The old Drift in the City building, in Isambard Brunel Road, has been knocked down after weeks of work and months of planning.
The eyesore had been empty since February 2013 – with the exception of a brief six-month stint.
And the removal of the ageing building has created a new access and view of Portsmouth’s war memorial in Guildhall Square.
Civic chiefs now hope to make the most of the rejuvenated space in the coming months by installing new lighting and furniture.
Councillor Ben Dowling, the city’s regeneration boss, said it was ‘fantastic’ and added: ‘This has opened up views of the war memorial that the people of Portsmouth haven’t been able to enjoy for decades.’
However, the revamp has not impressed some councillors, who felt the demolition was a ‘wasted opportunity’ for the city.
Councillor Luke Stubbs claimed the building could still have been rented out, if cash had been pumped in to revamp it.
Cllr Stubbs, Portsmouth’s deputy Tory leader, said: ‘The city centre as a whole looks run down and improvements to tidy it up are long overdue.
‘When the Conservatives set aside the money to do some work for this, the Liberal Democrats denounced the whole thing as a vanity project.’
Tory boss Councillor Donna Jones previously said demolishing the building was ‘short-sighted’, adding the site had been worth ‘between £300,000 and £400,000’.
‘It is a big space and it is worth doing up,’ she said. 'Here we have a proposal to spend £150,000 to make a walkway when we could make £300,000 on it, or make £75,000 a year renting it out.’
Cllr Dowling stood by the the Lib Dem administration’s decision, saying it was the first step in a plan to improve the area, which included future landscaping work.
‘We're doing everything we can to make Portsmouth a better place to live and work and the quality of the public realm in the city centre is a really important part of what we're doing,’ Cllr Dowling added.