WORKS in a $700 million overhaul of the East End have entered their second phase on Monday as work begins on a 116-apartment building.
Iris Capital has begun work on the seven-story building bounded by Hunter, Wolfe King and Thorn streets, which will also feature ground floor commercial space and retail.
It follows preservation work on the former David Jones building. As part of the new works the facades of the Lyrique Theatre, Masonic Hall, Royal Exchange Hotel and Soul Pattinson Chemist will be preserved.
Chief executive Sam Arnaout said gems of the city's east would be revealed more fully in the works.
"The East End has so many incredible buildings that have formed the fabric of the city and we are very proud to restore these and return them to their former glory," he said.
"What once was the Lyrique Theatre will once again be a feature in the city's architecture.
"A laneway linking Wolfe and Thorn streets will unveil the theatre like never before and will see it become a landmark in the East End."
A 40km/h speed limit will replce the existing 10km/h limit under a council-approved streetscape plan that will also require blue stone footpaths, cobblestone laneways and al fresco dining areas be completed in the area.
"It will see Hunter Street revert to a traditional high street with kerb and guttering that better define usages and help attract more residents, students and visitors to the precinct," City of Newcastle director of infrastructure and property Ken Liddell said.
"Avenue tree-planting, increased public seating and footpaths with distinctive finishes and historical interpretation will encourage more outdoor dining and create a whole new welcoming feel with vastly improved connections between the harbour foreshore and Cathedral Park."
Deputy mayor Declan Clausen said stage two of the Iris Capital project beginning while stage one continued was a sign of confidence in Newcastle.
He described the two stages as "game changers" given how much of the mall they would incorporate.
"Woolworths' fit out of a boutique grocery store will start in July, marking the first return of a major retailer since David Jones closed in 2011," Cr Clausen said.
"The momentum of this development is unstoppable and provides hope for the mall traders that have done it so very tough for several decades since the rise of Westfield Kotara and Charlestown Square.
"A development application for a five-star hotel in the old David Jones building is likely to go to the Hunter and Central Coast Regional Planning Panel for determination in March, which will be the icing on the cake of the $700 million development."