Interserve is working with DTZ Investment Management to create a mixed-use scheme including leisure facilities, hotel accommodation and retail units.
The Co-operative Group has sold the former department store to DTZIM to allow the refurbishment to get underway.
The total scheme is valued in excess of £30m with the construction contract worth £17m.
Premier Inn will operate a 184 bed hotel at the site when the refurbishment programme is completed by December 2015.
Interserve will manage delivery of the project on behalf of DTZIM.
The Grade II listed art deco building extends to nearly 170,000 sq ft over six floors and has been a feature of the city’s skyline since it opened in the 1930s.
The sale also includes the adjoining car park and Chinese restaurant.
Dougie Sutherland, Managing Director of Interserve Developments, said: “The collaborative approach between Interserve, Premier Inn and DTZIM has ensured that this complex scheme is now viable and can be progressed.
“We have worked closely with the local authority over a number of months and we are now in a position to progress construction works on this major city centre project.
“This project further demonstrates our ability to deliver innovative solutions in property development and we are progressing a number of further schemes.”
Construction work on the project will be led from Interserve’s Newcastle office.
Interserve said it will work closely with local supply chain partners on the development.