Dundrum Town Centre, owned by Joe O'Reilly's Castlethorn, has for the first time admitted the economic slowdown ­and protracted negotiations over an anchor tenant have delayed the building of the second phase of Ireland's largest shopping mall.

But in an effort to dispel widespread concerns among residents, traders and local councillors that the development will be frozen, Dundrum said it was "confident" that in the next two months it could name a department store tenant to 'anchor' the next 106,618 square meter development it plans at the far end of the village.

Building has already been delayed by at least a year. Representatives of the developer told the Sunday Tribune earlier this year it expected to appoint a building contractor this summer. But a subsequently revised planning application raised residents' objections about the height of a 9-storey hotel the developer proposes on part of the site.

Don Nugent, director of Dundrum Town Centre, said talks with an anchor tenant had been a factor in the delay. "We have always gone for a long-term solution, not a quick deal," he said, adding that talks with an unnamed anchor tenant were "very far down the road".

John Lewis, the British department store, which is seeking permission to build an outlet off the M1 near Lisburn, said on Friday it was continuing to talk to developers in Dublin about opening a second Irish store in the south.

Many residents and businesses believe that construction along the main street in Dundrum – connecting the existing mall with the new development to create one of Europe's largest shopping malls – will not be completed before 2014, at the earliest.

Aidan Culhane, a councillor in the Dundrum area, said that though the project was of a "high standard" it will take at least four years to complete whenever construction finally gets underway.

Planners at Dun Laoghaire-Rathdown County Council, which raises €7m a year in rates from the existing retail and office tenants in the new mall, said questions about "the commencement and completion" of building work in Dundrum "should be directed to the developer".