Construction may begin in four weeks and offer up to 15 full-time and part-time jobs by the time the store opens in September.
The site, in Princes St near the Oval, includes the Southern Sports Bar and Grill hotel and the adjacent former Auto Court premises, which were bought for an undisclosed sum about 18 months ago by Raeward Fresh.
The former Auto Court premises have just been sold for more than $2 million to privately owned Big Save Furniture. The project will cost about a further $1.5 million in construction and up to $2 million to stock.
The adjacent hotel's asking price has been knocked down from more than $1 million to offers around $895,000 as a going concern.
About 18 months ago, Hellaby Meats bought adjoining properties with plans to develop a fruit, vegetable and meat retail outlet under the Raeward Fresh banner, and hoped to open by the end of 2012.
Raeward managing director Brent Thomas said last November the redevelopment project had been "put on hold", but yesterday he said a decision had been made to concentrate on Raeward's earthquake-affected Christchurch outlets and there were no plans to return to Dunedin.
Big Save promotes itself as New Zealand's largest furniture retailer, with more than 38 years' experience and 21 stores throughout the country.
Big Save's Napier-based managing director, Tom McKimm, was contacted yesterday and said the company had sought access to Dunedin for the past two years.
The property deal was "around" $2 million, having involved multiple-section deals, easements and right-of-way agreements for trucking access.
"Dunedin will be our 22nd store and the last big city where we will have a presence," Mr McKimm said.
The Auto Court building would be redeveloped under existing resource consents and operate seven days a week, but another 500sq m of retail space would be added to the site, with tenders out for what he estimated could be a $1.5 million contract.
Initial furniture stocking would cost $1.5 million to $2 million, he said.
Dunedin realtor Tim Barnett said responses to the sale of the Southern Sports Bar and Grill hotel had "not been as good as expected" and its price had subsequently been dropped from "more than $1 million" to a negotiable $895,000.
The earlier Raeward proposal had envisioned demolition of the hotel for parking space.
• The 67-year-old family-owned company, which operates three Raeward Fresh outlets, gained non-notified resource consent from the Dunedin City Council in December 2009 to operate as a fruit, vegetable and meat processor and retailer. The operation was permitted to operate seven days a week, 8.30am to 6pm, and employ up to 20 staff.
