The development also marks the partial retirement after 49 years in the motor trade of Auto Court owner Neil Cottle, but son Nelson will continue the family's car sales connection from a new but smaller still-to-be-determined site.
Mr Cottle said the business was being scaled back in reaction to new restrictions from the previous Government on exhaust emissions allowed by imported used cars.
The first stage was introduced on December 31, 2007, but starts to bite from December 31 this year, when tougher restrictions are imposed, which Mr Cottle said would mean half the current range of imported cars would not qualify.
He said the policy would not reduce emissions, because drivers would end up retaining older cars for longer.
Car prices would rise and many could not afford to trade up.
"If they had done nothing, those cars would have been phased out over five years," Mr Cottle said.
"Selling cars on a premises of this size is no longer viable," said Nelson Cottle.
The company owned about 0.5ha on the corner of Crawford St and Andersons Bay Rd including the former Rent-a-Dent and Caltex service station buildings.
They plan to add an extra 350sq m to the Auto Court building, taking it to 1500sq m, while a new 1000sq m building would be built on the site of the former service station.
Mr Cottle said negotiations were being held with prospective tenants and work would start once tenants were confirmed.
Bulk retail outlets were starting to dominate that part of the city, and Mr Cottle said the proposed development fitted into that landscape.
