TWO of Winchester's biggest employers will consider leaving the city if they are not given room to expand, councillors were told.

Growing businesses have nowhere to go and two major firms are reconsidering their position, a meeting heard. One told officers their departure would cost the local economy £2.5 million per year.

The warning came after Winchester City Council revealed a design competition will be held for the revitalisation of the city's Station Approach area, which is expected to provide more than 100,000 sq ft of office space.

Head of estates, Kevin Warren, told cabinet on Monday: "Small businesses that grow suddenly find there is absolutely nowhere for them to expand into and the only option that is open to them is to actually move out of the city, down the road to Eastleigh.

"We have been approached by two major employers in the city who both indicated that their business model has changed and they need to expand their businesses. The difficulty they face is that there is absolutely nowhere for them to move into and very limited options for expansion on their existing sites."

Station Approach is seen as a key part of Winchester's future by the council, providing housing, offices, shops and transport infrastructure between Sussex Street, the railway station and Worthy Lane. It could also feature a new music venue.

The scheme has been backed by business leaders but remains controversial with some residents, who say it will remove open space and wreck their neighbourhood.

One firm looking to expand told the council that it spends at least £2 million a year in Winchester, with staff spending an extra £500,000.

The companies involved were not named at cabinet. The Chronicle contacted several of the city's major employers on Tuesday. Denplan, Winchester's biggest private employer, declined to comment. Others said they were committed to Winchester, including Dutton Gregory solicitors, who said they need more space.

Around 150,000 sq ft is needed to meet demand in Station Approach, Mr Warren said, adding that national and international businesses looking to open Winchester headquarters want a landmark building.

Council officers have drafted a brief demanding the scheme improve facilities for cycling, walking and public transport around the station. Development should be no more than five storeys tall, it says, besides taller landmarks.

The council is inviting architects to create a 'design concept', which would then be shown to the public and judged by a panel.

The winning firm would then be commissioned to produce a detailed design of the Carfax site, between Sussex Street and the station. They would then have the opportunity to design the neighbouring Cattle Market site, on the junction between Andover Road and Worthy Lane.