A CITY centre eyesore is set for a multi-million-pound makeover.

The long-derelict Custom House and next door York Hotel on Custom House Street, just off St Mary Street in central Cardiff, are set to be partly demolished and redeveloped as offices.

Cardiff-based property developer the Bailey Group has submitted a new planning application for the site, which it has owned for over two years.

The application would mean the York Hotel would be completely demolished and rebuilt while Custom House will be renovated to provide 32,000sq ft of premium office space.

The listed building’s distinctive 150-year-old facade will be retained.

Bailey Group director Anne Griffiths said she hoped the development would link up with similar offices across the railway line in Callaghan Square, making the whole area more pedestrian-friendly.

She said: “Custom House is owned by the Bailey Group and it is our intention to redevelop its potential as office space.

“This is the last link in the chain to finish off the bottom of St Mary Street and its link to the Bay.

“However in this economic climate it is likely to be 18 months at least.”

A planning application for the project was submitted last week but it will be at least four months before the plans come before Cardiff Council’s planning committee.

If successful, the Bailey Group will wait for clients to come on board before development begins, which could take as long as two years.

Simon Wakefield, Lib Dem councillor for Cathays, said: “I think there is an inevitability that as we develop the city people will always be looking at the next piece of empty land.

“The railway line is the next area to be developed in order to connect the city centre with the Bay area, but with the economy as it is at the moment, that is a long-term projection.

“I haven’t seen the plans in detail but I am a bit worried because the money isn’t in the economy to develop areas in the city centre at the moment, which are instead being left derelict.”

Custom House is thought to have been built in 1863 by London architect Sidney Smirke. It was built alongside the Glamorgan canal, opened in 1790, the path of which is now followed by St Mary Street.

The York Hotel was built in 1876.

In October, the Echo reported the council’s plans to temporarily move a homeless hostel into the building until renovation work on its current building in Butetown is complete.

The Huggard Centre will be based in Custom House for up to two years while the existing Tresillian facility is given a multi-million-pound upgrade.