Vale Park Demolition Services has started on site at Portergate Properties' £18m mixed-use scheme in Friargate, Preston.
A team of 15 demolition experts is preparing the 1.5-acre site for the main contractor, Eric Wright Group. The project involves stripping out the interior of the existing structures before bringing in specialist equipment to level the buildings.
Portergate's development at the northern end of Friargate is set to include retail premises and a 253-bedroom building providing hotel-style accommodation to students at the nearby University of Central Lancashire.
The flats will also be available for graduate students and apprentices and workers in Preston's high-tech manufacturing sector and enterprise zone.
The shop and apartment complex has been designed around open garden areas by architecture practice Leach Rhodes Walker.
Anthony Jackson, chairman of Portergate Properties, said: "There is strong, growing demand for quality properties from investors, something we have seen since the beginning of our successful £16m Riverside House project in Salford.
"We're already seeing major investment in our concept of luxury boutique hotel accommodation in towns and cities with thriving universities and growing student populations.
"Investors are also looking at the growing importance of the university sector to the UK's economy and the rising number of overseas students being attracted here."