City developer Building Design Northern (BDN) has agreed a deal that will see the building - previously owned by Edward Thompsons - open its doors in 2023.
The new Stableyards venue will play host to music and performances on a large outdoor stage as well pop- up events, markets, bars and restuarants and will be connected to the city centre by the new Wear footbridge between Sheepfolds and the former Vaux Brewery site.
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Other plans for the site include a multi-million pound facility, the Housing, Innovation and Construction Skills Academy (HICSA), which aims to train and upskill the housebuilders of the future.
The project hopes to train local people to create innovative factory-built new homes, the first of which will be assembled as part of a new neighbourhood at Riverside Sunderland.
A total of 450 new homes are also set to be erected on the north bank of the river which includes the conversion of the former printworks into loft
apartments - set to get underway in 2025 and 2026.
City council leader Councillor Graeme Miller, said: "It’s adding to what we’re building in the new city centre, so while we’ve got the river which is a ravine splitting the new city centre in half, so what we need on the Sheepfolds site is to be giving a multiple of reasons to be coming here, which will be linked by a footbridge.
“This development will give us the space that we need for the future individuals and families to live here and to work, rest and play. Sheepfolds is a vital and integral part of the city centre development."
Plans for Sheepfolds include eight shop-fronted units, which are expected to attract cafe, restaurant and retail operators, as well as two open courtyards, providing attractive outdoor spaces for events and entertainment.
Phillip Young, an architect at BDN said: “We know this is an important, historical landmark in the city and we wanted to come a part of it to see the growing investment.
"This is one of the last few remaining examples of the coal mining history in the area so it’s important to protect that.”
City council bosses previously said the plans would fit with the government’s levelling up agenda by creating more economic opportunities for people and businesses by enabling the area to ‘build its own’ homes.
The project was recently given a funding boost from the government’s Levelling Up Fund which is expected to be used to support the gross cost of the HICSA project of more than £14million.
David Howells, Chief Operating Officer for the EPNE group said: “The Housing, Innovation and Construction Skills Academy will be about the modern methods of construction and traditional trades. We already have a vibrant city campus and this will support and enhance that.
"It’s going to give younger people the opportunity to access new skills and training.”