Manchester City Council's Cabinet has approved the final development agreement with Ask Property Developments for the First Street project to the south of the city centre.
The 20-acre site is seen as a key link between Manchester's central business district and the Oxford Road Corridor.
A new 160 metre pedestrianised boulevard will be built between Whitworth Street and Hulme Street. Ask said the remaining Mackintosh Mills will be acquired and demolished to open up further pedestrian linkages through the eastern part of the site.
The council will occupy 140,000 sq ft of the 180,000 sq ft 1 First Street until 2013 while the Town Hall complex is redeveloped. The refurbished building has won a post-construction BREEAM 'excellent' accreditation.
The overall site has consent for 1.2m sq ft of offices, 1,500 residential units and 350,000 sq ft of shops and restaurants.
John Hughes, director of Ask Developments, said: "We're delighted that the First Street development agreement has been approved. We have worked hard with the city council to create the platform for this strategic site. This area has endured a lack of identity and purpose in recent years, resulting from its failure to integrate and connect in a physical and economic sense with the rest of the city centre and the Oxford Road Corridor. We are confident that First Street will now start to fulfil its potential and make its contribution to enhancing the city's competitive position."
Work on the public realm will start in December 2009, with completion in early May 2010.