The Dominion Museum building on Buckle St is set to be converted to an army museum and feature a World War I exhibition developed by Sir Peter Jackson, but the facility may last for only four years.
Massey University and the Tenths Trust own the building and grounds in equal share.
Tenths Trust chairman Morrie Love said the current arrangement constituted a sublease from Massey, due to start in December.
Love said the lease would last for four years, with the likelihood being that it would lead to a full sale.
"The final arrangements are still in negotiation, we will likely end up with a sale process over the whole building," he said.
"Nothing is simple, and as I understood it they were working late [last week] to get the arrangement going."
However, a Ministry of Culture and Heritage spokesperson said there was no negotiation relating to the sale.
"The start of sale and purchase negotiations are subject to a feasibility study and cabinet approval for a permanent new museum."
Prime Minister John Key announced the plans for the exhibition at an invite-only event at the museum earlier this month.
The project would take a number of spaces previously used for teaching - the east side of the ground floor, the grand hall and the first mezzanine.
"[Massey's] students are going to shift. That's happening very quickly," Love said.
"The museum will have the entrance, including all the entrance spaces.
"Massey currently has an office by the front door; they will lose that."
Speaking about the WWI exhibit, Jackson was quoted in a ministry release saying it would focus upon what life was like for the average New Zealander.
"This museum will not cover the strategies of the generals, but will deal with what life was like for the Kiwi soldier leaving their families to fight a foreign war on the other side of the world and for those left behind," he said.
Ministry spokesman Tony Wallace said the exhibition aimed to give visitors an impression of what soldiers experienced.
"There will be a simulated trench to capture the conditions for soldiers, like the gas and the noise," he said.
"It will be quiet technological. The precise details we won't know until it is unveiled."
Culture and heritage minister Chris Finlayson said the exhibition would be a tremendous addition to Wellington, along with Te Papa's Gallipoli exhibition, which was being developed in partnership with Weta Workshop.
The exhibition is expected to open in April next year and will stand for the duration of the centennial period. Admission is expected to be free.
College of Creative Arts vice- chancellor Claire Robinson said the college was beginning to make plans now the announcement had been made.
"In the first instance this will involve reconfiguring existing spaces on campus," she said.
"We have achieved great results with design teaching innovation since we opened our new facility in 2012, and we will be looking to capitalise on [that]."
The new museum will be the crowning jewel of the new Buckle St war memorial park due to open on Anzac Day next year.
- The Wellingtonian