"Firefighters are still working to extinguish the fire, but the majority of it has been knocked down."
The ablaze building measured 30m by 40m, he said.
Sanson local Stephen Gill, who lives around the corner from the ablaze antique and homeware store, says there isn't much of the building still standing.
"It's a two-storey building, so the smoke would've been going 50-100 metres up and it was blocking one of the side roads.
"There was a lot of smoke - for a long period of time, you couldn't see the flames and when the flames ... that was the end of the building, really."
Firefighters arriving to the town faced the additional hurdle of having to source water from the local reservoir to douse the flames, Gill said.
"Our main road has no water supply, so tankers have had to go back and forth carrying water from the water reservoir."
Dunbar said the building appeared to be so damaged it would need to be pulled down.
At 7.30pm Dunbar said the fire was under control, but crews would remain at the scene for some time, damping down hotspots.
No other properties are at risk of catching alight, Dunbar said.
A St John Ambulance spokeswoman said one person suffered minor injuries in the blaze. One ambulance was sent to treat the person, who did not need hospital treatment.
Pictures show the fire is near a fuel station.
Waka Kotahui/NZTA has closed a section of SH3, between the intersections of Milne St and Phillips St, until the fire is contained.
Police have diverted traffic surrounding the building and ask motorists to travel with care.
Northbound traffic is being diverted from SH1 and SH3 onto Penny Rd, then Speedy Rd, Fagan Rd before turning back onto SH3.
Southbound traffic heading towards Wellington is being diverted right onto Fagan Rd, then Speedy Rd before turning right onto SH1.
Southbound traffic heading towards Palmerston North is being diverted from SH3 onto Fagan Rd, then Speedy Rd before joining Penny Rd and back onto to SH3.
The diversions are expected to be in place for the next few hours.