The £16m project involves a new head office for safety equipment and workwear specialist Arco.
The start of building work also marks a major milestone in the £80m rejuvenation of the waterfront Fruit Market area.
The construction project will also include a 350-space multi-storey car park.
Later stages of development on the site will feature 34 homes and 3,000 sq ft of retail/leisure space to continue the reinvention of the Fruit Market as a thriving urban village.
Rejuvenation of the waterfront district is being led by Wykeland Beal, the regeneration company formed by commercial developer Wykeland Group and house builder Beal Homes, as part of the Fruit Market LLP joint venture with Hull City Council.
Wykeland Beal has worked closely with Arco to develop the scheme and enable the company to relocate from its existing head office in Waverley Street.
This has been purchased by Hull City Council to support the planned A63 Castle Street improvement scheme.
Dominic Gibbons, Managing Director of Wykeland Group, said: “There hasn’t been a new office building of this size in Hull for a single user for more than 50 years and the development will see a showpiece facility of exceptional quality and prestige occupying a key, strategic site.
The 60,o00 sq ft, five floor building will be completed by the end of 2020, enabling around 550 Arco staff to move into their new home.
The project will sustain around 200 jobs during the construction phase.