Harrow Council says the underused carpark in Harrow Town Centre will soon have gallery space, flexible retail units and affordable workspace for creatives.
Its site will also be used for community or event spaces, micro galleries and will have a pedestrian walkway linking the site to Station Road.
Councillors gave a unanimous backing to improving the car park as part of a redevelopment of the Greenhill Way site.
Construction would begin in the next few months and once running the area would be locked at night. Businesses will be able to rent space for shipping containers to serve customers in.
It is estimated that it will be used as a hub for five years, but it could be extended if it is successful.
Cllr Norman Stevenson, cabinet member for business, said: “This is welcoming news.
“Until now this area was deteriorating and needed revitalising. We are a borough that supports local businesses and entrepreneurs and committed to keeping our borough clean and safe – this is exactly what this transformation will do.
“I look forward to seeing the works complete and invite local start-ups and creatives to take their business further.”
The project will be funded from the Department for Levelling Up’s Future High Street Fund, which was set up to help high streets and town centres recover from the pandemic by improving transport links, building new homes and transforming underused spaces.
Councillors heard that the seven disabled spaces lost within the 274-space car park for the redevelopment would be moved to the rest of the car park site.
At the planning committee meeting, vice chairman Cllr Chris Baxter said the plans were creative and innovative.
He added: “This will bring more welcome activity into this area and more people being around for legitimate reasons is likely to reduce some of the negative behaviours currently seen in this area. Improving vitality can only be a good thing.”