IRIS Capital's East End development will go back for planning approval if the company is able to find an operator for an “upmarket” hotel envisaged for the former David Jones building.
In a surprise announcement on Friday, the developer revealed it was testing market interest for a 110-room hotel to occupy the landmark building.
The company confirmed its intention to build 228 units across three buildings at the site were unaffected by the hotel proposal, but 16 “large apartments” originally planned to be built at the former David Jones building would be scrapped to make way for the hotel.
Iris chief executive Sam Arnaout said if an “expression of interest” campaign to find a hotel operator was successful, the company would need to modify the development application, requiring approval from the Joint Regional Planning Panel.
Mr Arnaout said the 16 units in the David Jones building were never released to the market because “we were unresolved if that was the best option for that space”.
“We feel that there’s a far better outcome that can be achieved,” he said.
“[The hotel] will respect the building more. It’s a much better use for it than just 16 apartments.”
Newcastle has seen two major hotel proposals in the past two years, with Doma Group’s plans to build the Little National Hotel in Honeysuckle, and the Newcastle Herald reporting in 2016 plans were lodged for a Holiday Inn at the former Holden car yard on King Street in Newcastle West.
Hotel magnate Jerry Schwartz also revealed in the Herald in February that he had put in a $3.33 million bid for the former Newcastle post office.
“We’ve got a real shortfall of rooms in Newcastle,” Mr Arnaout said, explaining the shift to the hotel proposal.
“Tourism is coming up in Newcastle – the light rail is being built, cruise ships are coming in and the airport is getting busier.”
Colliers International will run the expression of interest campaign, and in a statement said it would “approach experienced boutique hotel operators”.
Asked how unit sales were progressing, Mr Arnaout said he was “more than satisfied” with the market response to stage one of the development.
He said more than three quarters of the available units in stage one had been sold.
The mall redevelopment is split into four stages, with the first new building to be built at King and Perkins streets.
A community consultation panel has been set up to manage the effect of the construction works, including representatives from Iris and council officers.
Iris said it wants the hotel to be operating at the site in 2020.
