has so far secured, an 11,000-square-metre hub across 10 floors of a Pitt Street office building in Sydney.

A Queen Street venue would be just metres from an existing hub at 401 Collins Street, where WeWork has occupied a historic office building once commandeered by General Douglas MacArthur during WWII.

WeWork is now vying with at least one other bidder to buy the 401 Collins Street building outright from its owner the Liberman family-backed Impact Investment Group, according to sources.

The WeWork model – a co-working business that arbitrages short-term user fees against the long-term leases it takes over prime CBD commercial real estate – has come under intense scrutiny as the proposed IPO approaches.

WeWork is considering a valuation for its initial public offering that may be below $US20 billion, according to recent reports.

In Australia alone, the behemoth office start-up has racked up close to $1 billion in non-cancellable leases, which are not recognised as liabilities in its balance sheet.

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