The project would see a soft tiled area built, with a sculpture and play equipment, movable seating and tables, to spruce up the area.
Council city development acting manager Alan Worthington said the work would include rubbish bins, a drinking fountain and trees.
Additional plantings at the Rankeilor St end would provide extra shelter, and a bollard would restrict vehicle movements in the area, he said.
The exact cost of the project was not available yesterday, but was estimated to be between $50,000 and $100,000, Mr Worthington said.
The work was expected to begin in mid-November and be completed by mid-December.
The improvements were the first concrete project to emerge from the council's draft South Dunedin Retail Centre Strategy.
The document - unveiled by the council in April - outlined the strengths, weaknesses and challenges facing the area, from underused and dilapidated shops to a lack of open space and parking, and the wide-ranging social and economic initiatives needed to address them.
That included upgrading the Cargills Corner intersection, more pedestrian and shopper-friendly upgrades and the development of a "pocket plaza" in the area, as well as improvements to the appearance of buildings, a South Dunedin library and street markets.
Council city development manager Dr Anna Johnson said in April a draft final strategy was expected to be released for further consultation before the end of the year, and a final version signed off early next year.
Work was also already under way on a central city strategy, considering the future of an area stretching from the Oval sports ground to the Otago Museum, including the Octagon, the Exchange and nearby heritage areas.
Research and analysis was started and would be followed by initial consultation next year, with a final strategy and action plan produced early in 2012.
