The move came less than 24 hours after Bexley City Council's zoning committee recommended that the full council vote against the request.
Rick Weber, chairman of the zoning committee, announced Capital's decision to withdraw the request for variances at Tuesday night's city council meeting.
Capital University spokeswoman Nichole Johnson said the university withdrew its application Tuesday. She said Capital believes that purchasing the Bexley Square shopping center would have been a benefit to the city and its residents.
"We still believe in the benefit," she said. "We decided to take a step back and re-evaluate the purchase. We have decided to terminate the contract (with Casto)."
Capital had a 90-day window of opportunity to evaluate the contract; the due diligence period ended in mid-June, although Casto officials indicated a willingness to give the university more time to sort out issues with the city.
When asked if Capital would consider the purchase at a later date, Johnson said the university would be willing to look at any purchase that presented itself but had no immediate plans to purchase the site.
Johnson said Capital did not withdraw its application because of comments made by council members at Monday's zoning meeting.
"I could not point to one thing, one meeting, one development or conversation we had with the city, or other developments that occurred during the due diligence period," she said.
Council's zoning committee discussed the university's request to allow "campus uses" at the shopping center at a special meeting Monday. Capital requested a variance for campus uses and another variance dealing with parking requirements.
Council was set to hear the third reading of legislation permitting the variances on June 8, but the matter was tabled at Weber's request to allow for more discussion.
The zoning committee forwarded a negative recommendation for the proposal to council Monday when Weber announced he was opposed to the variances. Ben Kessler abstained because he inquired about purchasing the property at one time and Matt Lampke did not attend the meeting.
Weber said there was great public interest in seeing retail maintained at the Bexley Square shopping center, adding "Campus uses in my opinion are what (gets) the negative reaction for me as far as this request."
Planning commission member Jan Zupnick encouraged Capital to purchase the shopping center property, but not for campus uses.
"We are concerned about tax revenue and the development of the property for tax purposes," he said. "I don't understand why you are pushing so hard."
Casto representative Charlie Fraas said redeveloping the Bexley Square shopping center site would bring major complications. Casto looked at redevelopment of the site, but it doesn't make financial sense, he said.
"No matter how dense we made it, we couldn't make it work," Fraas said. "The ability to market retail sites of this size is getting harder and harder."