Ikea, will submit plans shortly to Sheffield Council for a £60 million development on a site at Meadowhall, weeks after the Council rejected plans for a £10 million Next store development at an adjacent site, causing a dilemma for planning bosses.

It is thought that the rejection was due to the Council's desperate search for new retailers to come into the City centre and their fear that the new Next store out at Meadowhall would further weaken the appeal of the City centre retail offer. A planning appeal is pending.

Sheffield city centre is currently half-empty after a huge "new retail quarter scheme", started by Hammerson, was abandoned in 2008. Retailers there are also upset by the recent Council decision to increase parking fees.

Given the proximity of Meadowhall, and the growth of Leeds as the centre of gravity for Yorkshire retailing, it is thought unlikely that a major retail investment will now be made in Sheffield City centre. Bradford faces similar problems. The dilemma for the Council is that if they prevaricate too much they will damage their prime retail asset at Meadowhall.

Ikea has been talking to the Council for some time, Paul Jacobs, Ikea real estate manager for UK and Ireland, said: "The council came up with 12 sites, but none were big enough." It is thought that one rejected site was  St Mary's Gate, right in the city centre.

The proposed Ikea on the old Tinsley Wire and Bettafence site next to Meadowhall would not be a threat to businesses in in Sheffield's traditional retail centre, Ikea said yesterday. It's plans are now out for public consultation.

Ian Nicholson, Ikea's Sheffield project manager, said the new store would create 700 jobs and added: "We have been looking for a site in South Yorkshire for many years now. Currently customers have to travel to either Leeds or Nottingham.

"An Ikea store in Sheffield will be a major boost to the whole city."

Sheffield architect HCD is working on the 370,000 sq ft store scheme for a showroom, market hall, warehouse and car park along with a restaurant, crèche and customer service areas.