Unitec will shut the doors on its Albany campus only five years after it opened.
The polytechnic had expected numbers to increase to about 1000 within a few years of the 10,000 sq m campus opening in 2011.
However, the campus shut down at the end of this year is expected to affect only about 25 students.
Courses run from Albany include IT, computing, building and carpentry.
Students and staff will be transferred to Unitec's main campus in Mt Albert.
Wei Yuen Loo, the Tertiary Education Union's Unitec branch president, said the campus was an enormous business and strategic blunder.
Academic staff on the campus had "poured heart and soul" into developing it and now had to deal with disappointed students and parents.
"Students will need to relocate to the Mt Albert campus and this means, in most cases, up to two hours of additional travel time per day."
When the Albany campus opened in August 2011, Unitec chief executive Rick Ede said demand was likely to increase as the North Shore population grew.
While Auckland University of Technology and Massey University also have North Shore campuses, Ede said Unitec would offer different training.
However, this week he told Radio New Zealand that the North Shore had proven a competitive market, and the leased campus was never in exactly the right location.
Unitec is in the midst of major restructuring. Last August Ede announced that up to 300 jobs would be lost over three years.
The TEU said at the time that the job losses were to help Unitec cope with a lack of adequate government funding.
Overall tertiary numbers have dropped as more people find work. That has put pressure on other polytechnics, including Manukau Institute of Technology.
A spokeswoman for Tertiary Education, Skills and Employment Minister Steven Joyce said the Albany campus was a small one.
"It was an attempt by Unitec to expand its provision to the North Shore. Unitec advise that they are closing it because they were not able to attract the number of enrolments they had hoped for.
"It has got nothing to do with government funding levels. Polytech enrolment numbers grew during the GFC and have declined since as unemployment has dropped. Polytech councils have planned for those changes in economic circumstances."
Unitec is also undergoing a physical rebuild, with plans to sell off part of the 53.5 hectare Albert site to major residential and commercial development. The polytechnic says it only needs 7 hectares for operations.