The site is owned by Urban Cohousing Otepoti Ltd.
When it is finished, the project will provide more than 60 residents with shared spaces and 22 units.
Project spokeswoman Anne Thomson said it had been a long process, so to see physical progress was exciting.
The group did not want to provide more details until an official ground-breaking ceremony later this month, Ms Thomson said.
"After five years it's really great to see it beginning to take shape.''
Urban Cohousing bought the old school in 2013 having plans to create an inter-generational cohousing neighbourhood built on ecological values and encourage social interaction.