The city administration is collaborating with real-estate developer SRV Kinnisvara and construction company Merko Ehitus on the 700 million kroon ($41.17 million) reconstruction of Viru Square, Tallinn's central shopping plaza.
Building work is due to start in April and to be completed in 2004.
Toomas Annus, chief executive of Merko Ehitus, said the area would see "hellish" traffic congestion this summer as underground communication networks were rerouted.
The complex will consist of a two-story shopping center containing around 70 shops plus restaurants and cafes, as well as an office building, a cultural center, luxury apartments and an underground bus terminal able to handle 85 buses per hour.
Three tube-like bridges will connect the complex with other buildings located around the square.
"Until now the look of the square has been a disaster," commented SRV Kinnisvara board member Indrek Toome, whose job has included maintaining cooperation with four successive city governments.
SRV Kinnisvara expects about 30,000 people will visit the new 25,000 square meter mall daily.
Some aspects of the project remain up in the air, however.
"Launching the bus terminal depends upon the city administration and so do the gas and electricity communications under the square," said Alvar Ild, SRV Kinnisvara's managing director.
Agreement on the cultural center has also yet to be reached.
SRV Kinnisvara, which also has a stake in the Hotel Viru Limited together with its shopping complex, won the right to develop the square in a public tender.
Merko Ehitus and SRV Kinnisvara then formed a joint company called Viru Valjaku Arenduse OU and bought the square last June for 65 million kroons. "The total cost of the project is about 700 million kroons," said Ild.
For its part the city has arranged a long-term, 200 million kroon loan from Eesti Uhispank to finance reconstruction of underground communication systems, the bus station and the overhead tunnel system.
The square dates back to 1967, when a new hotel was constructed on the site.
Previously the area contained a tram terminal and before that was built up with wooden houses. At the moment, the 10,000 square meter area near the hotel is used as a parking lot.
There has already been keen interest from enterprises interested in using the renewed Viru center, said Ild.
"Mostly those are Estonian companies," he said. Some are now being asked to assist with funding the development.