One of York city centre's worst eyesores could get a new lease of life under ambitious plans unveiled by a developer today.

Victoria House, the former Co-op department store in Micklegate, York, has been boarded up since its closure in February last year. It could now be transformed into a hotel with shops.

That is one of the options being considered by Hull building firm George Houlton & Sons. It has already spent £2.5 million revamping the nearby council office buildings which it owns and has started erecting 20,000 sq ft offices at an old mill warehouse in North Street.

Richard Houlton, managing director of the 120-year-old family firm of builders, revealed today that he had negotiated a first option to buy Victoria House from the Yorkshire Co-operative Society in Bradford "and a couple of schemes are in the offing".

Mr Houlton said that he hoped to finalise details of a plan to submit before Christmas, when the North Street development is due for completion.

"All I can say is that the typical 1960s building has been a total eyesore, so we want the right scheme and we have to consider a number of factors.

"The building has the strength to be extended another floor and various uses have been mooted, including a hotel with retail underneath, possible conversion into offices or even demolition to create something different."

But he dismissed the possibility of an all-retail plan. "The Co-op closed precisely because it was not attracting business there," he said.

A meeting is being arranged between Mr Houlton and Paul Murphy, chief executive of the York Inward Investment Board, who is trying to encourage more office development in the city centre to attract outside firms to relocate to York.

Peter Brown, administrator of the York Civic Trust said: "We welcome any sensitive redevelopment in the city centre, but I stress it must be sensitive.''

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