The historic Goninan train factory at Broadmeadow will make way for a massive new housing and hotel precinct under plans being discussed by the developer, council and NSW government.
The 16-hectare site is among 10 precincts the government said on Monday would receive accelerated rezoning assessments to "unlock" housing supply.
The Department of Planning would not disclose the land in its sights, but the Newcastle Herald understands the adjoining City of Newcastle depot in Turton Road could form part of the Goninan rezoning proposal.
The rail maintenance depot behind Hunter School of the Performing Arts also could be included in the government rezoning program, which covers nine suburbs in Sydney and Broadmeadow.
A GDI Property Group trust bought the Goninan site in 2014 and leased it back to the train company, now known as UGL, on a 10-year lease with a five-year option.
GDI has been working with the council and government on rezoning the site for at least 1500 dwellings.
"We're heavily involved in the rezoning," managing director Steve Gillard said.
"We think it's something with huge potential for Newcastle and we're working with all the parties.
"At the moment we have a tenant and we're delighted to have that tenant."
The Herald has been told UGL will take up the option of extending its lease to 2029.
The company has a long-term contract to maintain the government's new Mariyung train fleet but will do so from a new state-built workshop on the Central Coast.
Goninan moved to Broadmeadow in 1919 and manufactured the state's Tangara carriages there in the 1980s and 1990s.
Premier Dominic Perrottet announced on Monday that the government would initiate rezonings in seven suburbs, including Broadmeadow, and assess rezoning applications in another three.
Many of the nine other suburbs are in western or southern Sydney. The government plans to complete the rezonings by June 2024.
The Broadmeadow rezonings, which could include the former gasworks site in Chatham Road, are not part of the proposed Hunter Park sports, entertainment and residential precinct.
The Department of Planning's Hunter Regional Plan 2041, published on Friday, says the Broadmeadow "growth area" can "deliver a range of affordable and diverse housing options".
"Land in and surrounding the Locomotive Precinct (an item of state heritage significance) will be investigated for potential housing, employment or unique cultural tourism opportunities," it says.
"Land north of Griffiths Road including properties in Hamilton North, the Goninan's site and other industrial assets on Clyde St and Chatham Rd could revitalise ... the northern gateway of Broadmeadow.
"These brownfield sites can provide new walking and cycling connections and affordable housing within easy walking reach of daily needs and local social hubs."
The government says the $73 million Rezoning Pathways Program will "unlock" an extra 70,000 new dwellings in Sydney and Newcastle.
Mr Perrottet said the government was "throwing everything at getting more houses built".
Business Hunter chief Bob Hawes welcomed steps to address "critical" housing shortages in the region.
"There's a great deal of opportunity to be leveraged around Hunter Park, and we welcome any efforts to expedite the delivery of outcomes at this site," he said.
But Mr Hawes echoed the concerns of other Hunter advocacy groups the Herald spoke to on Monday when he said the government had faster options for relieving the lack of housing supply.
"It's worth noting, through the collective efforts of groups like the Hunter Planning Alliance, that there are a range of identifiable, shovel-ready projects capable of relieving housing pressure in the shorter term.
"These projects have stalled owing to the requirement to fund upfront certain infrastructure.
"In the spirit of 'throwing everything at getting more houses built' we'd urge the government to consider the array of opportunities available owing to their more immediate prospects to provide sites for housing."
The Lower Hunter and Greater Newcastle commissioner on the government's Greater Cities Commission, Matt Endacott, said Broadmeadow was "one of the catalyst areas that can take more housing close to new jobs".
"The commission knows that we need more homes in greater Newcastle faster," he said.
UGL's parent company, CIMIC, declined to comment.
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