However, it is not the end of the legal action, as Fonterra has advised the court of its opposition to Ferrum's withdrawal and is in talks with the council.
Last December, a five-day hearing into the proposal to build the 4000sq m office block at the junction of Kitchener and Birch Sts was held, and in May the regional council was given approval for a notice of requirement to begin work on the building.
Ferrum then appealed the decision, as it had concerns the building would adversely affect the slipway the company leased, which is near the building site.
Manager Ian Kemp said the company and the regional council had reached an amicable agreement after mediation to "co-exist".
"We recognise their building is going to go ahead, and plans have been put in place for the slipway to continue to operate."
The regional council had indicated it would design its building to the acoustic levels mentioned during the hearing, which would accommodate slipway operations, he said.
A Fonterra spokeswoman yesterday said it was not appropriate to comment, as the company was in discussions with the council.
In the meantime, work was progressing at the site of the proposed building, with demolition of the existing buildings under way.
Corporate services director Wayne Scott said the existing concrete foundations were being crushed to use as solid fill on the site.
The building's design was also progressing, with architects now at the detailed design stage.
