Palmer Square Management has decided not to lease a storefront on Hulfish Street to the Princeton post office, as previously planned. But the branch, a presence on Palmer Square since 1934, may move to the East Nassau Street neighborhood as part of the former West Coast Video location. The front of that building is being considered as a location for a 7-Eleven store.

Alec Monaghan, first vice-president of CBRE Inc., the real estate firm handling the post office sale, said Tuesday that the West Coast Video site is on the table as a new home for the post office, which must move because it’s Palmer Square building is being sold to a California-based developer. “It would be on the side of the building or the back,” he said. “It has pretty good visibility and there is parking. A whole population lives at that end of town, too. I feel good about it.”

Mr. Monaghan said he has spoken to Robert Bratman, whose family owns the former West Coast Video building, about the possibility. Mr. Bratman said Tuesday that if the deal went through, the post office would be located where a laundromat used to be. “I think it’s a good idea,” he said.

The United States Postal Service wants to move the Princeton branch to a smaller site as part of a nationwide downsizing effort. CBRE is also representing other post office locations. Princeton’s current post office is 12,000 square feet, and the move to 51-53 Hulfish Street would have meant scaling down to 2,000 square feet. The East Nassau Street site is approximately 2,300 square feet, Mr. Bratman said.

The Postal Service was in the process of negotiating a lease with Palmer Square Management, but the management company has decided not to go through with the deal.

“Mostly this is because I was hoping to keep it as a retail or dining use,” said David Newtown, vice president of Palmer Square Management. “I hope they find somewhere in the downtown. They have been very professional in their dealings with us, and I hope the right outcome occurs.”

Postal Service spokesman Raymond Daiutolo said yesterday that the decision was a disappointment. “We learned that the location is no longer available, so we have to go back to square one,” he said. “That means we have to solicit again for an alternate location for retail operations.”

Mr. Monaghan said the Hulfish Street site was “a triple A location,” and also expressed disappointment at the decision. But the company is looking for alternatives. In addition to the West Coast Video possibility, they are considering another downtown location. “I can’t disclose where it is, because it has a tenant in it,” he said.

Keeping the post office in a downtown location has been a priority since the move was announced in 2012. Some people have expressed an interest in moving it to Princeton Shopping Center, where there is ample parking, but that option is not favored by the municipality and by Princeton University, which wants to keep the site within walking distance of students.

“I have encouraged the post office to explore that possibility [East Nassau Street] as well as others,” Mayor Liz Lempert said in an email yesterday. “It is important to maintain a post office in the central business district and we are working with the post office to try and find a spot that meets their needs and the needs of the community.”