Newport City Council is to seek tenders for its Friars Walk city centre development after Modus Corovest indicated it is not in a position to deliver the proposed scheme.
Most of the site clearance, roads infrastructure and a new car park are in place, but the developer told the Council it could not find the funding for the scheme.
"Such is the importance of this project for Newport we are not prepared to accept a scaled down version and will therefore open up the scheme to other interested parties," said leader Matthew Evans.
"Businesses and investors know the huge potential that the city has, and there was no lack of interest in the Friars Walk scheme which was 75% pre-let. The banking crisis has had a huge impact on the commercial property market and unfortunately Modus and Friars Walk have been caught up in the middle of this."
