But the council has confirmed that there will still be a supermarket on level one of the “Market Square” building – despite one councillor questioning whether it could be relocated out of the precinct altogether.

InDaily reported last year that the council had slashed its Central Market Arcade project budget by nearly a quarter – $6.5 million – due to “reduced costs for returnable works”.

At the time, the council refused to say why it had cut spending, citing “commercial in confidence” negotiations.

A document since released from confidence shows the council made the saving in June last year when it transferred ownership of the proposed supermarket to Melbourne-based developer ICD Property – the company with which it is partnering for the redevelopment.

The document shows city ratepayers will now only spend $26.6 million on the arcade redevelopment (including a contingency allowance) – down from the previously reported $28 million.

The total cost of the redevelopment, which also includes a 37-storey tower with a hotel, apartments and offices, is $400 million.

According to the council’s guiding principles for the project – published ahead of it signing the contract with ICD Property in 2019 – the council would own a “retail shopping centre including supermarket and specialty shops, located across the ground and basement levels”.

The council’s director of city services, Tom McCready, said the agreement endorsed by the council in 2019 included a supermarket on level one.

“This has not changed,” he said.

InDaily asked McCready why the council later transferred ownership of the supermarket to ICD Property, but did not receive a response.

McCready did, however, confirm that the transfer was deducted from the council’s “returnable works” net cost.

“ICD Property is currently in negotiations to secure a suitable supermarket operator to complement the retail offering for this project,” he said.

A spokesperson for ICD Property said the developer had “always intended to take ownership of level one of Market Square, including the supermarket component”.

Asked why ICD did not take ownership of the supermarket when the original redevelopment contract was signed in 2019, the spokesperson said: “The agreement was written to provide flexibility on who would eventually own and manage the supermarket”.

“Possessing sole ownership of level one allows us to cohesively design all components of the floor to work together harmoniously and ultimately deliver a stronger offering for its users,” they said.

“We have received overwhelming response from all over the world in regards to the residences, office tower, supermarket, and hotel – and are working closely with all stakeholders to ensure the best outcome is reached in respect to each component.

“We are excited to make an announcement soon on a final supermarket tenant.”

But north ward councillor Phil Martin has questioned whether the supermarket could be relocated out of the Market Square complex altogether.

He has asked the council’s CEO, Clare Mockler, to provide him with any documents which might show whether the supermarket is proposed to be relocated to a site other than Market Square.

In an email to journalists this morning, Martin wrote: “I strongly believe it should not be located anywhere in the Grote Street Precinct other than on the site of the redeveloped arcade to be known as Market Square”.

A council spokesperson reiterated that the supermarket would be located on level one of Market Square as endorsed by the council.

Demolition of the existing circa-1960s Central Market Arcade is slated to start in November.

According to the council’s website, construction is expected to take three and a half years to complete.

In December, the council unanimously agreed to undertake an investigation into potential locations to run temporary supermarket services within the Central Market district while the redevelopment is underway.

A council spokesperson said the investigation is ongoing.