Neutral Bay plaza plans collapse as major developments move ahead

9 November 2026

North Sydney Council’s ambitious plans to transform a car park in the heart of Neutral Bay into a public plaza have suffered a major setback after two property developers rejected the council’s terms for delivering the project.

The council has formally ended its procurement process for Grosvenor Plaza after both Coles Group and developer Arkadia refused to accept minimum commercial conditions for entering negotiations.

The failure leaves the long-awaited public plaza without a development partner or funding, even as major residential and commercial developments on adjoining properties continue to progress through the planning system.

The proposed plaza, which would replace the existing Grosvenor Lane car park with a largely pedestrianised public space and underground parking, is a centrepiece of the Neutral Bay Village Planning Study adopted in May 2024.

Council documents prepared for its 9 November meeting reveal that the procurement process, which began with four expressions of interest, ultimately produced just one formal tender.

That tender, submitted by Coles Group in partnership with Titanium, proposed to deliver the plaza and an 85-space underground public car park as part of the redevelopment of the adjoining Coles supermarket site.

However, an independent evaluation identified concerns about the project’s potential cost to the council, the allocation of financial risks, construction methodology and delivery timeframe.

“The commercial assessment identified concerns regarding the cost to Council and the allocation of risk, while the assessment of the delivery approach identified concerns regarding the proposed timeframe and clarity of the construction methodology,” the council report states.

The council rejected the tender in August but offered both Coles and Arkadia, which had participated in earlier stages of the process, an opportunity to enter direct negotiations.

Those negotiations were conditional on the developers accepting a set of minimum requirements designed to ensure the plaza could be delivered at no or low cost to ratepayers, with appropriate cost controls and financial protections.

“Neither Coles Group nor Arkadia accepted Council’s minimum negotiation parameters,” the report states.

“Accordingly, the precondition established by Council for commencing direct negotiations has not been satisfied and negotiations have not proceeded.”

Both developers rejected the conditions in September, bringing the procurement process to an end without an agreement.

“The procurement process has therefore reached its conclusion without an agreement for the delivery of Grosvenor Plaza,” the report states.

The report says the project remains unfunded, although the council remains committed to pursuing opportunities for its delivery.

PRIVATE DEVELOPMENTS PROGRESS

The setback comes as both developers pursue substantial redevelopment proposals for their neighbouring properties.

Coles is seeking planning approval for a mixed-use development at 41–53 Grosvenor Street comprising a seven and eight-storey building with approximately 78 apartments above a new supermarket and retail premises.

Its revised proposal also includes a four-level basement car park with 265 spaces, comprising 185 non-residential and 80 residential spaces.

The council supported the progression of the Coles planning proposal in April, subject to modifications including a maximum building height of 28 metres, with an additional three metres for rooftop structures, and measures to protect sunlight reaching the proposed plaza.

The NSW Department of Planning, Housing and Infrastructure subsequently issued a Gateway Determination on 23 October, allowing the rezoning proposal to advance towards public exhibition, subject to conditions.

Significantly, Coles confirmed in June that it was no longer proposing a voluntary planning agreement as the mechanism for delivering public benefits associated with its development.

Its earlier non-binding offer had included the construction of Grosvenor Plaza, the replacement underground public car park and upgrades to surrounding streets.

Instead, proposed public domain and frontage improvements are being addressed through draft planning controls.

Meanwhile, Arkadia is pursuing a separate redevelopment of properties along Military Road.

Its original proposal envisaged four mixed-use buildings ranging from nine to 12 storeys, together with a new 730sqm community centre, two publicly accessible pedestrian connections to Grosvenor Plaza and footpath improvements.

North Sydney Council rejected the proposal in September 2025, citing concerns about building design, site isolation, public spaces and community facilities.

However, following a rezoning review, the Sydney North Planning Panel determined in February that the proposal had sufficient strategic merit to progress, subject to significant revisions.

The panel called for further consideration of building setbacks, pedestrian connections, community facilities and affordable housing contributions.

