The design of the development has taken in neighbours and the Hutt City Council's views into consideration before commencing.
Traffic and pedestrian issues and the environment have also been considered.
Ebert Construction Ltd plans to revamp the old industrial property into a modern retail environment. The store will have Kmart's full range of products, including men's apparel, women's apparel, children's apparel, toys, health and beauty, homewares, stationery and sporting goods.
Kmart New Zealand head of operations Sue Smith said the retailer was excited to get on with the development of its second Wellington store.
"I along with the entire Kmart team can’t wait to make available our products at great low prices and we look forward to being able to support the local community."
It's expected Kmart will hire around 80 local part and full time employees to be a part of its store. It will start recruiting for staff in early 2017.
Completion of the store is expected in the second quarter of 2017.
Kmart has been making large strides in the New Zealand market as of late.
In March, it opened a new store in Bethlehem, Tauranga and in June it confirmed it would finally launch an ecommerce site.
This follows on from its major store redesigns it carried out last year.
The redesign of Kmart's St Lukes store in Auckland.