Acting Dunedin area manager Matt Schmidt said yesterday the organisation understood the need for a new hospital on the site.
Asked if he was concerned about the expected demolition of the building, Mr Schmidt said heritage buildings were ''always important from an architecture point of view and for the story they tell''.
''Nevertheless, heritage buildings do need to serve a purpose into the future.''
The Southern Partnership Group in charge of planning for the hospital confirmed last week a main inpatient building of up to nine storeys would be built on the site between Cumberland and Castle Sts.
While the recently redeveloped historic dairy factory fronting on to Castle St would be retained, it was anticipated the SPG would apply for consent to demolish the remainder of the Cadbury factory.
Chairman Pete Hodgson said a decision would be made by architects when the final design was done, but his advice was not to build an earthquake-proof hospital inside an existing facade.
Demolition was not 100% certain, but ''99 point something''.
A Heritage New Zealand record shows the ''utilitarian'' brick and plaster building was mostly constructed after a fire on the site in 1902.
Mr Schmidt said there was a deep archaeological layer relating to the history of reclamation of Dunedin under the building.
Asked if he would like to see the facades retained, he said his organisation was talking to the Ministry of Health regarding the project, but did not have specific details about what was proposed.
''It may be that some key features of the heritage building can be retained where possible.''
The Ministry of Health had been ''very co-operative'' in consulting Heritage New Zealand, and the organisation was pleased the 1875 dairy building would be retained.
