Secretary of State for Local Government Eric Pickles resoundingly rejected the £160m plans by Henderson Global Investors to knock down part of the historic General Market and nearby Fish Market in Farringdon Street and to build a seven-storey office block and shopping complex on the site.
In doing so he backed an alternative regeneration scheme by the founder of Camden and Spitalfields markets, Eric Reynolds, who put forward proposals to turn it into a Covent Garden-style market.
Mr Reynolds has now urged Henderson to “pick up the phone” and talk to him about setting up a deal.
It is the second time in less than 10 years that an office development has been blocked on the site by the Secretary of State, meaning the “game is pretty much up” for that type of scheme.
Henderson has a lease on the building until 2020. It is currently used by Crossrail to store equipment while it rebuilds Farringdon station.
But it is expected to vacate the market by the end of next year. Mr Reynolds said the building should be made available as soon as possible after that.
In a statement he called for the buildings to be brought into suitable public use as soon as practically possible. “The best way to preserve historic buildings is to keep them in use,” he said. “Crossrail could be ready to move out in a year or so and the re-use project should be prepared to open the doors immediately after the space is clear.”
He added to the Tribune: “Henderson are not a fly-by-night company. We have written to them before about our scheme, but have not heard anything.
“But the belief in the architectural circles now is that the game is up for Smithfield. Mr Pickles’ judgment was very strongly and carefully worded, closing up all the potential loopholes.
“There is a brand new station which will bring thousands of people next to the market. We have a planning application in with the City of London. We hope they will determine this as soon as possible.”
In his strongly worded statement Mr Pickles criticised the City of London Corporation, which owns the building, saying: “The deteriorated state of the building is, at least in part, the result of the history of deliberate neglect.”
Mr Reynold’s call was backed by campaign group SAVE Britain’s Heritage, which had battled against the office plans.
A spokesman said that the nearby Fish Market is empty and could be used immediately.
Henderson has the right to appeal against Mr Pickles’ decision. It did not respond to requests yesterday for comment.
A spokesman for the City of London – which granted planning permission to Henderson last year – said any new scheme would have to go through the planning process.
Mr Pickles, who had “called in” the decision, described the plan as “wholly unacceptable” on Tuesday. He said: “The extent of damage the application would cause to the important heritage asset of Smithfield runs entirely counter to national and policy objectives intended to protect such assets from harm.”
He added that Mr Reynold’s scheme was “viable and deliverable” and could “secure a long-term future for the buildings”.
SAVE described the victory as “ resounding”. Marcus Binney, SAVE executive president, said: “Our energies will now focus on implementing a scheme on the lines proposed.”