The first floor of the long dormant building on the corner of Jetty and Crawford Sts has been sold as leasehold by owner Oakwood Properties to a local developer.
Oakwood Properties director David Marsh said the building had sat for "some time" so it would be interesting to see how the redevelopment panned out.
He said Oakwood had retained ownership of the 300sqm, residentially zoned property.
The Dunedin City Council has a listed valuation of $326,000 on the building.
Colliers advertised the building as having resource consent for conversion to 12 residential or commercial units.
Cr Benson-Pope said the 120-year old building had tremendous potential.
He said it was great to see the renewed focus on older buildings in the heritage precincts, for quality residences situated from the "first floor up".
That had been reflected in the increase in grants from the city’s heritage fund, he said.
Last year, the fund allocated almost $500,000 across 29 projects. Funding ranged from a $6000 contribution for repairs to a stained-glass window at the Maori Hill Community Centre to $100,000 for the slate reroofing of cell blocks and seismic strengthening at the former Dunedin Prison.
More than $294,000 of that had been allocated in the past two quarters alone, representing average incentive funding of 22.5% for projects, worth more than $1.3million across the city.
Cr Benson-Pope said the ‘‘intensification’’ was an important part of the reviewed district plan, which includes rezoning of the city’s warehouse precinct area to encourage mixed use residential and office developments.
"Dunedin is actually in a fortunate position relative to other cities, which had lost many of their heritage areas due to redevelopment about 30 years ago."
DCC city development manager Anna Johnson said the district plan had worked some ‘‘significant exceptions’’ into zoning, for example for scheduled heritage buildings and buildings that did not have existing parking where they were converted to multi-units.
She said current planning had focused on bringing residents into the central city, while ensuring maintenance, restoration and reuse of heritage buildings.
She said for the most part activity in the commercial areas in the central city would be limited to second floor and above, except on the ground floor of buildings facing major pedestrian routes.
This would include George and Princes Sts.
She said there would also be increasing height limits in the commercial parts of the central city, refining rules for allowable works on heritage buildings to respond to heritage building developer feedback, including allowing an additional 4m in height above the height limit for scheduled heritage; providing for earthquake-strengthening of scheduled heritage and character-contributing buildings, and adding policy guidance supporting changes required under the Building Act when a building was converted for an alternative use.
She said an important element would also be allowing network utility connections to heritage buildings, taking on board their future commercial use.
"These objectives are also supported by increased heritage funding for the heritage fund, as well as recognition of the great work that many of Dunedin heritage building owners are doing through the heritage awards."
Enterprise Dunedin director John Christie said heritage architecture was a core part of Dunedin’s offering as a visitor destination. He saw heritage architecture as a unique selling point that offered visitors an insight into the city’s fascinating past.
