The scheme, which includes demolition, land remediation of the site and the purchase of new shipping containers, will be funded through a combination of the Government's Future High Streets Fund and council investment.
City of Wolverhampton Council has appointed a contractor to begin preparatory works next week ahead of machines moving in to remove derelict shops at 1-7a Cleveland Street.
The cleared site and car park sitting between Cleveland Street and Bell Street will then be used for the construction of the Box Space, which is set to open in 2024.
Computer generated images show what the shipping container style venue could like, subject to final designs and planning approval.
The Box Space will also support the official reopening of the Civic Halls in June 2023, which will bring hundreds of thousands of visitors to the city centre a year and boost the local economy by more than £10million annually.
City of Wolverhampton Council Cabinet Member for City Environment and Climate Change, Councillor Steve Evans, said: “This is a major milestone in the exciting transformation of the west of the city centre that will boost footfall and create invaluable employment and business opportunities.
“The demolition of vacant shops at 1-7a Cleveland Steet and use of the adjoining Bell Street car park are part of long held regeneration aspirations in the City Centre Area Action Plan.
“Together, they will form the site for the Box Space – a modern food, beverage and entertainment facility.
“These type of box spaces, using shipping container style cabins, are hugely popular in other areas of the country such as Newcastle, London, Sheffield and Sunderland and will be a superb addition complementing Wolverhampton’s existing leisure, events and evening economy.”