Deal struck to replace obsolete market with modern building

Although the site already has planning approval for a 200-stall indoor market and eight large shops, the scheme has been subject to a series of delays because of funding problems.

Scottish Widows Investment Partnership (SWIP), which bought the lease for The Moor for 26.5m last year from RREEF – the property arm of Deutsche Bank – has handed the market site back to Sheffield Council, which will fund the 18m cost of building the new market itself.

The development manager leading the team for SWIP, John Rawlinson from Faithful and Gould, said: "We are delighted that we have reached this agreement with Sheffield Council to start moving forward with the markets development on The Moor.

"We want to thank the people of Sheffield for their patience while we ensured we agreed a credible and deliverable high-quality retail scheme for the city."

In return for handing over the land and agreeing to carry out millions of pounds in "public realm" works, SWIP has been given a 250-year lease on The Moor to replace its original 150-year agreement.

SWIP will also be responsible for building the eight new shops, with a combined retail space of 83,000 square feet and a service yard for the market.

The revised plans were agreed by Sheffield Council's Cabinet committee on Wednesday, after months of uncertainty over the project.

Although SWIP said it was committed to building the market as recently as December last year, it also said work could not start on site until a "substantial" number of the new shop units were let.

For the last six months their agents have been attempting to secure such a pre-let, but could not find traders willing to take on the units.

Mr Rawlinson added: "We are fully committed to The Moor project. However, the coming months will be crucial in the speed of progression as we finalise the legal agreements and go through the procurement processes.

"Subject to finalising legal agreements by the end of August, and a swift passage through the council's EU procurement process, we would like to see this development completed by the end of 2012.."

Market traders who are currently trading from the obsolete 1960s market building in Castlegate are keen to move to the new and improved facilities on The Moor.

Once the new market opens, Sheffield Council plans to knock down Castle Market and open up the area, once home to a medieval castle, as a tourist attraction.

The authority wants to uncover remains of the former Sheffield Castle, create a new park and install a new pedestrian route through the site, to link Victoria Quays with the city centre.

However, there are also question marks over this project, as an application has been made to English Heritage to list the decrepit market building – meaning that plans to bulldoze it could be scuppered.

Sheffield Council's executive director for place, Simon Green, said in his report to Cabinet members that the agreement with SWIP will "secure the long-term future for a central indoor market for Sheffield".

He added: "It will achieve a long-standing need to restructure and consolidate the city centre retail offer and represents the first phase of the regeneration of The Moor, a shopping area that has been under-performing for a long time.

"It will also show developers confidence in the city centre's ongoing regeneration at a time of national recession."