Seventy-three new homes, including a seven-storey block of flats, are to be built on the vacant Harborough Rubber Co. site.
Harborough planners approved the mixed scheme of townhouses and apartments despite some misgivings that it was an overdevelopment of the site.
The seven-storey building would be the tallest in Market Harborough.
The plans also include restoring the rundown Grade II listed Blandford Flour Mill, which dates back to 1860, into offices.
Speaking after the planning meeting Cllr Phil Knowles said they were faced with a difficult decision as the site had stood empty for a decade.
He said: “There’s been a need to redevelop that site for a considerable time. But I have a major concern about the multi-storey element, which I feel would be overbearing on the site.”
Details show that 45 houses and apartments would curve around the junction of St Mary’s Road and Kettering Road, with a spur overlooking the River Welland. A further 28 houses and apartments in a seven-storey block would occupy the vacant triangle of land between Rockingham Road and the River Welland.
Planning officers said the development had the benefits of restoring a listed building and providing new homes on a brownfield site.
However, at the meeting, Barry Frenchman, a member of Market Harborough Civic Trust, asked that the plans should be returned to the developer for further design considerations as they were “wholly out of place” in an important gateway to the town.
Joan Ashworth, speaking on behalf of residents from the retirement complex Welland Place wanted assurances that access would not be obstructed to minimise anxiety.
Cllr Derek Evans, said: “This has been an eyesore for a number of years, it’s dangerous, the hoarding panels have come loose. It is time something was done. The development is not perfect, but can we expect it to be. I will support this.”
There will be parking for 66 cars at basement level. And the car park opposite Market Harborough railway station will be raised to prevent repeats of flooding.