The project will transform the old tram depot on Leith Walk into a new space for artists and creative entrepreneurs, including a temporary community services hub for the voluntary and public sectors.
It is being funding by the Scottish Government (£750,000) and the City of Edinburgh Council (£530,000).
Social enterprise Rebuild will begin work to fit out the shipping containers this week.
The project is being developed for the Council by Development Partner Hub South East.
Cllr Kate Campbell, Housing and Economy Convener for the City of Edinburgh Council, said: "This is an amazing project which has had a huge amount of community involvement.
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"Leith Walk is one of the most densely populated and fastest growing places in Scotland, with a strong sense of identity and an incredibly engaged community. This project will create much needed space for local artists and other creative entrepreneurs as well as providing valuable community space. It is also great to see training and job opportunities as part of the project."
Marcus Weurman, Hub South East's Development Manager added: "Hub South East has been involved from the very start, proposing ideas for the development and helping the Council secure funding, so it's exciting to have followed the journey this far and to see work start on site on the Leith Meanwhile project.
"This is true partnership working in action. It's a real opportunity after 60 years to turn this site back into a space that can be used meaningfully for the benefit of the local community and we're incredibly proud to be involved."
Work is expected to be complete on the project in Autumn.
(CM/MH)
