A multi-storey car park at Millennium Point, which will cost Birmingham City Council £11 million to build, is likely to make a loss of £420,000 during its first two years of operation.

The 1,000-space facility will struggle to make a profit until the regeneration of Eastside takes shape and brings more businesses to the area, members of the council cabinet were told. Clive Dutton, director of regeneration and planning, said the £420,000 estimate was a "worst case scenario".

It was possible the car park could break even before two years. Mr Dutton said the lack of footfall at Eastside would only be a temporary problem.

With the completion of the first phase of the £450 million Ventureast mixed-use scheme likely by 2010, bringing 650,000 sq ft of offices, the new car park would become highly profitable, Mr Dutton added.

Under a financial deal agreed by the cabinet the city council must pay Millennium Point about £2 million in compensation for the loss of existing car parking space which is required to provide land for the city park.

The cost of building the new car park will be met by a combination of a £3 million grant from Advantage West Midlands, money from council land sales and borrowing.

In a written report to the cabinet, Mr Dutton said: "The proposed multi-storey car park is intended to be a strategic car park located to the east of the city centre where the council currently has little provision.

"There will be a shortage of capacity in the area as Ventureast will need additional parking compared to that it can provide itself. The Curzon Park scheme will provide enough car parking for its own occupiers but no spare capacity. On-street parking will become restricted in the future. The only council car park nearby at Bartholemew Street will close within two years"

Mr Dutton said an outline business case indicated the project was "robust enough" to warrant progressing to a detailed and fully costed option to build the new car park by the end of 2009.