Palace in spot south of a cathedral city (6)
I believe the answer is:
elysee
'palace' is the definition.
(I've seen this before)
'spot south of a cathedral city' is the wordplay.
'spot' becomes 'see' (both can mean to notice or observe).
'south of' means one lot of letters go next to another (in a down clue, some letters go under others).
'a cathedral city' becomes 'Ely' (English city with a cathedral).
'see' after 'ely' is 'ELYSEE'.
'in' acts as a link.
(Other definitions for elysee that I've seen before include "Official residence of the French president" , "French President's palace" , "Parisian palace" , "Official palace in Paris" , "French leader's palace" .)