The site, at 41 Wharf St, was identified by the council as suitable for a road linking Wharf St with a new on-ramp to the nearby overbridge and is subject to a notice of requirement.
Last December, Mr Barnett, of Arthur Barnett Properties, applied for consent to build a 3105sq m building on land that was once part of rail shunting yards.
In January, the land was identified by the council as a possible site for the road link.
A resource consent hearing was held in May, with the decision released yesterday.
The resource consent hearings committee of city councillors Colin Weatherall and Andrew Noone and commissioner Roger Tasker ruled that while the site was on industrial land, the proposal was a "true exception".
This was because the site was too small for industrial activity, had never been used for industrial activity and the development would sit comfortably near the Chinese Garden and retail businesses.
Mr Barnett said yesterday he was pleased with the decision, but could not begin building until after the notice of requirement process was completed.
The city council has been working on a plan for five years to redevelop the Steamer Basin with apartments, bars and tree-lined boulevards.
A district plan change would alter the zoning of the area beside the Steamer Basin and allow both commercial and residential use.
As well as the plan change, the council notified six notices of requirement to designate areas for public walkways, squares and road realignment affecting Mr Barnett's development.
Council acting planning policy manager Paul Freeland said hearings for those would begin on July 21 and could take between two and three weeks.
Once they were finished, it would be at least two weeks before a decision was made, and that would be subject to appeals to the Environment Court on what was likely to be a contentious issue.
Business owners in the area have expressed concern over the future of their businesses if the council compulsorily acquires their land to make way for development.
Mr Barnett said he was preparing a submission for the hearing and would just have to wait to see what the decision was.
It would be four to six months at the earliest before he could start building.
