The owners of 5 Clark St, the McNay Somes Partnership, have applied for consent to convert the vacant downstairs level of the building to residential use.
The upper level of the industrial building, in the central city area, already has three apartments, which would be reconfigured, resulting in 15 bedrooms across both levels.
New decks would be built at the rear of the building, and would also become the focus for entry to the redeveloped building, a planner's report said.
It recommended consent be granted, subject to a list of conditions, but the plans concerned neighbours Jeff and Tania Herkt.
The couple owned the adjacent residential home at 9 Clark St, and worried the extra residents and new decks overlooking their rear yard, would threaten their privacy.
Mr Herkt, speaking at a consent hearing this week, said they bought their home about six years ago, but it had been a residential address since the 1880s.
Their home had been "significantly refurbished" in recent years, and provided a private, inner-city residence, he said.
The adjoining building at 5 Clark St, which had been home to industrial and commercial tenants downstairs since its construction in 1927, had been empty downstairs for the past year or so, Mr Herkt said.
The existing three apartments upstairs were occupied by professional couples who were "very easy to live with", he said.
The redevelopment, as proposed, would result in a "significant" increase in density next door to their home.
The couple's planning consultant, Conrad Anderson, of Anderson and Co (Otago), said the development would also permanently remove an industrial resource from the city.
It could also increase the potential for conflict between the up to 30 tenants who could occupy the redeveloped space and surrounding industrial businesses, he said.
If it was successful, the council could expect "a flood" of similar applications, raising the risk of creating an "undesirable precedent", he said.
Consultant planner Kirstyn Lindsay, appearing for the building owners, said noise insulation had been offered by the developers.
The "indiscriminate mixing" of activities had occurred over a long period of time in the area, and the downstairs level was surrounded by residential activities to the north, south and above, she said.
An expansion of that mixing would not further constrain the industrial use of the site, she argued.
The council's hearings committee will deliberate in non-public mode before issuing a written decision.
