A $2.7 million redevelopment to transform the former RSA building into a cafe and office space is expected to be completed by July.

Pukeroa Oruawhata Holdings bought the building at auction last year for slightly less than $1 million - and now plans to spend about $2.7 million renovating it to transform it into offices and a cafe.

Pukeroa Oruawhata general manager Peter Faulkner said the company had identified a preferred contractor and expected to start work early in the new year.

Work on the Haupapa St building should be completed by July or August.

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Mr Faulkner said they were in discussions with a cafe operator but could not confirm who it was.

He said there was also interest in the office space with the upstairs sections - about 400sq m - subject to an agreement to lease.

Mr Faulkner said part of the back of the building would be demolished to increase the amount of parking on site.

The building has been deemed one of Rotorua's 35 quake-prone buildings by the Rotorua Lakes Council.

He said while the building did not meet earthquake standards now, the redevelopment would "bring it back to new".

Mr Faulkner said they were looking at recognising the historical links in the naming of the building, including a reference to the Crowther family who originally donated the land to the RSA.

Last June the RSA made the decision to put the building, which had been home to the organisation for decades, on the market after experiencing ongoing financial pressure.

The redevelopment of the building is one of several projects the Pukeroa Oruawhata Group has under way at the moment.

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In October the group announced a major $20 million redevelopment at Trade Central, with Kmart the major tenant.

The development at the site will add an extra 8848sq m of retail space to the Trade Central site, which is home to Mitre 10 Mega and Hunting & Fishing.