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A cyclist passes through Toronto's Kensington Market on June 7, 2013.

MOE DOIRON/THE GLOBE AND MAIL

Kensington Market appears to have won the war against Walmart.

The latest pitch to the city from RioCan, the real-estate company developing a site near Bathurst and Nassau streets, no longer includes a big-box Walmart and would shrink the project's retail area.

Councillors Adam Vaughan and Mike Layton revealed the new plan at a local stakeholders meeting at the Scadding Court Community Centre on Thursday evening.

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"We pushed back hard on this," said Mr. Layton, who has advocated against Walmart for nearly two and a half years. "The pressure put on Walmart and RioCan from our community backed them off from putting it in our area."

Ed Sonshine, chief executive officer of RioCan, said that if the project is approved, "we believe we can make arrangements with Walmart so that they can basically walk away from the deal."

He declined to elaborate.

The largest retail unit in the new proposal is about 45,000 square feet, less than half the 95,000 square feet allocated for a Walmart in the original proposal.

The new plan also includes two floors of office space and sets the building farther back from Bathurst Street to make way for a larger sidewalk.

"We've been in discussions with city officials before the thing heads off to the [Ontario Municipal Board] later this year. Rather than going to the OMB, we've been working with the city to come up with a revised proposal," Mr. Sonshine said. "We're all going to do what's best for each company."

The proposal still has to pass through city council, but Mr. Layton said he is "cautiously optimistic."

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Mika Bareket, a Kensington Market business owner, said most stakeholders were "very keen" on the new proposal.

"As a resident of Kensington Market for my entire life, it looks like a wonderful compromise," she said. "They were potentially a threat for the businesses in not only Kensington, but in Little Italy and Chinatown as well.

"It looks like an agreement will be made. I cannot see why it wouldn't be."

The city will present the full proposal to the public later this month.

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