The fire at Oamaru Hire in Exe St destroyed about a third of the shed, inside which "heaps of machinery", including lawnmowers and rotary hoes, was stored, Oamaru Fire Service spokesman Warren Stringer said.
While most of the machinery was destroyed, some might be able to be salvaged, he said.
The building was well alight when the fire service was called to the property about noon. It took about 10 minutes to get it under control.
There was no threat to neighbouring properties and no-one was injured, Mr Stringer said.
A woman contacted at Oamaru Hire last night said the business was "bound to be" open today.
"It was only a shed."