A blizzard of regeneration projects – including a £500m retail scheme – is set to transform Liverpool’s city centre and give it the chance to get one up on its larger northern neighbour.

Inner-city living has landed in liverpool. Rows of empty and partially occupied inner-city office buildings along the waterfront and in the town centre are being converted into modern apartments and penthouses. For a town more closely associated with soulless, Brookside-style estates, this is a big step.

Typical of the trend is developer John Rocha’s design for L3, a slick refurbishment of a 1930s art deco parcel distribution centre in Hatton Garden, on the eastern fringe of the central business district. Space, the inner-city arm of Charlton Group, is handling the development, and Charlton Construction, the group’s less fashionable-sounding contracting arm, is converting the building into 92 apartments and 23 penthouses at a cost of £12m.

Project architect is local practice Falconer Chester. Senior partner Paul Falconer says the scheme reflects the mini-boom taking place in the region. His firm is one of the smaller local construction-related businesses to have benefited from the city’s new-found confidence. In three years, it has doubled its staff to 16 and now has a fee turnover approaching £1m.

As for the rest of the region’s firms, it seems that good times are on their way again. Regeneration company Liverpool Vision, headed by former Wimpey boss Joe Dwyer, is due to present its strategy for the next tranche of Objective One European Union funding to the city council this month. The company hopes to revamp the city centre by 2008, so that it can compete as a major shopping and leisure centre and attract more tourists.

At the heart of its plans is a scheme awarded to Grosvenor Estates and Henderson Investors in March – a huge £500m redevelopment project centred on Paradise Street. Once opened, the scheme should add 25% more retail space to the city, and will provide a link between the Albert Docks and the city centre.

Years of stifled development plans during the Derek Hatton era kept developers away from Liverpool. But the impressive list of companies queueing up for a slice of the Liverpool Vision action – among them Land Securities, Lend Lease and Hammerson – was an indication of restored confidence in the city.

“In the late 1980s, it seemed the council couldn’t care less about inward investment,” says Falconer. “Things are very different now.”

The council and Liverpool Vision hope to attract £2bn of investment, of which about 25% will be EU or government money. Council chief executive David Henshaw is on a mission to make Liverpool the UK’s most business-friendly city. And the leader of the Liberal Democrat-controlled council, Mike Storey, is understood to be equally keen to push through the regeneration masterplan.

Grosvenor Estates director Justin St Clair Charles does not want the industry to get overexcited about Paradise Street just yet. “Then it becomes a question of trying to keep a handle on people’s expectations of when and where it’s going to happen.” Fortunately, adds Falconer, regeneration is already taking place. “It is the best market ever, as far as I can remember,” he says.

The market is showing signs that the pump priming is working. Construction firms report that, compared with three years ago, demand is keener, output is higher and there is a better throughput of work. Yet there is little tender price inflation.

Falconer says these signs of inherent strength are the most encouraging thing about Liverpool’s situation. “If you depend entirely on Objective One funding, once that’s run out you will go back to a base level of activity.”

Liverpool’s resurgence kicked off with developments in the leisure market, particularly at the city’s top nightlife destinations in Rope Walks. Strong demand for new clubs and restaurants continues, particularly in Rope Walks, and money is pouring into Concert Square and Queen Square, with national developers such as JD Wetherspoon following local trailblazer Urban Splash.

In the same part of town, architect Austin-Smith:Lord has been appointed to design an £8m centre for the Foundation for Arts & Creative Technology. Elsewhere, final touches are being put on plans for a £40m development near Lime Street Station involving an indoor entertainment centre, apartments and a health studio.

The office market is buzzing too, as it strives to meet the increased demands of Liverpool’s service-based economy. Rumford Investments’ 152 m skyscraper, designed by Kohn Pedersen Fox, is set to transform the city’s skyline.

Liverpool Vision is also promoting a site to the north of the Liver Building to encourage the development of a landmark office project. The council is keen to have an architectural statement to complement the three graces: the Liver Building, the Mersey Docks and Harbour Building, and the Cunard Building.

Out of town, things are looking up as well. Four miles south of the city centre, in Speke, EDAW is leading a regeneration strategy for Speke Garston Development Company. The new baby Jaguar is to be built at the Halewood plant, on the edge of Speke, which should increase work for component suppliers and fuel demand for hotels.

Indeed, the former Speke airport terminal, a listed 1930s art deco building, is being turned into a 160-bed four-star hotel by Falconer Chester. An adjacent aircraft hangar has already been converted into a David Lloyd gym by Falconer’s firm. And a new terminal is on the way for Liverpool Airport. Owner Peel Holdings has secured detailed planning permission and the terminal is due to open by 2005.

But it is not all plain sailing. Falconer worries that the regeneration projects in the pipeline could intensify skills shortages in the trades and the professions. “Plasterers have been difficult to find for a while, as have architectural technicians,” he says. One encouraging sign, though, is that some architecture graduates who left Liverpool for London are now applying for jobs back in the city.

Liverpool may not yet be “the new Manchester” – the phrase doing the rounds at cocktail parties in the North-west. But, as one local contractor points out: “Since when did Liverpool want to be ‘the next Manchester’ anyway?”