Deputy Mayor Viv Napier, chairwoman of the Wheels Park Steering Group, told the Times-Age the preferred site was close to other popular facilities, the Rail Trail and dog park.
"They're both busy places, so there will also be a wide variety of people there all the time."
The steering group's research revealed the most common requests had been for a park that was suitable for skateboards, scooters and bikes, which also included a children's cycle track.
"There's been a general consensus for a long time that Greytown sort of lacks a facility like that," Mrs Napier said.
Masterton, Carterton, Martinborough, Featherston and Eketahuna each have a skate park in their towns.
"We want somewhere that will be suitable for kids from preschool to anyone who wants to use it."
The decision on the location had been made "after an extensive look at every vacant site in Greytown that wasn't in the middle of a lot of housing".
The steering group is now in the process of contacting designers around the country for design quotes.
SWDC is contacting other local authorities in New Zealand to glean ideas and advice from successful skate parks in their regions.
Although the group is "early in the design stage", the idea of a kids' roadway "with stop signs" was likely to be incorporated, Mrs Napier said.
"We're in the reasonably early stages but we are making quite good progress."
When the potential park designs have been drawn up, they will be put out for public consultation.
Last year, the steering group was given $10,000 by SWDC for feasibility and planning purposes. To date, the group has spent its own time and money on the project, so the full amount is available to pay for planning and design.
A previous attempt to set up a skate park in Greytown's Soldiers Memorial Park did not go ahead after residents living near the park opposed the proposal in 2010.