Gazette Media Company, publisher of the Evening Gazette in Teesside, has signed a major deal that will see a £12m Institute of Digital Innovation built next to its Borough Road offices.

The newspaper publisher has sold the land, previously home to its old press hall, to Teesside University, which is planning to build a new Institute on the site.

GMC managing director Alastair MacColl said: "Releasing this land to the university is the start of a unique and formidable partnership which allows us to work with the university on a number of groundbreaking multi-media initiatives.

"It brings together the strengths of our media business and the academic and commercial ambitions of the university."

The Institute will be part of a media village to include the core GMC business and the company's media centre, where 14,000 schoolchildren will learn media and literacy this year.

Post-graduate teaching in digital media, around 200 post-graduate students, university research and development teams, post-graduate researchers, accommodation for business start-ups, concept testing and development facilities, and meeting rooms will be based in the Institute.

Alastair said: "The university and GMC both see this development as another important initiative which adds to the pace and energy of the transformation we are seeing in the Tees Valley."

A design competition is under way with five architects firms bidding to win the contract for the four storey building.

Construction should start later this year once planning permission has been received, with the Institute ready for occupation by spring 2007.

Space for the Institute has been freed up by GMC moving its printing operations after investing in a £14.6m press hall at Middlesbrough's Riverside Park.