"As such, we are exploring our options and have decided to put this development on hold until further notice," the statement said.
Designed by Darryl Church Architecture, it was to overlook the historic Ohinemutu Maori village.
While the trust had held a hui to consult with locals, others who didn't know about the consultation were furious about it, Ohinemutu resident Lani Kereopa said.
She said another hui was held on November 17 and more residents expressed their concerns to the trust.
She said she was "ecstatic" to hear the news yesterday it had been put off.
"It's not that we don't want development but it's a building that belongs in the city, not in a village."
Miss Kereopa said she was "horrified" when she first heard of the plans to construct an office building "towering over our quaint little village".
She said an office building would change the ahua (nature) and wairua (spirit) of Ohinemutu from that of an historic living village to a commercial zone.
"We have a way of life in Ohinemutu that we want to protect. Our kids run free and lovely in our village."
She said family who lived in Ngapuna had lost their whanau atmosphere because local authorities allowed the area to become commercially zoned and she didn't want to see that happen in Ohinemutu.
She said in a way it was more disappointing the locals were having to fight their own iwi to not have the development on Lake Rd go ahead.
She said if they had $6 million to spend, it should go towards fixing social issues impacting Maori.
"They are so far away from what is happening in our village. Fix the social issues before you start showing off your flash buildings."
At the time of the development announcement in October, trust chairman Sir Toby Curtis said the building would have great value to Te Arawa and significant benefits for Maori and the local economy.
"It is going to create employment because we want our local people to build it. We also want this development to provide opportunity for training so that our people can learn the skills required for the various trades."
He said the building was the result of the "foresight" the trust had to buy the land 10 years ago" and, with patience and perseverance, it would be transformed into an asset for the iwi.
Sir Toby could not be reached for comment yesterday.
A statement from the trust in October said the trust would occupy the building and the Bay of Plenty Regional Council had signed a memorandum of understanding to look at moving to the new building once it was completed.
Mayor Steve Chadwick said at the time she was thrilled with the development because it would have a wood-first theme and use local contractors to construct.
She said it built on the air of confidence with other investments happening around Rotorua.
If resource consent was granted, work was expected to start in the middle of 2017 and open in 2018.
