Council bosses have pulled out of a deal three years in the making to dispose of the formal central library site, in Angel Row.
The plan had been to work with developers HBD, previously Henry Boot Developers Ltd to develop the site and market it as offices.
Now, the director HBD Ltd has said he is ‘disappointed’ by Nottingham City Council’s decision to scrap the deal.
A report on the issue for the city council said the sale will not proceed due to ‘changes in the economic context’.
The council is now expected to place the property on the open market for sale.
Justin Sheldon, Director at HBD, said: “It’s disappointing that Nottingham City Council has opted not to progress with the disposal and investment plans for Angel Row with HBD, which were well advanced.
“We have worked closely with the council over the past three years, progressing the plans in line with their requirements.
“The city is crying out for new office space, which is needed to satisfy the level of demand that exists from both existing businesses and those looking at Nottingham as a new location – even now during Covid.
“Angel Row would have helped to meet that need.
“HBD remains committed to investing in Nottingham and the wider region – the city remains a key focus for opportunities and continued investment, which is currently in excess of £70million, and we look forward to working with the council on future projects.”
All city council libraries closed at the start of lockdown, but as others were reopened, a decision was made not to reopen the Angel Row site, ahead of the opening of the new central library in Broadmarsh.
It means there will be no central library in the city for around a year.
A Nottingham City Council report says: “ Unfortunately, this sale to Henry Boot Developments Limited is no longer proceeding.
“As such, the most appropriate course of action is to place the property on the open market for sale. The sale will complete once the property has been vacated.
“It is proposed currently to offer the property for sale by informal tender.”
Councillor David Mellen, Leader of Nottingham City Council, said: “The economic landscape has undoubtedly shifted in the past few months because of Covid-19 with the property market in particular affected, including here in Nottingham.
“This has led, in some cases, for us to look again at investment plans where appropriate.
“In the case of Angel Row, we considered that the basis of investment had changed substantially and that the best return for Nottingham residents would be achieved through an open-market sale.
“This was confirmed in a properly-considered decision of the authority and, as we have said before, we only ever deem a property surplus once every option has been exhausted for an alternative council use.
“We are still seeing high levels of investment in the city – in housing and commercial space in particular – and we are working hard with partners to maintain this as part of our economic recovery.”