Members of the public were evacuated and shouting could be heard.
Shop assistant Amber Griggs told ABC News police have been coming into her store and telling everyone to be quiet.
"We had quite a few customers, but we were instructed to send them out the back to go down our fire escape," she said.
"People just kept running into our store. the music is quite loud. We had no idea what was actually happening on the street.
"Then suddenly these police came up pushing us to the back of the store. Everybody was really frantic, people were screaming."
ABC reported that officers were moving in on the gunman, who is reportedly not wearing a shirt.
"He's just wearing shorts. He's carrying a revolver. And he was holding that to his chin," said ABC reported Dea Clark.
Another witness told Sky News that the gunman was tall, dark and had "crazy eyes".
"The look on his face pretty much said it all. He had crazy eyes," she said.
Members of the public are not able to enter or leave the building, leaving many shoppers and workers trapped inside as police close in.
- nzherald.co.nz
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