Sydney-based developer HYG has invested an undisclosed sum into the Core Project Group (CPG) development 727 HQ on Hunter Street, which was officially ground-broken by Lord Mayor Nuatali Nelmes on Friday.

The ground breaking ceremony signified CPG starting construction on the 14-storey commercial high rise, with a development application lodged to raise the limit another two floors.

The project is HYG's first foray into the Newcastle market and spokesperson Tony Zhang said he hoped it to be their first of many.

"Newcastle is one of the most beautiful cities in Australia, and of course in the world. It is an amazing place to live in and work," he said.

"We believe Newcastle is quickly becoming one of the strongest metropolitan office markets in Australia with only a 1.8 per cent vacancy rate in the office market as of January 2021" (according to Colliers data).

The project is set to include more than 11,000 metres of commercial space to cater for up to 1000 employees, a rooftop terrace, two retail spaces, more than 200 car parks and end of trip facilities including ground floor showers and bike storage.

The site will also incorporate a Melbourne-style public laneway alongside the building connecting King and Hunter Streets, which will include artwork and decorative lighting.

The laneway was one of the first visions when CPG bought the former Newcastle City Holden site in 2015, which it has since developed into the Birdwood Precinct including the Holiday Inn Express, RSL Life Care residential aged facility and Creative Childcare.

Core Project Group's Courtney Knight said 727 HQ was the "jewel in the crown of this precinct".

"Both in its scale and its form, but also in its locality being right in the heart of this area," he said.

CPG is hoping to have the building complete by the end of 2022, when it will hand the keys over to HYG.

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