Melbourne's GPO is set to undergo another costly redevelopment as the $81 million premium retail centre battles competition from the new Emporium centre under construction nearby on the old Myer site.
But owner ISPT said the GPO was "not closing" and would "definitely not" become a hotel, denying claims on social media that the retail precinct was "dead" and plans were under way to transform the heritage-listed property into boutique accommodation.
"It will continue as retail," ISPT chief executive Darryl Browning said. "We certainly are looking at remixing and redevelopment options."
The new plans come after the superannuation fund recently spent $3 million on heritage work on the landmark building's facade and roof.
The retail centre has reportedly struggled with vacancy problems since opening in 2004. Large chunks of the centre were empty when Fairfax Media visited on Thursday afternoon while some tenants were advertising steep discounts.
ISPT's website shows that the centre has nine empty shops covering 670 square metres, most on level one. Alice Giblin, manager of fashion boutique Life With Bird, said it was difficult trading on the first floor next to two large vacant shops.
"We've seen a lot of stores come and go - mostly go," she said.
Industry sources say the ground floor - home to popular fashion labels such as Ben Sherman - would be generating strong revenue for ISPT but the upper levels were struggling to attract or hold tenants.
Mr Browning said the GPO was also facing competition from the "fairly aggressive" Emporium development under construction next door. Set to open later this year, the $1.16 billion Emporium project promises 225 stores including international retailers and luxury brands.