A Newcastle development company plans to turn a former car auction house in Parry Street into office space in a move designed to sidestep the high cost of building from scratch.
Altim Property, the firm behind the nearby Swift and Arbour office projects in Hunter Street, has lodged a $4 million development application for the former Gamers Motor Auctions building.
The building was intended as the future home of Musos Corner, but owner Sandra Lindsay sold the instrument shop to Cedar Mill Group last month.
Altim bought the two-storey building and a neighbouring Parry Street property for $7.5 million in January and plans to convert it into 12 "funky" commercial spaces aimed at creative professionals.
The building, to be known as Key West, will have a central light well and ground-floor parking.
Director Ian Summers said reinventing old buildings had become a more attractive option as construction costs rose.
"There's a lot more value in built-form assets," he said.
"Adaptive reuse is not always easy, but if you can find the right building. You need to get creative."
The company has also remodelled commercial buildings in its 11-unit "Parkside" light industrial development in Broadmeadow Road, Broadmeadow.
Mr Summers agreed with a recent Urban Development Institute of Australia report which found the construction cost of a typical two-bedroom apartment in Newcastle was $1.1 million, well above the $850,000 the market was willing to pay.
"There's a time in the future when residential will work again, but that report was spot on," he said.
Mr Summers said Altim had begun demolishing the Arbour site at 810 Hunter Street and planned to start marketing the office space soon.
The Swift office building at 643 Hunter Street is in an advanced stage of construction.
