Department store operator David Jones Ltd (ASX:DJS) said on Friday that it has agreed for a 20-year extension of the lease agreement for the company's Karrinyup outlet in Perth, revealing that the new deal is "on attractive commercial terms in line with the more favourable David Jones leases."

The company said that the new lease with AMP Capital (ASX:AGF) would give David Jones an additional 30 percent space for its store in the Karrinyup Shopping Centre, raising its total expansion size to about 13,000 square metres.

The new deal would also oblige AMP to obtain development approval that would allow the existing David Jones store to move to a new site within the expanded Karrinyup Shopping Centre, which should provide an additional 50 percent space or up to 14,000 square metres.

David Jones said that the initial development application for the 13,000 square metre expansions was given the go signal by local authorities though it is still awaits for the nod coming from the Western Australian Planning Commission.

The company said that AMP gave its assurance that it is presently coordinating with the commission and the approval should be handed down shortly as both companies expressed confidence that the expansion project would meet its completion target of September 17 2013.

David Jones chief executive Paul Zahra is upbeat that Perth promises to be an area with substantial growth potential as he reported that "since 2008 we have locked in a proposed new store in Whitford, an option for a new store at the proposed Westfield Innaloo redevelopment, and an expanded Karrinyup store."

Mr Zahra said that the Karrinyup expansion gave the company the opportunity "to lock-in a dominant position in the high value, high growth northern Perth region."