The owner of Weimar Boarding Kennels, which is near the top of Rudd Rd, was in the process of evacuating just before 4pm.
Dogs staying in the kennels had been moved to a neighbouring property and she was about to leave.
She had been told by police it was a case of being on the "safe side" as emergency services were uncertain whether the fire would spread to her property.
"They are not sure because there is meant to be strong winds coming up [later this afternoon]."
The MetService has issued a severe weather watch for Otago, including Dunedin, from 5pm today until 5am tomorrow, saying northwesterly winds could approach severe gale strength in exposed places.