Cardiff Council has dropped plans to acquire a key land site in the centre of the capital for a new headquarters building.
It has been considering a potential 250,000 sq ft new HQ at a wasteland site at the southside of the Callaghan Square office scheme.
The council had been in protracted discussions with the Welsh Government, which owes the Callaghan Square site, over a land deal.
However, the council has now formally withdrawn from negotiations and is instead now looking at options for its current County Hall HQ building at Atlantic Wharf in Cardiff Bay.
This includes a refurbishment of the existing building as well as a new build option on the current site, which depending on the design could free some land for other developments.
As part of a deal to increase the size of the Callaghan Square site to 12 acres, the Welsh Government has acquired adjoining large industrial units from the council.
The Welsh Government, which is being advised by property advisory firm Knight Frank, is working on a new masterplan for the enlarged Callaghan Square development site.
Its city centre site, coupled with close proximity to Cardiff Central Train Station, should see it attracting strong developer interest if formally brought to market. It could be developed as a mixed-use scheme with a focus on office space.
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The Welsh Government acquired the land from property development firm MEPC for £7m in 2013. Its rationale for the deal at the time was that the site hadn't been developed, which seven years on remains the case.
The council is expected to confirm next month its plans, whether a new build or a refurbishment of County Hall, which with its car park extends to around 20 acres, next month.
A Welsh Government spokesperson said: "A Welsh Government spokesperson said: “We are in discussions with our appointed agents for the development site at Callaghan Square and proposals for its marketing will be reviewed in the first quarter of 2021."
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