The firm secured planning consent last year to redevelop a two-acre site that is a minute’s walk from York Railway Station within the city walls. It will include 127 flats, 5,000 sq ft of retail/restaurant space, 34,000 sq ft of Grade-A office space and 5,000 sq ft of other commercial uses, located in four buildings around a landscaped central courtyard. The scheme, branded the Hudson Quarter, will also include a new landscaped link from the train station, opposite the site, through to Toft Green and then onto Micklegate. The new office building will be first of its kind of this size to be built speculatively in York City Centre for more than 20 years.Palace Capital's CEO Neil Sinclair said: "Demolition isn't finished yet, but should be finished in next few weeks. Construction will start in February. We intend to release the first batch of apartments in June."We will complete in the early part of 2021. The marketing suite will be finished in early June and we've had quite a lot of interest - approaching 100 people have said they a interested."There will be three blocks with 127 apartments, mainly studio, one and two-bedroom, a few three-bed and one four-bed. The site has got quite a lot of parking, which in York is murder."Asked whether the new site will be sympathetic to York's architectural heritage, Mr Sinclair said: "The city council wanted something tasteful. It will be built in brick with no cladding, which after the Grenfell Tower fire is a good thing."It's the first speculative office development of that size in York in over 20 years. York has got no brand new office space, unlike Leeds. "The vacancy space in York has fallen to 3 per cent. It has lost a lot of space to residential and nobody has been building offices."He said York is a very attractive city as it has such good connectivity, being one hour and 50 minutes from London.The group has another site on Museum Street in York. This retail and office building was acquired as part of the RT Warren Portfolio. Mr Sinclair said there is a major shortage of offices in York and the vacancy rate has fallen to 3 per cent. "We have 5,500 sq ft, most of which had been vacant for some time, but in urgent need of refurbishment. We have now placed a contract to refurbish the offices andthis is due for completion in February 2019," he said."Museum Street has probably not been touched since 1983. We bought it last year when we took over a family property company. "We are very keen to buy more in York. Visitor numbers are up and about one in four visitors to York is Chinese and it is seeing an increasing number of Japanese visitors."Elsewhere in Yorkshire, the group is looking to refurbish Bank House in Leeds where the Bank of England is currently in residence. "We are looking at what we might do with it," said Mr Sinclair. We've got the Bank of England for another five years and Walker Morris upstairs and they are moving out. It's a great location."In Halifax, the group bought the Broad Street Plaza leisure scheme two years ago, which is home to a Pure Gym and a Vue cinema. "The leisure sector has had a tough time," said Mr Sinclair. "The Prezzo at the site had a CVA and they have moved out. We have now got serious talks to let that space. We think that on the leisure side, the worst is over. Last year was really difficult."Palace Capital is looking for sites elsewhere in Yorkshire. "We've got some smallholdings in Sheffield," said Mr Sinclair. "We'd buy in Leeds, York and Sheffield. We looked at Hull, but we couldn't find anything interesting enough. "We are very keen on Yorkshire. There is a lot of entrepreneurial spirit there, but it's hard to buy in Yorkshire. We are not the only ones who want to invest in the county."We are competing against foreign investors who are attracted by exchange rates. Also there are funds who are leaving London. They are not getting the returns so they are coming to the regions."