Factory, the flagship arts building for the north of England designed by Rem Koolhaas’ Office for Metropolitan Architecture (OMA), has been granted planning approval by Manchester City Council.

Construction will begin in Q1 2017 on the large-scale venue, which has been designed to reflect the “extraordinary creative vision and breadth of Manchester’s cultural life”. Ellen van Loon and OMA founder Rem Koolhaas are leading the project.

The £110m (US$137.2m, €129.6m) venue – which takes its name from Factory Records, the Manchester music label which launched the careers of British bands Joy Division, New Order and the Happy Mondays – will be operated by the Manchester International Festival (MIF), which will commission and host performances of theatre, music, dance, technology, film and TV. The 130,000sq ft (12,000sq m) structure will have room for 2,200 seats and 5,000 standing visitors.

The project's economic impact will be considerable, creating or supporting almost 1,500 full-time jobs and adding an estimated £1.1bn to the city’s economy over a decade. In time, it will form part of the city’s new 20 acre St. John's neighbourhood, which is being developed by Allied London in partnership with the council on the site of the former Granada TV Studios. Hotels, independent food and drink outlets, extensive public realm and open green spaces will also feature.

According to local publication Manchester Confidential, OMA’s design resembles in parts the work of surrealist architectural artist Filip Dujardin, who imagines concrete or industrial buildings introduced into unfamiliar contexts. The rear of Factory appears to feature cladding formed of a mixture of materials forming unconventional patterns – contrasting with the concrete and glass exterior at the front of the building.

“Much of my professional life has been spent undoing limitations of the traditional typologies," said van Loon, responding to the council's green light. "From classical opera and ballet to large scale performances and experimental productions, Factory in Manchester provides the perfect opportunity to create the ultimate versatile space in which art, theatre and music come together: a platform for a new cultural scene.”

Speaking last year, Koolhaas said: “It is wonderful to participate in the longstanding renaissance of this city, where real experimentation is expected.”