Site fences have gone up this week to allow the contractors to begin testing and locating service pipes, however, construction will start early 2020 with preloading expected to begin in March and be in place for six months.
These works will require some periodic traffic management and partial road closures.
Rotorua Lakes Council group manager strategy Jean-Paul Gaston said the council was looking forward to working with Waiotahi Contractors and starting the next section.
"This will lay the foundation for the construction of the new destination playground which is definitely a key feature of the development and what much of the community is waiting in anticipation for.
"While this work is underway, the design team including Veros Property Services, Tonkin and Taylor, and architects from Isthmus Group, will continue working on the plans for the western end of the lakefront where the commercial development will be," he said.
Stage one of the lakefront development began in late October and is now well under way.
Construction of the entire lakefront development is being completed in stages to ensure parts of the lakefront reserve are always accessible.