Council leaders are hopeful demolishing Southampton’s old Toys R Us and building hundreds of flats will unlock the “very important” city centre site.

A bid for around 600 build-to-rent flats, restaurants and shops was given the green light by planners two years ago.

The development agreement between landowner Southampton City Council and leaseholder Packaged Living was due to lapse this summer as certain conditions had not been met.

It comes after council cabinet members approved an extension and alteration to the commercial terms of the agreement for the Maritime Gateway scheme at a meeting on Tuesday, April 16.

Cabinet member for economic development Cllr Sarah Bogle said the alterations to the development agreement reflected the “very challenging economic conditions in the last few years”.

“This gives the developer a chance to fulfil their obligations and hopefully unlock a very important site for the development of the city,” Cllr Bogle said.

The Labour councillor said she could not go into the details of the commercial terms.

The firm said the scheme had faced setbacks last year due to “macroeconomic issues”, such as interest rates, inflation and the supply chain.

These factors had made it difficult to meet the conditions of the agreement by the initial deadline of June 2024.

A report to cabinet said the developer had seen “positive trends” this year which would support the delivery of the project.

The Toys R Us building off Western Esplanade has sat derelict since the retailer’s collapse in 2018 apart from a brief period when it was used to store donations for Ukrainian refugees in March 2022.

Packaged Living’s plans for the land involve demolishing the old Toys R Us, levelling the site and building four blocks between seven and 25 storeys.

Full planning permission was given by the city council and is due to lapse next year unless work starts.

A fifth eight-storey building could be included in the development but its use is yet to be decided.

The scheme also features a new pedestrian route, International Maritime Promenade, which will link Southampton Central Railway Station and the waterfront.

Packaged Living and the council signed the development agreement in December 2021, seven months after the London-based developer acquired the leasehold interest of the site.