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John Lewis Partnership has pulled a massive £500 million build-to-rent project, fearing the finances behind the plans no longer stack up.
The department store and Waitrose supermarket business intended to build and privately rent about 10,000 homes.
John Lewis and investment partner ABRDN have already drafted plans for the first tranche of around a thousand apartments by converting three unwanted stores.
However, the employee-owned retailer has recalculated the figures and decided that shifting economic conditions mean the numbers behind the project no longer work in the current high-interest market.
The build-to-rent project launched in 2020 and was a bid by the retailer to break out of traditional business financing by generating income from developing surplus land and airspace above existing stores.
Planning permission for the residential schemes above Waitrose supermarkets in Bromley and West Ealing, both in London, and a former industrial site in Reading, Berkshire.
In West Ealing, the firm wanted to build 428 flats in four high-rise blocks above the Waitrose store.
Bromley would have delivered 353 rental homes in a 24-storey building above the supermarket, while the Reading plan would have included 170 flats as part of a £70 million scheme.
John Lewis is now discussing the fine details of the projects with planners before deciding what to do with the sites. Options include selling them to developers.
A spokesman explained rising borrowing costs, higher construction costs, and weaker investor appetite as key factors in the decision, noting that the venture was designed for a market that no longer exists.
He added that the build-to-rent model no longer meets the partnership's investment goals.
The retailer also confirmed it is leaving property management. The business will be closed when the current contracts expire.
A press release revealed the company is investing £1 billion across 34 John Lewis stores and 315 Waitrose supermarkets and convenience stores.
"We're proud of what we've achieved in terms of progress with three planning applications and managing third-party build-to-rent homes for residents to a high standard. We will fulfil our existing management contracts at four build-to-rent sites as part of a responsible transition out of the business," said the spokesman.
How the John Lewis West Ealing plan of four high-rise blocks would have looked