The head of planning in the ACT has endorsed a $70 million, seven-storey hotel slated for Forrest as a good development and "a sign of confidence in this city".
But she has also flagged that rules around pre-consultation by developers on major projects may soon be tightened.
It comes as at least one resident has signalled he will appeal in the ACT Civil and Administrative Tribunal the decision to approve the hotel complex.
Inner South Canberra Community Council chair Gary Kent said the basis of any appeal would be the "total sham" of consultation around the development application and the premise that the suburbs could be treated the same as Canberra Avenue in terms of allowable building height.
"Certainly aspects of the decision are inexplicable and residents' groups, including the ISCC, are extremely concerned about the precedents it sets for planning in the inner-south," Mr Kent said.
However, director-general of the Environment, Planning and Sustainable Development, Dorte Ekelund, has backed the planning and land authority's decision to conditionally approve the seven-storey hotel on the site of the former Italo-Australian Club in Franklin Street.
"I think it's a fantastic location for a hotel," she said.
"It's very close to the Manuka group centre, to Manuka Oval and to Parliament House.
"It's an activity that obviously the proponent believed there was a demand for and it's in a location where there's a number of office spaces. It's quite close to a number of federal government departments so one would imagine there would be demand for visitors to want to stay in that locality, it's in walking distance to all those things.
Ms Ekelund has also denied leafy, heritage Forrest was being overdeveloped - or subject to "Gungahlin-isation" in the view of critics. She said parts of Forrest were "transitioning", with more commercial uses and medium-density housing.
"We do have regard to the character of an area when we determine development applications," she said.
"I think it's not healthy to try and freeze places in time and they should be able to respond to changing aspirations and demands of the community. I think you have to look at these issues in balance."
The Forrest Residents Group believes the developer, while meeting the letter of the law on pre-consultation, did not consult adequately. It is concerned Forrest is becoming busier and denser with smaller blocks approved, along the lines of the new suburbs of Gungahlin.
"It's not a solely residential area," Ms Ekelund said. "It has commercial buildings and medium-density residential, as well as detached residential dwellings.
"It's more a case of some people not wanting their area to get too busy and preferring it to be of a lower-key residential area, but it's also a commercial zone."
Labor MLA for Yerrabi, Michael Pettersson, has invited members of the Forrest Residents Group to go on a tour with him of Gungahlin to "experience everything the area has to offer".
"Gungahlin has a thriving community, with a mix of housing options attracting a range of people to the area – from first home buyers and young families to retirees and dream home buyers. And yes, that does mean different sized blocks," he said.
The Forrest hotel, meanwhile, has 227 rooms and a 500-seat function centre. The commercial zones development code allows for a maximum of two storeys. The seven-storey hotel was still approved because it was consistent with other higher-storey buildings on Canberra Avenue, the authority found.
Ms Ekelund said the hotel had "quite an attractive design" and left enough open space for the seven-storeys not to overwhelm the block.
"The design approach is like the 'village in the park' concept where there is lots of landscaping around it rather than built hard up to the boundaries," she said.
"So it didn't encroach unduly onto surrounding properties. We think the height actually works pretty well in this circumstance."
Ms Ekelund said pre-DA consultation for large projects was meant to help a developer work with the local community but she acknowledged it might need to be more prescriptive.
"We've never really dictated exactly what the form of the consultation should take. We generally think smart developers do good pre-consultation and work with the community," she said.
"However, we are actually looking at whether we should provide greater guidance on what we think good practice on pre-consultation may be."
Ms Ekelund did not want to comment directly on the consultation for the hotel other than to say the developer "met the requirements".