The Vogel St warehouse, where the about 60 lanterns are stored, is being sold, forcing event organisers to look elsewhere.
The 11th event was held last weekend, with record numbers of about 10,000 people attending.
For the past five years, Nigel Brook has allowed his Vogel St premises to be used free of charge, but is now selling the building.
Event organiser Paul Smith said having the space for free "has allowed us to invest more in the festival, which is a real gift".
"It couldn't have been more ideal. We've been really lucky," he said.
Finding new premises would be a challenge.
"We're looking for someone with some space, even rafter space they're not using."
The Dunedin City Council was also helping the organisers find alternative storage options.
Council events team leader Marilyn Anderson said Carisbrook was an option and they were in negotiations about the venue.
Mr Smith said the lanterns took up between 50 and 100sq m of floor space, depending on the height of a room. The lanterns need a new home within weeks.
Some of the larger lanterns would be culled if suitable space could not be found.
- Annabel Reid
