The City of York Council has agreed to occupy one of the oldest railway station buildings in the UK for its new 150,000 sq ft headquarters in the city.

York Investors — a joint venture between Buccleuch Property and local developer S Harrison — will house the council in the grade II-listed 1840s structure, along with a new open-plan area as part of a BREEAM “excellent”-rated refurbishment of the building.

Property company Buccleuch bought the property and surrounding site in 2005 and then brought in local expert S Harrison around a year ago to bid for the council headquarters.

The joint venture beat 11 bidders, including Aviva Investors, through the Official Journal of the European Union tender process, for what is thought to be one of the city’s biggest-ever occupational deals.

The council plans to rehouse staff spread across 16 buildings into the new complex, which will be the main customer centre for council service and should save money.

It could also house the council’s partner organisations and is likely to be completed by 2012.

The council will then buy the building, which is expected to cost no more than £32m to develop, from the joint venture.

The proposals have been backed by English Heritage and York Civic Trust.

Buccleuch Property development director Sandy Smith said: “It shows how old and new can combine to provide functional sustainability and still deliver civic style.

“Our plans respect York’s historic and railway heritage but offer modern, functional, sustainable accommodation that will deliver the operational cost savings the council is seeking.”

The development also includes a £10m 120-bedroom hotel scheme and a central courtyard.

Smith said: “A good-quality hotel within the city walls will help boost the city’s economy and add to the attraction of York as a tourist destination as well as a place to do business.”

Christie & Co will market the hotel site to investors.

The team will now exhibit their plans to the public and submit a planning application later in the spring.

Crease Strickland Parkins designed the scheme and York Investors hopes to start work on site before the end of the year.

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