MTM Land and Worthing Homes hoped the former O’Brien removals and storage base, in East Worthing, could be converted into nine homes – four of which would be rented at affordable rates.
But the applicants failed to strike a deal with the Range, adjacent, to construct a pedestrian footpath separated from the business’s delivery yard.
Worthing Borough Council’s planning committee rejected the plans by five votes to one.
Speaking after the meeting, chairman Kevin Jenkins said: “We have to remember that whatever we build now will be there for the next 100 years plus. We have to ensure that we do not simply accept a lower standard to meet a demand.
“These messages were already relayed to Worthing Homes and the developer in the pre-application stage by the planning officers.
“I hope that they will now go away and give this greater consideration and if appropriate bring back a revised scheme that is acceptable and meets council policy.”
Fears over the safety of the access were coupled with the council’s policy on protecting commercial units.
Like its need for housing, the town has a chronic shortage of industrial units. Its planning policies demand commercial units are extensively marketed before conversion to housing.
Numerous applications seeking conversion of employment sites have been rejected in recent months.
Head of economic growth James Appleton suggested the site was not ‘actively’ marketed and attempts were ‘rather limited’.
Agent for the applicants Nik Antoniou said the property had been marketed since 2014 but there was ‘zero’ chance of success because the building had no services.
Worthing Homes could overcome the issue by connecting the site to services for its adjacent properties in Oakleigh Court.
Councillor Noel Atkins said: “I don’t believe this will ever be serviced as a commercial site.
“This is an excellent proposal which gives us affordable housing, which is normally very hard to get.”
But Mr Atkins was the only supporter of the scheme. Councillor Paul Yallop said the access proposal was ‘dangerous’.
‘A bitter blow’
MTM, which has been working on its proposals for 18 months, said it was ‘virtually impossible’ to source commercially viable land suitable for Worthing Homes in built-up areas.
Speaking after the meeting, a spokesman for the firm said refusal of permission was a ‘bitter blow’.
They said: “It is a great shame that Worthing Council failed to deliver a unique opportunity to provide nine new affordable homes and allow the site to potentially fall into further dereliction or become a commercial site for car repairs, paint spraying and the like.”
A spokesman for Worthing Homes said it understood the reasons for refusal but lamented the ‘lost’ opportunity for affordable housing.
“Given that there is a high need for affordable homes in the area it is not the best outcome,” they said.