The combined library and community complex is expected to be open by mid-2025 at a cost of $21.4 million.
The facility at 138-156 King Edward Street will include meeting rooms, IT learning spaces and a recording studio, the Dunedin City Council said.
The project will be a partnership with local property investor Positive Property Limited which bought the Wolfenden and Russell site after fire destroyed the former clothing shop buildings in 2020.
The developer would build a two-storey building to a shell stage, the council said.
The council previously planned to build the library on the former Veggie Boys site at the corner of King Edward St and Macandrew Rd.
The new facility would cost "significantly less" and was expected to be open by mid-2025, whereas work on the Veggie Boys site was not due to begin until at least 2025.
Dunedin Mayor Jules Radich described the project as "an exciting development for South Dunedin and for the city".
“The end result will be a stunning, welcoming facility, in a convenient location, which everyone can be proud of."
Previous concept plans outlined by the developer were for a three- level building including 300sqm of retail and 3000sqm of office space, as well as 40 car parks.
A plan to use the Veggie Boys site to house a temporary community centre was shelved in April due to cost.
