Property Alliance Group is planning to build a Premier Inn hotel on the site abandoned by Bashar Issa on Dale Street.
Architects Stephenson Bell have submitted a planning application on PAG's behalf for the 193-room, 12-storey hotel.
PAG has agreed a deal in principle with administrators KPMG, acting on behalf of Bank of Ireland, which was owed £17m by Issa Developments before it failed. Bashar Issa was declared bankrupt owing £69m in 2009. The sale is subject to planning consent being achieved.
Sarah Tower started on site before the recession but never got passed the start of the steel frame erection. This will be dismantled and the new block built in its place on the corner of Lena Street and Dale Street.
Manchester City Council is due to decide on the application in December. Pending planning consent, construction will start immdiately with practical completion due early 2012. Russells Construction has been instructed as contractor.
The hotel will be the fourth Premier Inn in Manchester city centre and will join Malmaison, ABode and City Inn near Piccadilly station.
Dominic Pozzoni, commercial director of Property Alliance Group, said: "This site acquisition and lease agreement with Premier Inn demonstrates Alliance's keen ambitions to step up development opportunities in the North West and we're delighted by the quick progress and strong relationship we've formed with Premier Inn to bring an exciting scheme to fruition. Our architects have worked closely with Premier Inn to design a stunning building and together with its Russells Construction we will ensure this new build Premier Inn hotel will be a great success."
Heatons Solicitors LLP and Jenics acted on behalf of Property Alliance Group and Cobbetts and King Sturge advised Premier Inn.