A search is continuing for four other people missing at the site.
Reports say an initial collapse caused a crane to fall, bringing down more of the multi-storey building.
At least 20 people were treated for injuries following the incident in Ramat Hahayil, a commercial area in the north of the city.
Pictures from the scene show clouds of dust rising from a huge crater, with large amounts of debris at the bottom.
Dozens of firefighters, rescue and security services were dispatched to the site to help the injured and search for those feared missing.
Israel's Haaretz newspaper quoted a fire service spokesman as saying there were "people buried beneath the sand".
Police moved people away from the area, fearing other parts of the building might also collapse.
The death toll after a car park collapsed while under construction in the Israeli city of Tel Aviv has risen to three, rescue workers say.