Southampton City Council has picked Raven Property Holdings as preferred developer for the former Tyrrell & Green department store on Above Bar to the north of the city centre.
The store has been vacant since the John Lewis Partnership relocated to the West Quay shopping centre in autumn 2000.
The council sees the regeneration of the store as part of its vision for a 'cultural quarter' at the north end of Above Bar. The ground and mezzanine levels will house 4,000 sq m of retail space, facing Guildhall Square. The upper levels will be converted into 200 apartments.
The Arts Council is backing plans to relocate the John Hansard Gallery to the site as part of a multicultural art centre, including space for dance and performing arts, and studios and video production facilities.
Southampton council leader June Bridle said: 'This is a major opportunity to reinvigorate a key part of Southampton, and give it a distinctive identity.'