The site is large, and the company has owned it for about three years. One of the buildings to be demolished at rear is the former Rock 'n Roll Club hall. The new building will use more of the space available, leaving less for car parking.
The only tenants left in the former AA building at present are America Nails and the Cactus Creme Cafe.
Finding new tenants for the retail space hasn't been easy, and Mr Fitz-Herbert said the company put a lot of work into it.
"People were reluctant, but we convinced them otherwise. We tried to remove the barriers."
Whanganui District Council has been "very positive, helpful and accommodating," he said.
The Wallace Development Company started in Whanganui, and managing director Jonathan Wallace was born here.
It owns commercial property sites, and it plans and builds projects and then leases or sells them. Its head office is in Havelock North.
In Whanganui it also developed the new AA building and Super Cheap Auto - both in Victoria Ave.