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The site, owned by Port Otago subsidiary Chalmers Properties, is being converted into a $9.45 million warehouse and office.
Demolition work at the site on the corner of Halsey and Fryatt Sts started early this month.
The demolished warehouses were formerly occupied by Northern Southland Transport and CRT Seeds.
Steel & Tube will occupy the new 4650sq m building which will be complete by year-end.
The 4650sq m building is on a 8000sq m site, at 197 Fryatt St, which abuts 22 Jutland St in the industrial precinct.
The site is to be fully landscaped and the building will feature full LED lighting throughout, for energy saving.
Steel & Tube's chief executive Dave Taylor said the new premises ‘‘ticked all the boxes'' for size, specifications and location, enabling the company to serve its customers from one operation, while gearing for future expansion of its South Island business.
The foundations of the new site would be reinforced to cater for the required floor loading and Steel & Tube would be operating multiple gantry cranes within the warehouse.
It is the second design/build/lease development by Chalmers Properties in Dunedin, following the $4million CHEP development in Sturdee St in December 2014.
Both developments will be retained in Chalmers Properties' $280 million investment portfolio.