Work has started to demolish Oxford Hall, formerly the Grand Hotel in Lincoln, as part of development for the Lindongate scheme.
While the shopping complex scheme takes shape, the site will probably used a parking space, thanks to its vicinity to the city centre and train station.
Site hoardings have gone up around the site, and the first stage of the work is to strip out remaining items such as carpets, doors and other furnishings from inside the building.
Contractors A.R.T. Demolition of Eagle Moor will then start demolition of the internal and external structure.
It is expected that the work will be finished on the Oxford Street site by February 2013.
In the Lindongate scheme, the site is within the area allocated for a new department store.
Lincolnshire Co-operative is progressing the project, which received planning permission earlier this year, through its agents Banks Long & Co.
All the necessary council permissions for the scheme have now been received and negotiations are ongoing with a range of possible national development partners who could take the scheme forward.
Options are being discussed with the City of Lincoln Council for use of the land after demolition takes place and before the Lindongate scheme starts.
These include using the area as additional city centre parking on a temporary basis.
Spokesman for Lincolnshire Co-op Emma Snedden said: “Oxford Hall would have needed substantial investment to bring it back into a condition where it could have been used.
“We felt, in view of the long-term plans for the site, that demolishing the building would be the best solution.
“Lindongate is a major project which will take time to progress. This demolition work is a small but important step forward.”