The owner of an iconic party supply business in Adelaide's south says he will be closing for good after the SA Government gave him until March 1 to vacate the site for a major intersection upgrade.

Key points: An iconic Adelaide store is to be demolished to make way for an intersection upgrade

An iconic Adelaide store is to be demolished to make way for an intersection upgrade The owner says the government's compensation preference is to buy out the business

The owner says the government's compensation preference is to buy out the business However, the Transport Minister says relocation is still an option but it is up to the owner of the store

Peter Van The Party Man, a family-run store selling party supplies from Panorama for more than 40 years, is to be demolished after being compulsorily acquired with an adjacent house and a closed petrol station on Goodwood Road.

"In late 2019 we were told by the DPTI [Department of Planning, Transport and Infrastructure] we have to relocate and find a place to move," owner Mark Van told ABC Radio Adelaide's Breakfast program.

"Then on the 15th of January my solicitor got a letter saying they wanted to extinguish the business.

"It worked out cheaper for them to buy us out than to move us."

He said the letter to his solicitor from the State Government reiterated that the compensation payable to the business would be assessed on an "extinguishable basis" and they wanted the site vacated by March 1.

Mark Van had been displaying a sign promising to relocate in February. ( ABC Radio Adelaide: Malcolm Sutton )

At odds over valuation

The $60 million project to upgrade and widen the intersection between Goodwood, Springbank and Daws Roads is expected to be completed by the end of 2021.

Mr Van has been displaying a sign outside his high visibility business since late 2019 promising to relocate in February this year.

He had previously told the ABC about efforts to find a new location, for which he had been receiving assistance from the State Government.

At the same time, however, there was a discrepancy about how much his business was worth should the Government decide to buy him out instead.

DPTI undertook a valuation but Mr Van wanted an independent valuation, for which the Government has given him money to pay for.

Mr Van said that process was ongoing.

The store has been selling unique party supplies to Adelaideans for about 40 years. ( ABC Radio Adelaide: Malcolm Sutton )

Department 'surprised' by closure

Transport Minster Stephen Knoll said it came as a "surprise" to the Government that Mr Van announced this week that he would be selling up and closing.

"The relocation for Mark's business was still on the table yesterday," he said.

"In fact, the department was seeking a meeting with him about it and had identified an alternative premises."

Mr Knoll admitted the estimated costs for relocating the business were high, although whether it would be more than buying the business outright remained "vague" because the valuation process had not been finalised.

"Without knowing the one figure, it's impossible to know whether the relocation is more expensive," he said.

He said compensation would either be paid to Mr Van for closing the business, or "the people moving the business", but it was a commercial decision for Mr Van if he chose to close or relocate.

The intersection upgrade is expected to be finished in just under two years. ( ABC Radio Adelaide: Malcolm Sutton )

Saying goodbye after 40 years

Mr Van said that the iconic nature of his business meant any move would incur high advertising costs on top of extensive moving costs and he believed it was issues like these that made it more favourable for the Government if he closed.

"It's very sad because we've been part of the Adelaide scene for over 40 years," he said.

"We've helped a lot of the Country Women's Associations and all the schools with their fundraising and whatever, and my staff and customers have been so good to me over the years.

"We've been a fairly happy business over time and I guess it's what happens to all good businesses at one time: there's got to be an end to it."

He told his staff in an "emotional" moment earlier in the week of the imminent closure.

"They've been very good to me and they're going to stick by me through this winding-up stage," Mr Van said.