Labour's Chris Hipkins says he has called National's Christopher Luxon to congratulate him on his likely election win.
With 85.1 percent of the votes counted, Labour are sitting on just 26.5 percent of the vote.
The projected number of seats was 34.
Just after 10pm, Hipkins was picked up from his home and made his way to Labour HQ at the Lower Hutt Town Hall.
RNZ understood he was waiting until about 60 percent of the votes had been counted before he made his way to the event.
Taking to the stage, Hipkins thanked supporters for their efforts during the campaign which he says saw more door knocks and phone calls than any campaign before.
Hipkins confirmed he had called Luxon to congratulate him on National's results.
"While it's MMP and the numbers are likely to move around a little bit before the final count, as it stands, Labour is not in a position to form another government.
"The result tonight is not one that any of us wanted. But I want you to be proud of what we achieved over the last six years, because despite governing through some of the biggest challenges our country has ever faced, we kept New Zealand moving forward and we protected those who needed help the most."
Hipkins thanked his Labour Party colleagues who has served but were not returning to Parliament.
"Thank you for the service you have offered to the people of New Zealand.
"I know you gave it your all and you deserved a better outcome than this one."
Hipkins congratulated all those who had been elected tonight and thanked the Remutaka electorate for voting him as their MP.
"You have consistently placed your trust in me and it continues to be an honour to represent you."
Hipkins said it was never going to be easy to follow on from former prime minister Dame Jacinda Ardern.
"I did know when I took on this job that it was going to be an uphill battle. No government has replaced a prime minister in an election year and continued onto win, and we've had the added challenges of flooding, a cyclone, and a cost-of-living crisis to contend with.
"I'm proud of the progressive platform we put forward in this campaign - one that supports everyone, not just the well off."
Hipkins said Labour now had a "new and important role in opposition".
"To hold the government to account and fight for those who stand to lose from their proposed cuts."
Tears were visible in Hipkins eyes after he left the stage and hugged a succession of his ministers and MPs including Grant Robertson.