Four fire trucks and a specialist ladder truck are on the scene, with a support unit in tow.
The road from Union St West to St David St was closed.
Emergency services were not aware of any person being injured or in danger, and said there is no risk to any other nearby structures.
A fire investigator will visit the site on Sunday and the fire has been flagged as suspicious.
Nearby at Oaken Cafe, owner Rama Krishna said he doesn’t generally see anyone going in and out of the building, but there are a lot of homeless people in the area who might stay there at night.
“Hopefully everyone is okay,” Krishna said.
Krishna said the building had been sold recently, along with a church that adjoined the building.
Krishna also alleged it was the same building where a man had been murdered at an earlier date.
In 2025, the Herald reported the body of Aneli Helu Katea, 36, was discovered at an address on Great King St in North Dunedin on October 3 after police received reports of a sudden death.
A 25-year-old man was accused of the murder and a trial date set down for June 2027.