Newcastle state MP Tim Crakanthorp intends to push for the preservation of a light rail corridor in Newcastle West to ensure high-rise developments do not prevent a future extension.
Recent property sales in the area, including the Dairy Farmers Corner site, have raised concerns about how development might impact a potential light rail extension.
While provision has been made alongside the Doma development and bus interchange for a future line, there is no such corridor between there and Tudor Street.
The government examined four potential extensions to Charlestown, Wallsend, Mayfield and John Hunter Hospital, which was deemed the "most suitable" route, in a strategic business case.
All four options ran from Newcastle Interchange parallel to the heavy rail line into the "centre of Tudor Street".
Transport for NSW's summary report of the business case says properties would be "impacted" between the heavy rail and Hunter Street, and suggested as next steps to "investigate the full impact on the roads and adjacent properties through alignment optimisation" and "reduce property impact through further study".
Mr Crakanthorp said even though an extension might be "some time away", it was "imperative" that work to preserve a corridor was "done now".
"We don't want to end up in a situation where the infrastructure becomes more complex and expensive because somebody else has snapped up needed land," he said.
"If the future corridors are built out this could greatly increase the cost of expanding the light rail and has the potential to kill any expansion.
"Let's get on and preserve the corridor now."
The entire block between the bus interchange and Railway Street has a 90-metre maximum building height.
Hunter Business Chamber CEO Bob Hawes said development in the area "could become a constraint to future extension of the light rail".
"The strategic business case recommended that challenges to a future extension continue to be monitored, so the current circumstances suggest that further planning measures should be pulled forward," he said.
"With the buoyancy in the property market and pace of development in the west end ... it may be time to move quickly on a review of the [business case] modelling, so that measures can be put in place to preserve the preferred corridor if required."
Transport for NSW said it would work with Newcastle council to "review any development proposals put forward" that "impact the preferred extension corridor".
"Transport has not been made aware of any development proposals for the corridor at this time," a spokesperson said.
Mr Crakanthorp said he would be "urging" the government to "prioritise" the extra analysis work and corridor preservation when parliament resumes.
One previously raised alternative would be to cut Sydney-Newcastle train services back to Broadmeadow and run light rail along the existing heavy rail corridor.
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