Rare opportunity' Does York's £2.5bn regeneration have enough ambition?

On an area the size of 63 football pitches next to York's Victorian railway station, work is under way on the UK's biggest city centre regeneration scheme, which will expand the area by a third.

- Julia Kollewe

The £2.5bn project, called York Central, aims to transform a vast 45-hectare (111-acre) site - once a major railway manufacturing hub with iron foundries, signalling workshops and wagon stables, now mostly a drab car park - into housing and offices.

In the works are 3,000 homes beside a large park, a 200-bed hotel, a hub for business start-ups with a focus on rail, agricultural and media tech and biotechnology, and an expansion of the National Railway Museum.

The scheme promises to create an estimated 6,500 new jobs, including 1,500 during construction.

It also includes a new building for a government ministry. The tenant has yet to be confirmed, but the Guardian understands it will be the Department for Environment, Food and Rural Affairs (Defra), and an official announcement is expected in summer.

York Central forms part of the government's plan for change that promises growth for every region, and its industrial strategy that names digital and technologies, and life sciences as two key sectors.

It "will see a ripple effect for the local economy", Angela Rayner, the deputy prime minister and housing secretary, said when she visited in February.

Stephen Hind, Network Rail's head of business development for the eastern UK, says one of York's biggest problems is an outflow of expertise from the city. "There's not necessarily the space for those companies to grow."

After previous failed attempts to remodel the site decades ago, the landowners Network Rail and Homes England have teamed up McLaren Property and Arlington Real Estate to get the new plan off the ground.

They are backed by £150m of public money, most from the government agency Homes England, with £30m from City of York council.