After years of speculation and months of consultation, the University of Tasmania (UTAS) has decided to "develop a city-centric campus" in Hobart's CBD.

Key points: UTAS will move the rest of their southern campus into the city

UTAS will move the rest of their southern campus into the city It will retain ownership of the Sandy Bay campus

It will retain ownership of the Sandy Bay campus Small Business Council is concerned it will have a detrimental effect on business

The long-awaited decision was announced late this afternoon after a meeting of the University of Tasmania Council in Burnie, in the state's north-west.

In a statement this afternoon, UTAS said the move would cost $600 million.

An earlier estimate from a University spokesman put the cost at $445 million.

The other option considered by the university — upgrading the existing Sandy Bay campus — would have cost $570 million.

UTAS said it would maintain its ownership of the Sandy Bay campus.

It already owns a significant amount of real estate in the city, including Menzies Institute for Medical Research, the former Midcity and Fountainside hotels and the Institute for Marine and Antarctic Studies.

UTAS said it would focus on designing a campus that meets the needs of staff and the "21st century student", improves access to education and supports cultural and economic development of the state.

"This will be a long, thorough and deliberative process. We will consult carefully along the way to produce a campus which is a source of great pride for both our university community and the people of greater Hobart," Chancellor Michael Field said in a statement.

Vice-Chancellor Professor Rufus Black said UTAS would address community concerns about the new campus's design and traffic management.

"We know how passionate people are about the city. We see a future campus in which there is a mix of built and green spaces, and of beautiful buildings that are highly permeable and inviting for both our staff, students and broader community," he said.

'This is not the place for a university'

UTAS also said it had proposed to make a compact with the Hobart City Council to deliver the equivalent, or more, of the general rate on its inner-city buildings for the next decade.

The decision was welcomed by Hobart's Lord Mayor Anna Reynolds.

"We understand the significance of this to the Hobart community and the importance of getting the planning and delivery of this transition right," she said.

"The council has been working over a number of years to familiarise itself with the character of other university cities.

"In 2017, members of council visited Freiburg, Cambridge and a University Cities conference that helped to gain an understanding of how a move might impact activity and movement throughout the city."

Mark Berry from the Real Estate Institute of Tasmania said it was "very exciting for Hobart".

"I think with the university moving in, it's going to revitalise the city even further than what's already been occurring over the last couple of years," he said.

But not everyone was happy.

Small Business Council chief Robert Mallett said he could not believe the university would "set up shop in the middle of the state's largest CBD".

"This is not the place for a university," he said.

"It's already having a deleterious affect on business in general with the level of student accommodation that's in the city - and to the move the university into the city holus-bolus - I think is a terrible decision.

"The evidence doesn't show at the moment that the current student population are actually providing any significant benefit to the traders within the city of Hobart at all."