Thirty-eight new off-street carparks will be created by the demolition of Tauranga City Council-owned buildings opposite the Cargo Shed in Dive Crescent.

The council's city transformation committee yesterday approved the $287,000 demolition of the old buildings and development of the carpark.

It left two old leased buildings between Dive Cres and the railway line in the way of the future development of the area.

The buildings occupied by Iron Design and Fixation Coffee were subject to an earthquake-prone building notice whereby they had to be strengthened or demolished by 2021.

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The carpark should be ready for use by January next year.

A report to the meeting from council strategic advisor Ben Burnand said the buildings from 10-24 Dive Cres were in such poor condition that they could not be leased.

''The council has identified Dive Cres as a precinct within the city centre with long-term redevelopment potential.''

Burnand said the earlier than scheduled demolition of the buildings would provide short-term off-street car parking while the new parking building in Harington St was constructed.

The $252,000 to demolish the buildings would be funded from the council's parking account and not rates. The $35,000 to establish the carpark would be funded from the council's renewals budget.

Burnand said the carpark was expected to return $40,000 a year.

Tendering the demolition and demolition was expected to take three to four months and establishing the carpark three to four weeks.

The committee was told there was asbestos in the buildings to be demolished and the building leased to Iron Design, but not in the Fixation Coffee building.