"The last thing Hastings needs is to have its CBD eroded to another part of town," Hastings City Business Association chairman Michael Whittaker said.
"It goes at the very heart of what The Park Mega was about. It was designed to reduce impact on the CBD and create a completely different retail space.
"The zoning there was for 1000sq m-plus - it was very, very clear it was not for small retail. It was for big retail and that's the way it needs to stay."
Councillor Wayne Bradshaw said he understood The Park's commercial reasons for wanting to make the application, but shared Mr Whittaker's concerns.
"If it goes ahead it is certainly going to make survival in the CBD [for smaller retailers] very difficult."
Mr Bradshaw said if the council knocked back the application the issue could end up in the hands of the Environment Court for a decision.
Sydney-based developer Charter Hall developed The Park four years ago, initially for The Warehouse, and Mitre 10 Mega moved to the development as owner of its site.
This year Noel Leeming moved to a new building at The Park with a footprint smaller than 1000sq m, but with a mezzanine floor that took it up to the minimum size.
Sydney-based Charter Hall, which has since sold the centre, withdrew an application for smaller retail spaces "because they realised it was too hard", Hastings Mayor Lawrence Yule said.
The new application for six smaller retail spaces from Advance Properties Group comes at a time when Hastings' CBD is suffering a record-high level of retail vacancies.
Mr Yule said Advance had every right to apply and its application, which was not a surprise, would be duly assessed.
"Developers have always wanted it, but the plan was quite clear at the outset as to what the rules were," he said.
"We're now in a place where people can apply to do something that varies from the plan rules, and that's what they're doing."
The council has yet to decide whether Advance Property's application would be notified, opening it up to public submissions.
Advance director Warren Ladbrook said the company would wait for the council's response to its application before deciding how it would proceed.
The Park has three smaller tenancies, among them Fishing Camping & Outdoors, which is due to vacate after its Australian owner pulled the plug on its New Zealand chain.
Mr Yule said the council was planing a public forum for June where experts would share their thoughts on what Hastings could do to revive its CBD in the face of changing shopping patterns, such as online buying, which were all affecting retailers globally.
"It's a phenomenon that's going on everywhere and we just need to understand what is occurring and what is the best way forward to try [to] mitigate it."