Demolition work started this month for the long-awaited redevelopment of the former Tatts Club building, and earlier this month at the old Terminus Hotel.

It follows a Newcastle City Council decision last month to approve plans to turn two other sites in Watt Street into serviced apartments.

Cafes, restaurants and a wine bar have opened their doors in anticipation of the area's approaching population boom, which will include residents from Mirvac's redevelopment of the Royal Newcastle Hospital site.

Restaurateurs said they also wanted to cash in on a recent Newcastle City Council decision to reopen Hunter Street Mall to traffic and on Renew Newcastle projects.

One of the most recent additions is Sprocket; like Bocados, it has recently applied for a liquor licence.

Co-owner Chelsea Daoust said two main issues stood in the way of the stretch taking off: paid parking and the railway.

"I personally think the rail line should go, how great would it be if it was all just opened up," she said.

"It would obviously hurt us in the long run but it just depends on what replaces it."

The owners of the old Tatts building, Chrysalis Holdings Ptd Ltd, gained approval in 2003 for a nine-storey commercial-residential building with 64 units.

The building, which is next to the Great Northern Hotel, is also known as Surf City.

It is understood they have to start work on the proposed Lotus Apartments before their approval expires.

Newcastle City Council also approved plans last month for a refurbishment and construction next door of 36 serviced apartments, car parking, restaurant and conference rooms.

Work is also under way on demolition of the Wirraway flats on the corner of Watt Street and Shortland Esplanade to make way for a 10-storey apartment building.

The former Terminus Hotel and its neighbour the South British Insurance building on the corner of Scott and Bolton streets will become an eight-level apartment block.