The major redevelopment of a city centre site which was home to a Toys R Us shop has fallen behind schedule.

Plans have already been approved to level the site in Southampton and build 603 flats, restaurants and shops across four buildings.

Councillors granted the proposal from Packaged Living for blocks ranging between seven and 25 storeys in March 2022.

A fifth eight-storey building is in the pipeline for the site between Western Esplanade and Harbour Parade, with its use yet to be decided.

Southampton City Council is the freeholder for the land, which has sat derelict since the collapse of Toys R Us in 2018 bar a brief period as a storage facility for donations to Ukrainian refugees.

Packaged Living acquired the leasehold interest of the site in May 2021.

The local authority entered a development agreement with the London-based build-to-rent firm in December 2023.

A new extended lease was negotiated, but this would only be agreed if the developer met a series of conditions by June 23, 2024.

While the details of these conditions remained confidential, Packaged Living has now told the council it will be “increasingly difficult” to complete them by this summer’s deadline due to factors including inflation and supply chain issues.

Cabinet members will be asked to approve changes to the commercial terms at a meeting later this month.

The issue is due to be discussed first by the overview and scrutiny management committee on Thursday, April 11.

A briefing paper to the committee says: “Through early 2023 the developer demonstrated commitment to completing the conditions of the development agreement.

“However, in 2023 macroeconomic issues impacted the construction sector nationally and locally, with increased interest rates, inflation on the cost of materials and also the capacity of the local sub-contracting supply chain for projects of this scale in Southampton.”

The paper says Packaged Living has pointed to “positive trends” emerging this year which will support delivery of the scheme. This included lower predicted interest rates, reduced inflation and stabilisation of construction costs.

“If no changes are made to the commercial terms, then the development agreement will expire in June 2024 and the developer would no longer be able to progress the delivery of the scheme,” the briefing paper says.

“The council would need to negotiate a new agreement with the same developer, as they are also the leaseholder of the site.

“This would add more time and cost to the delivery of the scheme if a new agreement has to be prepared and agreed.”