An office block in York is set to be transformed into 139 apartments after planning consent was secured by property investor Palace Capital.

The 103,000 sq ft office block, known as Hudson House and situated close to York’s railway station, was acquired by Palace Capital for £39.25m in 2013, as part of a 24-strong property portfolio.

It has now received permission for the change of use under the UK Permitted Development legislation.

“We are currently evaluating our options in the light of this approval and the imminent secondary legislation as to how we create further value from this important asset and will keep shareholders updated on the progress that we make,” said Neil Sinclair, chief executive of Palace Capital.

“When we acquired the property in 2013, we identified Hudson House as a key asset from which we were confident that we could create significant value for our shareholders,” he added.

Palace Capital believes that York has a particularly buoyant rental market, thanks to its large student population and reputation as “one of the fastest growing cities in the UK”.

The company is still in talks with the City of York Council’s over a planning application for an alternative restoration of Hudson House. This would see the building divided into 37,000 sq ft of offices and 82 apartments.