In the first in a series of articles business editor Ian Griffin looks at how regeneration has improved the city and the work yet to come.

Turning the run-down St George's area into a thriving cultural quarter was never going to be achieved by simply throwing tens of millions of pounds of public money at it.

The idea behind building the £61 million Curve theatre and the £21.5 million Phoenix Square film and digital media centre – both publicly funded – was not only to transform a derelict landscape but to help attract vibrant businesses.

However, the redevelopment of the area, which started about eight years ago, was brought to a sudden halt by the recession and Government spending cuts.

Now, business activity is returning, with the quarter being boosted by major investments by residential developers, restaurateurs and bar owners.

One of these is James Van Oppen, who has just opened The Lanna Thai restaurant at a former leather factory, in Rutland Street, with business partner Peter Banks.

The venue includes nine luxury apartments, after Mr Van Oppen invested £1.5 million.

"I could see a decade ago that this area had qualities that no other area in the city had," he said.

He said businesses had been boosted by the fact that Curve, built on a derelict piece of land on the corner of Rutland Street and Halford Street, and Phoenix Square, on the site of a former textile factory in Midland Street, seemed to have overcome early troubles and were attracting thousands of people to the area.

"The area has changed so much and with the economy having picked up, Curve now doing exceptionally well and Phoenix Square also doing well, footfall is improving and businesses are seeing activity increase," said Mr Van Oppen.

Cassie Cockerill opened The Exchange bar at The Exchange Building, in Halford Street, last month after spending £100,000 refurbishing what had been a former newsagent and tanning salon.

"The businesses that are in this area are really creative and the people behind them are really dynamic," she said.

"What's exciting about it at the moment is that you can see things happening."

She said more smaller businesses would be attracted to the area as it continued to develop.

Shaf Islam, owner of restaurant Chutney Ivy, in Halford Street, which moved into what had been The Quarter in October, said: "There's a lot of development going on and a real sense of excitement."

As well as being a centre for arts and leisure, the cultural quarter, which is located between Charles Street and Humberstone Gate, has become a hotbed of enterprise, with dozens of small businesses.

The £4.75 million publicly-funded LCB Depot, in Rutland Street, which opened in 2004 at a disused bus depot, houses 46 fledgling enterprises.

Another 27 are based at units in Phoenix Square, in Midland Street.

Both sites are more than 90 per cent occupied.

These units have proved so popular that the city council is about to create a £1 million site for larger creative digital business at a former textile factory in Rutland Street.

Peter Chandler, manager of LCB Depot and the business units in Phoenix Square, said: "We are seeing creative companies thrive in this area."

Design firm Bulb Studios is a prime example of a business which has benefited from this creative environment.

The firm, which started up at LCB Depot four years ago before moving to nearby Yeoman Street, last week collected a national industry award at a ceremony in London.

Managing director Jim Willis said: "There are a lot of great businesses in this area. A lot has been achieved in the past few years."

Businesses said the key to the cultural quarter's continued success was to get more people living there and staying overnight.

More than 2,000 people are already believed to live in the area, primarily in flats and developers are looking to increase this figure.

A group of investors has put forward a £14 million scheme to transform the 11-storey former International Hotel, at the corner of Humberstone Gate and Rutland Street, into student flats, shops, restaurants and a gym.

They hope to have completed the revamp of the 220,000sq ft site by summer 2012.

David Hughes, chief executive of Prospect Leicestershire, the agency charged with helping to redevelop the city, said: "The owners of the International Hotel have also realised that students in the future will be a bit more discerning about the type of accommodation they are looking for.

"This development will also add to the vibrancy of the area."

Meanwhile, building work on a 115-room hotel at the former Norwich Union building, on the corner of Charles Street and Halford Street, is in its final stages.

The three-star Ramada Encore is due to open in April or May.

Another hotel has been proposed for land close to Phoenix Square.

Thriving businesses, as well as students and visitors with money to spend, can only help attract more investors to this increasingly buoyant quarter.