New South Wales retailers expressed indignation on Tuesday as property group GPT announced its decision to abandon its $600 million Newcastle inner-city development project and blamed the state government for refusing to support the Hunter Development Corporation (HDC) renewal report.

The revelation came following luxury retailer David Jones' disclosure that it would shut down its store in the CBD by January next year, further devastating the business prospects of many retailers in the area.

One retailer predicted that as a direct consequence of GPT's decision, the surrounding businesses would suffer and many people would lose their jobs.

Another shop keeper lamented that most of the business operations in the area were just starting up but many were already experiencing considerable growths until the gloomy development brought about by GPT's and David Jones's hasty departure.

Hunter Business Chamber president Brett Darwin said that the NSW government must take responsibility for the GPT pull out for deliberately sitting on the HDC report.

Mr Darwin scored the state authorities for passing up on the opportunity for further growth in the CBD when they elected to "procrastinate to a point where GPT have said they can't wait any longer they've got other things to do."

GPT's head of retail Mark Fookes said that as a result of the project meltdown, the company's CBD properties would be put in the market, adding that "we expect that we would sell down all of our holdings over time."

Newcastle Lord Mayor Johan Tate decried that setback wasted the council's substantial investment in the centre as all investment opportunities in the area had actually depended on the GPT development project.

Mr Tate said that instead of witnessing major breakthroughs in the area, "what we'll see now is more empty buildings."