Doma Group has lodged revised plans for a nine-storey building in Merewether Street after buying part of the former rail corridor last year.
The $22 million redevelopment replaces an earlier plan for a 48-unit building on a smaller block next to the former rail line.
The proposal for the expanded site includes 60 units, 112 parking spots and 2000 square metres of commercial space, a significant increase on the original plan.
Doma has started demolishing the Ice Box bottle shop on the site after gaining approval for this work in 2017.
The Newcastle Herald reported last week that the median apartment price across Newcastle and Lake Macquarie had fallen almost 10 per cent from its peak more than 12 months ago, raising doubts about whether some big-ticket CBD redevelopment proposals will proceed.
But Doma's general manager of development, Gavin Edgar, said on Monday that he was not concerned about fluctuations in the market as Newcastle's population was forecast to grow.
"There will continue to be demand for new dwellings, and we're going to meet that demand," he said.
"It's a scale and size of project that's not going to be that ambitious.
"I'm not interested in what unit or house prices are like the last 12 hours. That's why I'm out there demolishing the building now."
He said the University of Newcastle's plans for a Honeysuckle campus would also drive demand for more units.
A section of rail corridor behind the Doma development would be used for parking but "could be amalgamated with sites on either side in the future".
Hunter developer GWH lodged plans this month for an eight-storey office building on an adjoining section of the former rail corridor known as Darby Plaza.
That $19 million project was originally intended to include units, but the submitted plans are for 8000 square metres of office space.
City of Newcastle councillors voted last month to proceed with the rezoning for tourism purposes of another section of the rail corridor it owns in Wharf Road to allow for a four-storey building.
A report to councillors said the site at 233 Wharf Road would continue to be used as a car park in the short to medium term, but "use of the land for a multi-purpose community space is now being investigated".