Frenson, the dominant landowner in the Ropewalks area of Liverpool city centre, has retreated from a development sale of 31 freeholds on three acres of Wolstenholme Square.
Savills carried out a market-testing exercise earlier this year to gauge interest from developers but failed to find a buyer who could make the redevelopment viable in today's expensive financial market.
The square, once home to famous nightclub Cream, sits next to the Hanover Street side of Grosvenor's Liverpool One retail scheme, due to open on 29 May.
A mixed-use, low-rise redevelopment was the most likely option for the site given its location and planners' current aversion to city centre residential.
Frenson owns large parts of Ropewalks and has been developing and selling assets with increasing frequency in the past few years. The group recently sold a large car park at the rear of Berry Street to Liverpool Community College to build a new administration centre.
All parties declined to comment.