The £30m development will be built on the 1.9 acre site of the old bus station in Feethams, Darlington.
The 140,000 sq ft Feethams leisure scheme will be anchored by a nine-screen multiplex cinema. It will include an 80-bedroom hotel, as well as restaurants, bars and shops.
A planning application will be submitted early in the New Year and it is anticipated that the scheme will be completed and operational by December 2014.
Terrace Hill is in advanced discussions with VUE Entertainment for the cinema element of the scheme and with Whitbread for the 80 bedroom hotel and family restaurant. Terrace Hill has also received strong interest from a number of national, as well as independent restaurant/leisure operators with regard to the remaining space.
Chief executive Philip Leech said: "Having made the strategic decision to increase Terrace Hill's focus on development, thereby better utilising our core expertise, we are very pleased to have been appointed by Darlington Borough Council to develop this important new scheme. The appointment is not only an endorsement of our development expertise and of our ability to attract first class leisure operators and retailers, but also underlines the importance of having a strong network of local offices that can access and win this type of opportunity."