Mr Williams said the demolition and rebuild required a consent from the Historic Places Trust due to the archaeological importance of the site, and the demolition process had to be done very carefully due to the many old timbers inside the saloon.
Mr Williams said a restaurant tenant would occupy the ground floor and part of the first floor and the balance would be occupied by offices, with space for 1-3 other tenants.
He would not be drawn on the exact price tag for the rebuild, but confirmed it was more than $1 million. Mr Williams said the restaurant tenant wished to remain anonymous and might not go public for several months. No other tenants had yet been signed up for leases.
The requirement for a new build had been influenced by the new earthquake strengthening standards, but he would not elaborate.
"The new building will bookend the Central Business District and the entertainment precinct. Both the restaurant and office space will engage more business into the CBD, which is great news for every other business in the area," he said.
The historic site at 41 The Strand was first associated with the Tauranga Hotel in 1872, when the first Victorian-style wooden pub was built there, and destroyed by fire in 1876.
A new wooden hotel was built the same year and also destroyed by fire in 1936, before it was replaced by a new concrete hotel in February 1937.
From then through to the present day the Tauranga Hotel site has undergone many additions and alterations including the establishment of the Grumpy Mole Saloon in November 1997.
Ironically, a fire engulfed the top floor and the roof of the saloon in 2007, causing $500,000 damage.