The company catered to school groups, mainly primary. "They'll be annoyed - it's another option they won't have."
Mr Reid said the council told him it bought the building to protect the business - the previous owner was looking to develop.
"I thought it was great the council bought-in to protect the whole area, so they can have a say in what happens. Since then they have never been able to say what their plans are with the area and they have never been able to give me confirmation over whether they are renewing the lease."
Two neighbouring businesses were also on month-by-month leases - a car yard and Hawke's Bay Cafe & Bakery.
Cafe owner Vandy Ban said he was on a month-by-month lease, but was told it could be up to five years before the council took action. "They said if they rebuild they will give us an opportunity," he said.
Mr Reid had been trying to sell his business for three years, but potential buyers repeatedly backed out.
"The only thing stopping us was the renewal of lease."
Pandora Kayaks' equipment is for sale.
A Napier City Council spokesperson said it purchased the leasehold interest of 49 to 51 Pandora Rd in 2011. "Being already the owner of the freehold title the purchase of the leasehold interest was made for strategic reasons."
The site was adjacent to the Humber St Reserve and future use of would be considered as part of the plan to develop the Pandora Pond Recreational Area.
"The project will be signalled in the council's 2015-25 Long Term Plan.
"In this particular area where leases have expired the council has offered tenants new leases. However, so as not to limit itself with any future plans, these new leases are on a month by month basis."