A group of Canberra and South Coast developers are proposing to build 250 apartments at the site currently occupied by Bunnings Warehouse Ulladulla.
The developers say the project would offer more housing options for residents and affordable homes for essential workers.
Canberra-based developer The Fleming Group and Sydney group Olivander Capital have submitted plans to the Shoalhaven City Council.
The group has purchased the site and settlement is due to be completed in the coming weeks.
Bunnings is relocating to a new store on Princes Highway in Ulladulla.
The Fleming Group and Olivander Capital are proposing to re-zone the St Vincent Street site from E4 general industrial to MU1 mixed use and increase the maximum height of buildings from 11 metres to up to 30 metres.
Subject to zoning approval, the developer intends to build 250 residential apartments on the block, including 50 affordable homes for essential workers.
Four buildings have been proposed, ranging from three to nine storeys tall.
Ground-floor commercial spaces and a 120-place childcare are also in the plans, and are hoped to generate about 190 jobs.
The Fleming Group's Alexandra Arnold said while tourism was booming in the Milton-Ulladulla region, many local residents had been priced out of the housing market.
"There is very little affordable housing or housing options, and our goal is to provide that so people can both work and live in the area where their family ties are," she said.
Ms Arnold said the relocation of Bunnings opened the door to provide housing options for people who were downsizing and those looking for affordable housing.
"By reimagining the site's potential we can address the evolving needs of Ulladulla and alleviate housing pressures," she said.
The developer intends to partner with an affordable housing provider that would rent 50 of the homes on a long-term basis to key workers such as nurses and aged care staff.
Plans also include green spaces and community facilities on the ground floor, including space for hospitality and wellness businesses.
Community members can have their say on the development proposal online.
