The 47 home complex will be built on the site of the former Tunnel ex-servicemen's club in North Street, Jarrow.
South Tyneside Housing Ventures Trust is working in partnership with construction firm Galliford Try Partnerships North to deliver the scheme.
The building will be on two and four storeys, developed in brick with areas of render.
It will have a traditional pitched timber framed roof with tiles to provide a classic look, blending with the surrounding development.
A car park for residents and visitors will also be located off Ormonde Road.
In addition, a private garden with seating areas will be developed to the east of the apartments.
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Brian Scott, Company Secretary of the Ventures Trust, said: "The development was given the go-ahead by South Tyneside Council's Planning Committee in February. The apartment block will consist of one and two bedroomed apartments that are self-contained, with their own front door, a kitchen, gas fired central heating and living area. A communal area on the ground floor will add to the atmosphere of a friendly, safe location to live."
Councillor Allan West said: "It's great to see construction get underway. The number of older households in the Borough continues to grow and schemes such as this are providing the much-needed quality of housing that older residents want and which helps to build sustainable communities."
Stephen McCoy, Managing Director with Galliford Try Partnerships North, added: "Working with regional housing providers to improve the choice and quality of property available to local communities is at the heart of our business. We are delighted to be working with the ventures trust."
All of the properties will be available for rent for over 55's.
The project is benefiting from £1m grant funding from the Homes and Communities Agency's Affordable Homes Programme and is scheduled for completion in October 2016.
(LM)
