Planning controls that support the proposed $250-million redevelopment of Melbourne’s iconic Queen Victoria Market have been approved by Victorian planning minister, Richard Wynne.

The City of Melbourne has led plans for the site’s redevelopment since last year, when the promise of a transformation formed a key part of lord mayor Robert Doyle’s election campaign.

As it stands, stallholders at the 139-year-old market do not have access to running water, electricity, or cold storage facilities. The council-led transformation will deliver these amenities – as well as modern toilets, upgraded car parking, and increased pedestrian access – to the site.

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“When you look at some of the improvements we’re making, they’re so fundamental,” says Doyle. “Hot and cold water, cold storage, power, things that councils have been talking about since the early 1900s, and bemoaning in 1953, that there should be facilities here. But there are not. Now [there] will be.”

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Although these new approvals pave the way for the contentious redevelopment project, a 196-metre tower proposed by the council in initial plans has been slashed by new height restrictions. The state government has ruled that the Bates Smart- and Six Degrees Architects-designed tower and low-rise community hub will not be able to exceed 125 metres. This allows for 40 storeys – a far cry from the 60 initially proposed by the City of Melbourne.

Draft plans for the tower originally included residential apartments (including 56 affordable housing units), a hotel, a childcare centre, a health and family services centre, an art gallery and artist spaces, a community kitchen, and roughly 2,500 square metres of open public space. This latter included the urban redevelopment of surrounding laneways and updated pedestrian access to the market site.

Following the height restrictions, Doyle suggests that there will no longer be capacity for the proposed affordable housing units. However, the hotel, the childcare facilities, and the community facilities are still likely to go ahead.

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Richard Wynne says that the restrictions placed around the market will ensure its heritage and patina are respected for future generations.

“The historic sheds, the delicatessen area, the food hall and the meat and fish areas will all be retained,” he said on Tuesday.

“That’s why you have to get the planning of this right – we’re very comfortable that we’ve got significant heritage protection and also the height control that I have put in place will ensure the integrity of all of the built form from here.”

Now that the development has been approved, the next stage is to start construction on the temporary pavilion that will house market traders while the redevelopment is underway.

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Construction is set to commence as soon as September on a 260-metre long, 16-metre wide, open-air trading floor by Breathe Architecture. The temporary trading space will be topped off with a $3.6-million commercial greenhouse.

With 10 million visitors each year, Queen Victoria Market is the state’s busiest tourist attraction. Planning minister Richard Wynne is adamant that Tuesday’s decision will provide adequate protections for the market’s integrity.

“Queen Victoria Market and its history [means] so much to so many people,” he said.

“We will never compromise it.”