The final form and timing of Arkadia’s revised proposal remain uncertain.

NEW PLANNING CONTROLS

Despite the failure to secure a development agreement for Grosvenor Plaza, council officers are recommending new planning controls intended to guide both adjoining developments and preserve the possibility of delivering the plaza in future.

The proposed amendments to the North Sydney Development Control Plan would establish detailed requirements for building setbacks, heights, pedestrian access, public spaces, landscaping and solar protection.

They are intended to ensure that private development does not compromise the longer-term vision for a pedestrian-friendly town centre.

“The proposed DCP provisions will guide the future built form of the sites and help ensure that key built form and design issues are appropriately addressed at the future Development Application (DA) stage,” the planning report states.

The council is being asked to place the proposed controls on public exhibition for at least 28 days, alongside the Coles planning proposal.

The planning and procurement processes are legally separate, meaning the developers can continue to pursue planning approvals despite the absence of an agreement to deliver the plaza.

“The procurement process and the statutory planning processes are separate,” the procurement report states.

“Accordingly, while this particular procurement pathway has concluded, opportunities for the future development of Grosvenor Plaza through available planning pathways are not precluded.”

Council officers maintain that the procurement failure does not mean Grosvenor Plaza cannot eventually proceed.

“The conclusion of this procurement process does not mean that the future Grosvenor Plaza cannot be delivered,” the report states.

However, no alternative delivery arrangement has been identified, and the council has not committed funding for the project.

UPDATE:

Council insists on public benefits as it explores alternative plaza plans

North Sydney Council has reaffirmed that it will not permit construction on council-owned land adjoining the proposed Grosvenor Plaza without corresponding public benefits, while agreeing to investigate alternative ways of delivering the project.

At its 9 November meeting, councillors adopted amendments proposed by mayor Zoë Baker calling on Coles to submit a fresh offer for a voluntary planning agreement (VPA), despite the collapse of negotiations over the plaza.

The council also resolved to write to the NSW Department of Planning, arguing that its earlier support for the Coles redevelopment was contingent on the public benefits outlined in the company’s original offer.

The letter will ask that any approval of the planning proposal be conditional on delivery of at least the pedestrianised plaza and associated public domain improvements.

Baker’s amendments emphasised that the council was under no obligation to approve construction on its land, including underground works associated with the adjoining private development.

Councillor MaryAnn Beregi supported the strengthened position.

“It’s owned by the community under the care and control of council, and there’s no building unless there’s benefit,” she said.

Councillor Shannon Welch also supported the amendments, arguing that the scale of the proposed private development warranted corresponding investment in public space.

“If we’re looking at uplift and if we’re looking at the kind of development that Coles are proposing … we need to have a proper public plaza,” she said.

The council also agreed to extend the public exhibition arrangements for the proposed development controls to allow submissions until at least 15 February 2027, following concerns that a consultation period over the Christmas holidays would limit community participation.

Speaking at the earlier public forum, Cremorne resident and former property development executive Meredith Trevelyan-Jones urged councillors to reconsider whether expensive underground parking was essential to the project.

She said Coles had previously estimated the underground car park would cost around $18 million, while a standalone council project could potentially cost $35 million to $40 million.

“Let’s re-look at what we could do with the site unconstrained by the requirement for expensive underground parking,” she said.

“Some people will be distressed that the tender process has failed … but I’m not distressed. This is a great opportunity.”

Trevelyan-Jones suggested exploring a retail laneway precinct, green space and a possible design competition.

Councillors subsequently adopted a separate motion requesting a report on options for progressing public domain improvements, including the plaza, independently of developments on adjoining properties.

Beregi said the council should examine alternatives involving both the surface and underground portions of its land.

“We should be looking to move forward on this, irrespective of what’s happening on either side of the plaza,” she said.

The decisions leave open two potential paths for Grosvenor Plaza: securing renewed commitments from Coles or pursuing an alternative development model for the council-owned site.