The council plans to create a new destination venue for an international-style food, drink and retail market.
The development will also improve pedestrian connectivity between Union Street and the bus and railway stations enliven Market Street with urban realm improvements in and around The Green.
There will also be a flexible-use outside space on the Green which could be used for events or pop-up market space.
Colin Milne, project director for Morrison Construction Building North East, said: “We look forward to working with all the stakeholders involved to create another high-quality landmark public facility for the people of the city, following our recent successful projects at Countesswells Primary School and the Torry Community Hub.”
Demolition work has taken place on the former BHS building and legal work is continuing in preparation for the next stage of the works.
A revised planning application for the new market has been submitted.
The City Council is to receive £20m from the Levelling Up Fund, which will be used towards the development of the new market building and nearby streetscaping.