A multimillion-pound deal to redevelop an industrial site has secured backing from Brighton and Hove City Council’s cabinet.

The commercial site at 3 Moulsecoomb Way in Brighton has two leases, and cabinet members agreed to grant a new lease for up to 200 years to allow for redevelopment.

Initial designs by the future leaseholder propose replacing the existing 1960s industrial buildings with a mixed-use development with modern industrial space on the ground floor and student housing above.

The existing building is in poor condition and does not meet modern standards.

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At a cabinet meeting the deputy leader of the council, Jacob Taylor, said that he wanted the scheme to include discounted student rooms for local young people and commercial space at below-market rates for the creative industries.

Councillor Taylor said: “Some residents in Moulsecoomb and Bevendean and Coldean and Stanmer might say, do we need more purpose-built student accommodation? Which is a tricky question but it’s worth taking it head on.

“There is a fair amount of data to suggest that the building of purpose-built blocks has relieved the pressure on the residential housing market.

“And the number of HMOs (houses in multiple occupation) within Moulsecoomb and Bevendean has decreased in recent years as that purpose-built accommodation has come online.

“It’s worth noting this is an industrial footprint type site so adding some student accommodation to the top does not hugely change its character and position.”

The council would still own the freehold of the site and the money generated would be used to buy family homes in the area which were previously sold under the “right to buy” scheme.

The Labour deputy leader added: “A portion of the capital receipt would be used for buy-backs, specifically in Moulsecoomb and Bevendean.

“We are purchasing roughly a house a day at the moment in terms of buy-back homes for families. By my reckoning, we could potentially buy five family homes in Moulsecoomb and Bevendean with these funds, which would be really important

“Moulsecoomb and Bevendean is a great place for families to live and we want families to keep moving there.”

Labour councillor Tim Rowkins said that affordable commercial property needed to be celebrated.

He said: “The creative industries in Brighton and Hove are absolutely core to its identity and many of the people that work in those industries in many cases can’t afford to live here and certainly can’t afford to live here and rent commercial space.

“It’s very important that we start to think strategically about that in order to preserve one of the things that makes Brighton special.”

The cabinet member for housing and new homes, Gill Williams, said that there was a great deal of negotiation.

Councillor Williams, who is also deputy leader of the council, said: “This is an exemplary example of how councils and the commercial world can work together to benefit our communities.

“It’s quite possible and very probable that we can carry on doing this in the future.”

The Labour leader of the council Bella Sankey commended Councillors Taylor and Williams for working together on the project to use the money to buy back homes.

At Hove Town Hall yesterday, the cabinet agreed to the surrender of the existing leases and to the grant of a new lease for up to 200 years. They asked officials to finalise the terms.