Kiwi Property Group, the country's biggest listed property investor, plans to build an $80 million office tower as part of a broader development of the Sylvia Park retail centre in Auckland.
The Auckland-based company has signed insurer IAG New Zealand as an anchor tenant for the office space, with early work starting next month and construction tipped to finish in June 2018, it said in a statement.
IAG agreed to a 12-year lease amounting to 29 percent of total office space, with the total building expected to deliver a net income yield of 6.7 percent.
"We are delighted to have secured IAG as our first tenant and we are experiencing strong interest from other businesses attracted to a Sylvia Park location," chief executive Chris Gudgeon said.
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The office development is in addition to a $180 million planned expansion of the retail centre which will house international retailers H&M and Zara, with construction projected to start next year and staged completion between 2019 and 2021.
Kiwi Property said the total estimated cost of the retail expansion and office development is $280 million.
The shares were unchanged at $1.56, and have gained 16 percent so far this year.