DEVELOPERS have abandoned huge redevelopment plans for York’s Castle Piccadilly area, which have divided the city for more than 15 years.

LaSalle Ltd, which owns the Coppergate Centre, says finding an acceptable plan has always been difficult but has now been made impossible.

The company has instead unveiled smaller proposals to turn the Banana Warehouse building, and the neighbouring computer and furniture shops in Piccadilly, into two new shops and 37 flats.

The warehouse frontage will be retained as it is seen as historically important, but everything else on the site will be demolished and rebuilt.

The company said City of York Council’s approval of plans for out-of-town shopping at Monks Cross, beside York’s new Community Stadium, meant demand for more shopping space had been met.

In a planning statement with that application, the firm said: “Finding an acceptable large scale retail-led regeneration scheme within York City Centre has always been challenging. Previous proposals have faced a wide range of complex constraints, particularly in view of the historic nature of York and the importance of the River Foss, which have made accommodating a major development in an acceptable manner impossible to date, with previous schemes having been unsuccessful.”

It said that the Monks Cross development meant a “comprehensive retail-led” redevelopment at Castle Piccadilly was no longer possible but said “smaller scale” regeneration remained possible and probably more acceptable.

LaSalle said the new flats would boost local services and business and contribute to a strong, vibrant and healthy community. It said new homes were needed.

Adam Sinclair, chairman of York Business Forum, said he was not surprised LaSalle had abandoned its large-scale plans and said councillors had been told last year, when they approved the Monks Cross plans, that such an outcome was likely.

He said: “The piecemeal development of Castle Piccadilly area makes sense in the circumstances, so we get the street regenerated.”

City council leader James Alexander said: "I'm pleased to see these planning applications being submitted for new retail units and homes on one of the city's key brownfield sites, Castle Piccadilly.

“We have seen consistent interest from businesses in this site and its good to see new investments coming forward now, following significant council investment in city centre through Reinvigorate York. I look forward to seeing the finer details and will be keeping a very interested eye on their progress given the potential associated jobs and growth for York.”

Green councillor Andy D’Agorne gave a cautious welcome, saying: “I would welcome some progress on tackling dereliction in Piccadilly if the proposals are sympathetic to the surrounding built environment.”

The new site will include flats in a U-shape, with a communal courtyard garden opening on to the River Foss. It will include 21 parking spaces and 44 bike spaces.

The Coppergate centre opened in 1984 and plans to expand it were first unveiled in 1997. Those proposals involved major new shops on the site of the Castle car park along Piccadilly.

There was major opposition and the Government rejected the £60 million scheme in 2003 after a lengthy public inquiry. The inspector said the project was a threat to York's historic core, especially Clifford's Tower.