The owners of the Menier Chocolate Factory, one of London's most successful small theatres and something of a musical theatre hit factory, have announced plans to build a 300-seat theatre adjacent to their current site, with the possibility that the new theatre would be operated by Menier artistic director David Babani.

Speaking to The Stage newspaper, property developer Don Riley, who liaises between the building's operators and its Russian owners, said that the property to the west of the theatre's current site, which is operated as a car park, would be developed to include a Menier Two basement theatre, gallery and cafe, rehearsal rooms, offices and a rocket-shaped apartment block, all topped with a "museum of vodka". The development, which is subject to planning permission, would also feature a ground-floor restaurant.

Property developers Henry George Holdings say they view the inclusion of an artistic space as key factor in increasing the value of residential and commercial property in the scheme. They estimate a "successful arts venue" will provide a 15% premium on the site compared to building a chain restaurant or supermarket at the base of the development.

The inclusion of 10,000 square metres of commercial space above the venue, spread across seven floors, will allow the development of 1,500 square metres of "high-class artistic space".

Speaking about the plans David Babani said: "We are in continuing discussions with Don Riley... regarding the plans to develop the space next door. I look forward with excitement to hearing more news and being involved with the ongoing developments."

Designed by Nikata Yaveyn of St Petersburg architecture firm Studio 44, whose previous projects have included Russia's State Hermitage Museum and Moscow State University, plans will be put before Southwark Council in the coming weeks, with developers telling The Stage they hope full planning permission will be obtained by mid-2011 with the new theatre opening as early as 2014.

Currently in previews, the Menier's Christmas revival of The Invisible Man opens on 24 November (previews from 13 November 2010). The retelling of HG Wells’ classic tale, adapted by Ken Hill, will play at the venue until 13 February 2011. Cast for the show, which is directed by Ian Talbot, includes triple Olivier award winner Maria Friedman, John Gordon Sinclair, Natalie Casey and Gary Wilmot.