The Dunedin City Council has granted consent for the project to go ahead in Andersons Bay Rd, on the former Smiths City site, subject to a range of conditions.
A Kmart spokeswoman yesterday said the international retail giant was "incredibly excited and encouraged" by the progress to date on the development of the upcoming Dunedin store.
The owner and developer of the site was equally enthusiastic.
Otago Land Group Ltd director Martin Dippie said he was very pleased the council had issued a consent so the retailer could return to the city.
"They have been sorely missed by many in the community, as witnessed by the incredible amount of social media interest there was when we announced their possible return."
The demolition of parts of the existing building had started and would continue into January.
A likely opening date would not be known until the middle of next year.
By that time the project ought to be tendered and a timeline agreed upon with the many tradesmen and subcontractors involved in the substantial build.
"It’s most likely to be early 2024," Mr Dippie said.
Kmart closed its Meridian Mall store after the 2020 Covid lockdown, citing concerns about required earthquake strengthening.
The retailer’s intentions remained unknown until about six weeks ago.
During its absence from the city, shoppers’ interest in Kmart’s return had been intense.
Mr Dippie believed the Andersons Bay Rd site would be significantly easier to access than Kmart’s previous city-centre location.
There would be free parking on site and in the surrounding streets — including at Mitre 10 Mega, which Mr Dippie owns.
"It wouldn’t surprise me if some of their customers park in our Mitre 10 Mega car park and shop both stores in the same shopping trip, which will be beneficial to both of our businesses.
"If this becomes popular we will be more than willing to open our car park for their use in the evenings."
There were bus routes to and from the site as well as good cycle access from all four directions.
Otago Land Group’s traffic design experts along with the council had been especially conscious of the congestion on Macandrew Rd at certain times of the day, caused by the McDonald’s car park access being next to the site’s entrance.
Traffic engineers had designed a separate entry into the Kmart site with a small slip lane that would significantly improve traffic flow into and off Macandrew Rd from the site.
Kmart also had the advantage of a late-evening trading pattern, as the store would be open to midnight seven days a week.
"We understand this has the potential to spread their customer visits out as they will be open for 15 hours each and every day."
However, due to the anticipated interest in the new store when it opens, the council required a traffic management plan to be put in place for at least a month after the opening, consent documents provided by the council said.
Traffic monitoring would also be required.
A review commissioned by the council found the 87 on-site car parks, including four mobility car parks, would likely be insufficient to accommodate a peak of up to 296 vehicles an hour on a Saturday afternoon.
It was "plausible" that a shortfall of parking could create issues around efficiency and safety of the roads, with disorderly parking and congestion created as vehicles circled neighbouring streets and nearby car parks looking for a space.
Nevertheless, the council said the proposal had been assessed by two independent transportation experts aiming to reduce negative effects on the transport network.
