The Armed Offenders Squad (AOS), carried out a search warrant at a property on Banbury Crescent in Fairfield, Hamilton.
The AOS have left, but police officers are continuing to search 52 Banbury Crescent.
Officers appear to be focusing on a red ute parked in a driveway.
Both ends of Banbury Crescent, which runs behind River Rd, were blocked off.
Residents have been allowed back into the street.
Jen Maxwell, who was in a nearby house, said she looked out the window to see about seven armed officers descending on the property.
An officer was also calling for the residents inside the property to come out.
"After about 10 minutes people slowly came out with their arms up."
Among the occupants was an elderly man and children including toddlers. "One came out on a plastic bike."
The neighbours estimated about 10 people came out of the house including a man in his early 20s who was arrested. The occupants of the house are still standing on the footpath nearby while police continue searching.
Maxwell said the officers were pointing their guns at the property as they made their way in.
A passing motorist said about 10 police cars passed him along River Rd at about 2.45pm.
"They were making their way up slowly. There were no sirens. There were no flashing lights - only about two cars at the back."
The man pulled his vehicle over and watched from River Rd.
"There were about three armed offenders [squad members] pointing their rifles over the roof of the police cars towards the house."
He saw some people leave the house and said about six members of the armed offenders squad then huddled together behind a shield and walked down the driveway.