Developers want to build 65 flats on the site of a trading estate next to the south coast railway line.
The Brooklands Trading Estate in Orme Road, Worthing, is currently the base of firms including Gleam Clean car and valeting service, Ashdown Motors and Aero Technics.
However, West Sussex education bosses have warned the town's secondary schools would not be able to cope with additional children living in the proposed development.
Borough planners have received 17 objections to the scheme from people who fear parking chaos and congestion in terraced Orme Road.
But a report being considered by councillors on Tuesday praised the high standard of the scheme, which would remove an "unneighbourly" industrial site from a residential area.
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