Perth's iconic former Piccadilly Cinemas would be converted into retail space under a $12 million redevelopment proposed by the owners of the complex.

Proposal documents submitted to the City of Perth revealed the three existing cinemas and foyer area would make way for a "main retail tenancy".

But the proponents said the work would be carried out in a way that would not "preclude future conversion of the tenancy back to a cinema".

The proposal would also see significant restoration work done to the Piccadilly Arcade.

The theatre closed in 2013 amid financial difficulties, asbestos concerns and decaying infrastructure, leaving the central business district without a cinema.

That ended 75 years of operation in which time the building was added to Western Australia's State Heritage Register after becoming one of Perth's best-known theatres.

The redevelopment proposal is due to go before the Perth council Tuesday night, with planning officers recommending it be given conditional approval.

Heritage support for renewed use

"The proposed redevelopment and refurbishment ... is considered to have an overall positive impact on the building allowing for critical upgrades and improvements to be undertaken," a report prepared for council stated.

"The ongoing adaptive re-use of the building will ensure the building will be viable in years to come while enabling the reinstatement of former uses, such as the cinemas, at some time in the future."

The report stated that despite the loss of the cinema, the redevelopment was seen to have an "overall positive impact on the cultural heritage significance of the place".

The removal of the cinemas was part of a broader refurbishment plan, which would also see the Hay Street and Murray Street Mall facades restored close to original appearance.

Heritage Perth executive director Richard Offen said many people would be sad to see the cinemas go but something needed to be done.

"You have got to look at it practically, there clearly is not sufficient business in town for a cinema at the moment," he said.

"As long as we don't lose this building but it is preserved and made useful, then that's a perfectly acceptable way forward.

"The best way to keep a building is to make it useful.

"There are plenty of other examples of where that is happening in the city centre, such as the Old Treasury Building."