Beach and Rees Streets will remain closed to traffic, but all roads into the central business district remained accessible to retailers, contractors and emergency vehicles.
• Queenstown reflects on a watery morning
Queenstown Lakes Mayor Clive Geddes said the airport and other core infrastructure were not affected and most of the visitor attraction businesses were operating as normal.
Queenstown's town centre remains on high alert as Mr Geddes told NZPA the lake water level was 311.4m this morning, rising at about 1cm an hour.
Yesterday 35 business prepared for overnight flooding with Queenstown District Council putting up wave breaking pipes and sandbags in an effort to keep raising waters out of the town centre.
Light rain continues to fall over the town, with steady rain in the headwaters of the river that feed the lake, but Mr Geddes said the biggest challenge today would be the wind.
It could "potentially push more water in the front of the town".
Queenstown Harbourmaster Marty Black could not estimate when the lake would peak, but said there was a lot of rain overnight.
"So it could be 12 hours later after it stops raining. It may not be able until tomorrow afternoon; Saturday night even," he told Radio New Zealand.
"All of the businesses in the lower area of Queenstown have been pro-active. I've just walked in front of some of the barriers that they've erected. It looks like the lake will certainly come higher and will flood some downtown areas.
"I think the message here is that it's only a small part of Queenstown and the rest of the business community, it's business as usual."
Mr Geddes said there has been ponding in parks and roads, affecting two business on the waterfront, but Queenstown was not expecting "water entering premises the way it did in 1999".
Eleven years ago the tourist town was cut off by slips and major flooding.
Since then the central business district had implemented flood-proof policies, such as higher floor levels, Mr Geddes said.
That flood cost Queenstown $46 million.
Queenstown business owners had an uneasy wait overnight as Lake Wakatipu threatened to spill into the resort.
Late last night, business owners and helpers in the central business district were still sandbagging premises ahead of a predicted lake-level peak of 312.2m. The town centre had been closed to vehicles.
The Queenstown Underwater Observatory in Rees St was flooded, and water was flowing into Marine Pde.
At 11pm, the lake level had risen to 311.304m, with 1m waves, as the wind picked up.
Rain started falling yesterday at 2pm and another two fronts were expected to hit the town, at midnight and 6am.
Many of the 35 threatened waterfront premises were evacuated yesterday and merchandise and fittings removed.
Two sections of footpath next to Earnslaw Park, the area most under threat, had collapsed, and other areas of pavement along the waterfront were starting to give way. Public toilets in the park were closed by flooding.
Yesterday afternoon, the Queenstown Lakes District Council issued a warning of a "major rain event" in the head waters of the Rees and Dart Rivers, predicted to bring between 70mm and 150mm of rain, which could result in widespread flooding in the town.
Late last night, the Lower Shotover River beach had disappeared with the volume of water.
At 10am yesterday, Lake Wakatipu's level was 311.226m - by 8pm it was 311.302m, breaching the "possible flooding" level.
However, Queenstown Lakes Mayor Clive Geddes was adamant Queenstown was open for business and there would be no repeat of the devastating floods of 1999, where the flood level reached 312.8m, and cost $46 million in insurance claims.
"We are not going to be in the position that we were in 1999 ... [when the attitude was] `don't worry about it, in a couple of days it will be gone'.
"We have in place much better data than was available in '99."
An action policy, administered by the Queenstown Chamber of Commerce, had been distributed to business owners and the council had a "much closer" working relationship with the Otago Regional Council, which yesterday sent its environmental engineering and natural hazards director Dr Gavin Palmer to Queenstown.
"I think we're a million miles ahead, as a community, of where we were in 1999," he said.
"Apart from some of the water-based activities, Queenstown is very much business as usual."
The regional council, using its lake level prediction modelling, had warned the "worst-case scenario" was flooding affecting Beach St; Rees St; the Mountaineer Building; the Steamer Wharf; Marine Pde; part of Church St; and part of Earl St.
Mr Geddes said one of the main issues was the 20-40 knot winds forecast for the next five to seven days.
"The effect of those is to push the base level [of the lake] up and then to provide wave action on top of that. That is a concern for Queenstown and particularly for Kingston."
Businesses in the Queenstown flood zone were advised again yesterday to take action while they could.
"We can assure them that by that time the council will have done everything it can to make sure the foreshore is protected ..," he said.
Mr Geddes hoped the flooding would only be an issue for "three to five days", with businesses likely to be affected for up to 10 days.
"If people are saying to me [tomorrow] or Sunday, or Monday 'you cried wolf', that's the best possible criticism I could receive."
About 25 council staff, including engineering services and contractors worked at the waterfront yesterday, with several on stand-by and monitoring the lake levels last night, as they did on Wednesday.
Queenstown police had also been helping, Mr Geddes said.
The Kawarau River was showing a "healthy flow". However, the concern was if the Shotover River began to block, backfilling the Kawarau and thus the lake.
Even when the rain stopped, it was likely to be 12 hours before Lake Wakatipu peaked due to headwater flow.
QUEENSTOWN FORECAST
> Today: Rain expected to ease, with fine weather predicted; gusty northeasterlies should ease this afternoon.
> Tomorrow: Early showers expected; but should clear; southwesterlies dying out.
> Sunday: Fine weather, but northwesterlies likely.
> Next week: More rain on Monday, strong northwesterlies turning southwest; followed by fine weather. More rain next Friday.
