The council said inner city retailers had been notified and the work was not expected to impact on business as it would be confined to a central area.
However some retailers spoken to by the Rotorua Daily Post said it had impacted on business yesterday.
Pumpkin Patch manager Rosie Butcher said she was "brassed off" the council had started the demolition during the school holidays.
"It's not good for business and we received less than a week's notice."
However, she said in the long term the plan did look good.
"I think the changes will be nice, when it's done."
Dunkin' Donuts store manager Aseem Sharma said he thought the changes were a good thing.
"I think it's good for us. Our visibility will be much better."
He said business had been very slow while the demolition was happening he was looking at it with a longer term view.
"It will bring in more business in the long term and they have to do it sometime."
Crossroads store manager Vanessa Williams said she thought it was a "brilliant" idea.
"It's good for the business, opening up the roads will make the traffic flow."
Olivia Adams, senior stylist at St Bruno, said she liked the idea of the changes.
"I think we need to have change to have growth."
Jean-Paul Gaston, the council's strategy and partnerships group manager, said the sails that used to cover the site were still in storage and would stay there until another use could be found for them.
"We have offered them to schools and other organisations but they are very heavy and require special construction. We are happy to be approached if someone thinks they have a use for them."
He said the overall revamp had been broken down into stages.
"Tenders we have received to date have come in at prices higher than we have budgeted and we're also aware companies which may have tendered are extremely busy and have plenty of work on at present.
"With that in mind and in conjunction with inner city retailers, we broke the project down into stages and the timing will be worked around contractors and our inner city stakeholders," Mr Gaston said.
The final phase of the project has been deferred until next year with the work set to be re-tendered.
At the same time as the stage two work is being done, work will also be done to create a pull-in drop-off parking zone outside the Quest on Hinemoa St. This will see eight carparks created.
Mr Gaston said the carved columns removed yesterday would be stored, with a view to reinstating them elsewhere in future.
The site was fenced off and the roads around Manawa, parts of Tutanekai and Hinemoa Sts, were closed from 6am to 8.30pm.
The need for a refresh of the space was highlighted in late 2013 when inner city retailers and businesses worked with the council on strategies and ideas to revitalise the central city.
