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The storage facility which houses the lanterns has been earmarked for demolition.
With the lease on the Caversham warehouse set to end in July 2022 to make room for apartment buildings, the lanterns were in need of a new premises, Dunedin Midwinter Carnival Trust chairman Paul Smith said.
Developed and managed by the non-profit organisation, the Dunedin Midwinter Carnival remained a unique annual celebration that had developed a loyal public following.
Held on the last Saturday in June, the midwinter carnival incorporated a large procession through the central city featuring dozens of giant lanterns made by local artists.
"We’ve been incredibly lucky to have an affordable space for a couple of years," Mr Smith said.
"But as our warehouse is soon to be demolished, we are facing a massive challenge as the warehouse market is a bit like the housing market: pricey and hard to find."
Until this year, the carnival had been held as a one-day event, but Mr Smith said there were plans to develop next year’s carnival to run across two days.
The trust had applied to the regional event fund to help make it happen.
‘‘We’re really excited by this opportunity, but it’s hard to grow when we are facing a storage dilemma.
‘‘Even if we find a new space, can we afford it?" he said.
The trust did not receive any funding for warehouse rental, and had been proactively engaging with sponsors and business partners to develop new revenue opportunities.
"We receive funding from the City Council and other local funders that cover event costs, but not storage, which is especially difficult for us as we are a free event run by a small non-profit and lots of volunteers," he said.
‘‘This festival is a real taonga for Dunedin - no other city has got anything like this. The art is made in Dunedin ... and it speaks about our unique environment.’’