Portsmouth company Magma pulls out of naval base move
A manufacturer will not be moving to buildings on Portsmouth Naval Base, which have been empty since shipbuilding left the city in 2014.
Magma Structures had been a preferred bidder for part of the site, but the Ministry of Defence (MoD) confirmed it would not move in.
Conservative council leader Donna Jones said it was a "disappointment".
The MoD said a centre of excellence was being created on the site by BAE Systems.
Ms Jones: "It is a disappointment they haven't moved in yet, it is for financial reasons with the cost of the relocation of the company into that ship hall."
Magma Structures is currently based at Trafalgar Wharf in Portsmouth and is a manufacturing company.
Mark Lancaster, minister for defence personnel and veterans, said Magma Structures was not using the site "after a review of its business needs".
It will be leasing office space within the naval base, he said.
The government also announced a centre for excellence for minehunter vessel maintenance is to be created at the site.
HMS Brocklesby is due to be moved to the facility on Wednesday for maintenance.
These activities had previously been carried out elsewhere at the base.
Magma Structures confirmed it would not be moving to the site.
Peter Henley, political editor, BBC South
When BAE moved shipbuilding from Portsmouth to Scotland the government said it would not let the city sink into economic recession.
We had the prime minister personally endorsing a £100m city deal, the hosting of Britain's own Americas Cup team in Portsmouth and even its own minister.
But since the election it has been a lot quieter.