All of the stallholders will leave, except for Flux coffee and Maori carver Whare Heke.
Creative Tauranga, which manages the art space, issued notices to the stallholders advising them they needed to be out of the Cargo Shed by May 31.
Creative Tauranga Charitable Trust chief executive Tracey Rudduck-Gudsell told the Bay of Plenty Times the trust decided the space was not being used effectively and the stallholders needed to vacate the space while the trust looked at a new model for the area.
She said the new model would better address the needs of the wider creative sector and could include work from budding fashion designers, graphic designers or shoe makers.
"We need to support more diverse forms of creativity. For example, if there was a beautiful fashion designer straight out of university who can't afford a lease on a shop then maybe we can help them here. Creative Tauranga is here to serve all art groups, not just artists and sculptors."
Mrs Rudduck-Gudsell said once the new model had been finalised, all stallholders would have the opportunity to go back to the space and whether the new model suited them or not was up to them.
The decision to modernise the space has upset several stallholders.
Mrs Rudduck-Gudsell said the stallholders were notified of the changes in January and some had blown the issue out of proportion.
"We listened to the community and we are trying to do the right thing and sadly some of the people have been here a long time and they are quite disgruntled so it's hard when people say something needs to change and you get criticised when you take the lead to make [the space] better."
Current stallholder Emma Walsh of Flux coffee said the Cargo Shed had "huge potential".
"I think it could do with more people [in here] and I think it would be good to see a bit more variety in here."