Sir Peter Soulsby has had discussions with landowners interested in redeveloping an historic fire-damaged factory.
The mayor announced last month that Leicester City Council had bought the 18th century Donisthorpe building, a former textile factory in Bath Lane, following a blaze that wrecked the property in the summer.
Sir Peter said the £550,000 acquisition of the building and surrounding land was made so the council could spark a wider regeneration of the rundown area on the banks of the River Soar.
He has said he thought it would cost about £2 million to restore the property but that he envisaged passing it back into private hands for that work to be done.
"I have had interesting discussions with landowners," he said.
"I do not necessarily intend that the council should retain ownership of the building long-term.
"If necessary, I would want to see the council invest in bringing the building back into use.
"But that is unlikely to be necessary because of the level of interest already generated."
Sir Peter declined to say who he had been in talks with but said there had been "two or three" parties involved.
He said: "We have a range of different potential uses, but I would be surprised if there was not a mixture of residential and employment land in the end.
"Having this building puts us in a position to take the lead with regenerating that part of town."
The Mercury asked Sir Peter if he was prepared to dispose of the site to a developer for less than it was bought for.
He said: "The short-term costs will be outweighed by the long-term benefits of regeneration of the area.
"In other parts of town, we have seen bold initiatives by the council unlock regeneration."
Stuart Bailey, chairman of Leicester Civic Society, said a planning document prepared by the city council about the site before the fire suggested the land around the factory could be used for family housing while the building itself could be converted into apartments.
He said: "That's a good idea, but I can see how the factory could also be used as offices.
"I know of at least one developer very interested in the site which has a good track record of this kind of project.
"I never thought the council would want to hang on to the building for long and I would not be surprised if it was sold quite quickly."
