The £6.8million building is aimed at creating new town centre offices in Torquay as part of the Castle Circus Regeneration Project, attracting investment and potentially 600 new jobs.
The four-storey business centre will create approximately 40,000 sq ft of office space and car parking on the current car park site off Lymington Road.
The aim is to attract new businesses into the town, though no specific occupier is yet lined up.
It has been estimated that only 13 car parking spaces will be lost in total after the building is completed.
The council has approved the business case for the project as part of the Castle Circus Regeneration Project and it will be funded by prudential borrowing, the cost of which will be met by the rent and the capital will be repaid over 25 years.
One of the aims of the project is to strengthen the attractiveness of this part of town as an office location, which in turn should benefit local retailers, says Torbay Development Agency, which is behind the project.
The building is to have a bio-mass boiler using fuel from sustainable sources and natural ventilation as well as solar panels on the roof for heating water.
The council is in discussions with Shopmobility and the Coalition for the Disabled which have shops currently sited at the entrance to the town hall car park, about alternative premises.
Subject to planning permission, work is expected to start later this year and be completed in 2011. Public consultation is continuing to the end of the month on the proposals. See www.torbay.gov.uk or email tda@torbay.gov.uk or telephone 01803 208985.