THE Terry's chocolate factory site could be worth more than £50 million, if property-hungry developers get their way.

A mad scramble is predicted for the 33-acre site, which straddles Bishopthorpe Road, and is one of the city's prime locations overlooking York Racecourse.

"There won't be a single stock exchange-listed developer who is not making anxious phone calls to see how they can get their hands on it," said Andrew Hedley, a partner at Blacks property consultants in Main Street, Fulford.

The Evening Press reported the shock announcement yesterday that Terry's is to close next year with the loss of all 316 jobs. Owner Kraft Foods plans to transfer production to other factories in Sweden, Belgium, Poland and Slovakia.

Developers claim the 33-acre site, which includes eight acres of car park opposite the factory, could fetch as much as £50 million if sold for residential development.

However, if bought for employment use its value would be much less, in the region of £16.5 million.

Housing developers will have hurdles to overcome, as the site is in a conservation area and is zoned by planners for employment use only.

But City of York Council planning chief Roy Templeman would not rule the prospect of it being used for housing.

"It is clearly scheduled for employment use and that would be our starting point, but that is not to say that we would rule out any form of alternative, such as a potential mixed development," he said.

Meanwhile, Mr Templeman has called on yorkengland.com, the city's inward investment organisation, as well as regional development agency Yorkshire Forward, to look for possible inward investors who want to take advantage of the major employment opportunities there.

He said that the council had already formally offered its help to Kraft Foods by setting up a package of support for employees through Future Prospects.

Developer John Reeves, chairman of the Helmsley Group, said the Terry's site was one of the most prestigious in the city.

"It's a beautiful building and I'm sure there will be a lot of interest," he said.

Mr Hedley added: "There will be much pressure for residential use. From the evidence I have, the market is much more interested in housing than business in that neck of the woods.

"We are all governed by the market even planning offices. If it zones something for a particular use and nobody wants it, then nothing happens."

lIn a letter to Terry's employees yesterday, operations director John Pollock wrote: "This announcement has been made as a result of a combination of factors including a recent decline in export volumes together with the size and configuration of the site which makes the cost structure too high for current production levels.

"The company will now enter a 90-day consultation with employee representatives and keep you fully informed of progress during this consultation."

He said staff would be given regular briefings on progress in the coming weeks.

Updated: 11:07 Tuesday, April 20, 2004