The tech company Apple has been granted approval to build a new store in Melbourne’s Federation Square, sparking criticism that the public space has been overtaken by commercial interests.

The Andrews government announced the deal on Wednesday, saying it was part of a broader strategy to “reinvigorate” the square, which opened in 2002.

The Yarra Building on the site’s southern side will be demolished to make way for the double-storey store.

The Koorie Heritage Trust, which is now housed in that building, will move to the Alfred Deakin Building on the square’s northern side.

The new building will have a slightly smaller footprint, opening up 500 square metres of public space. The state government said it would be Apple’s first global flagship store in the southern hemisphere.

The announcement has drawn criticism from Melbourne residents, who say the square should be home to public events and cultural institutions like the Australian Centre for the Moving Image and the National Gallery of Victoria, which are both located there.

It has also played host to public concerts, a visit from Oprah Winfrey, and regular broadcasts of significant sporting events. It is also used for protests and public vigils.

The new store will be one of the first high-profile buildings to be fully powered by renewable energy from 2019.

“The new Apple store replacing the Yarra Building at Fed Square is radically different architecture and converts cultural/civic space to commercial,” the Greens councillor for the City of Melbourne, Rohan Leppert, said on Twitter. “And despite this being a public centre, the changes to the planning scheme have already been approved without any public process.”

The new Apple store replacing the Yarra building at Fed Square is radically different architecture and converts cultural/civic space to commercial. And despite this being a public centre, the changes to the planning scheme have already been approved without any public process. pic.twitter.com/9JkfjRGgiL — Rohan Leppert (@RohanLeppert) December 19, 2017

Federation Square was built after an architectural design competition, which was won by a consortium of the London architects Lab Architecture Studio, the Dutch firm Karres en Brands Landscape Architects, and the Melbourne architects Bates Smart.

The $450m scheme became the most awarded project in the history of the Victorian branch of the Royal Australian Institute of Architects, winning five awards in 2003, and has been both praised by visitors as a public meeting space and reviled by those who say it is ugly.

But it is a unique and stylistically consistent landmark, and critics of Wednesday’s decision the proposed design of the Apple store would be inconsistent with that overall design, as well as inconsistent with the square’s original purpose.

Fed Square is the closest Melbourne has come to creating a successful public space and it's pretty hard to see how an Apple store contributes to its civic and cultural objectives. Maybe the charter is just too loosely worded. — Ben Wilkie (@benvwilkie) December 20, 2017

I'm up to join the resistance to this appalling handover of Fed Square civic space to @Apple. What are you thinking @DanielAndrewsMP? — Tim Richards (@Aerohaveno) December 20, 2017

I'm all for capitalism, but this Apple Store at Fed Square business is a joke. No thanks. — Brett (@bcmc89) December 20, 2017

Re Melbourne Fed Square Apple Turnover (aka @FedSquare farce): this decision isn’t just selling out physical public space; it’s selling out an image so ingrained in the city it’s formed its new brand.

There is nothing sacred in neoliberal #Melbourne — Matt (@places_calling) December 20, 2017

The tourism minister, John Eren, said the store would bring “millions more visitors to Victoria” and breathe “new life” into Federation Square.

The trade minister, Philip Dalidakis, said the deal “reinforces Melbourne’s reputation as the undisputed tech capital of Australia and creates hundreds of ongoing jobs in the process”.

Prof Donald Bates, one of the original architects, disagreed with complaints that the store’s design would be incongruous.

“Apple Federation Square respects and expands on the original vision for the site, with more public space, extensive landscaping and better access to the river, allowing more people to enjoy this renowned civic, cultural and commercial hub,” Bates said.

Apple said the store would be a community “destination”, hosting daily free lessons on how to use the company’s products.

“We’re thrilled to move forward in the planning process for our new home in Melbourne’s Federation Square and would be honoured to call the world-class galleries and museums of Melbourne our neighbours,” Apple’s senior vice-president of retail, Angela Ahrendts, said in a statement.

The tech giant has been criticised for working conditions in the factories that manufacture its products and was accused of relying on students working illegal overtime to build its iPhone X.

Construction on the store is due to begin in 2019, with the doors opening in 2020.