Mall manager Simon Eddy said stage two - costing between $1 million and $5 million - would see the mall's old food court refurbished to create space for seven new food outlets and up to 350 diners.
Construction began yesterday and was expected to be completed by September, in time for the Rugby World Cup matches in Dunedin, he said.
The project was the final stage in the mall's two-step refurbishment, which began in 2009 with the redevelopment of the mall's main retail area.
The mall's old food court - and its five outlets - closed in the middle of last year, when it had been planned to redevelop the food court, Mr Eddy said.
It was later decided to delay work until after Christmas, to avoid disruption during the mall's peak shopping period, but negotiations with prospective tenants began in November, he said.
It was hoped the redevelopment would attract new food retailers from outside Dunedin, and possibly outside New Zealand, he said.
"We have leased some of the spaces and we are in final negotiations on most of the others.
"There are some local operators in those negotiations, there are some out-of-town operators, there are some names who don't exist in New Zealand at the moment and it would be their first outlet in New Zealand."
Discussions were also continuing with some former tenants of the old food court, but Mr Eddy declined to name any of the companies until more details were released closer to opening day.
"Certainly, I think it's fair to say that there will be at least one - possibly two or three - new operators in there who don't currently exist in Dunedin."
Dunedin-based company Cook Brothers Construction had secured the contract for both stages of the redevelopment, which were tendered separately, he said.
The total cost of the mall's redevelopment was not yet known but was expected to exceed $5 million, including work on stage two, Mr Eddy confirmed.
Each of the seven tenancies created in stage two would be "much bigger" than those in the old food court, averaging 40sq m in size rather than the 20sq m to 25sq m occupied by previous tenancies, he said.
Customer capacity would also increase to 350 people, up from between 220 and 250.
The new food court would help drive extra foot traffic to other businesses in the mall, with a lighter, brighter space and new mix of food outlets providing an "upper-class offering", he said.
"We're going for something which is really a wee bit classier than your average shopping centre food court."
