The former Whanganui River Māori Trust Board building on Taupo Quay will be demolished, with a green space taking its place for the time being.
Ngā Tāngata Tiaki o Whanganui Trust announced work on the building at 61 Taupo Quay will start on Friday as it is no longer fit to inhabit, due to the damage suffered from the 2015 floods.
"The building is not viable for future occupation either, because the design does not mitigate against the risk of more flooding brought about by climate change," trust chairman Gerrard Albert said.
The board acquired the former New Zealand Railways bus station in the 1990s.
Albert said no decisions have been made about what the iwi will build on the site or when, and in the meantime the trust will use the space to promote awareness of Te Awa Tupua.