A development application to build a five-storey, 18 metre tall, multi-use building on Dunn Bay Road in Dunsborough was unanimously approved by the City of Busselton Council.
The development includes two commercial levels, two residential levels and one level of car parking.
Up to 18 commercial tenancies will occupy the ground and second levels of the building which could be used as restaurants, retail shops or offices and a level of car parking on the first floor.
The third and fourth levels would include 14 one and two bedroom apartments which could be used as short-term accommodation.
City of Busselton officers recommended that council approve the application along with around 40 conditions the developer must meet.
Included in the conditions was a cash in lieu payment of $394,037.05 for 37 parking bays which would not be provided on the site.
Officers also recommended the developer pay $15,130.36 towards upgrading Dunsborough's road network, $7,974.40 towards paths and $44,492 towards community facilities in Dunsborough.
The development is set to become the tallest building constructed in Dunsborough which has concerned some residents.
At community access sessions, a number of Dunsborough residents addressed the council concerned about the height of the building and car parking.
Dunsborough's town planning scheme allows for a height limit of 21 metres, which was amended to encourage mixed-use, medium density development within the town centre.
Resident Mark Webster said 21 metres for Dunsborough's town centre was too high.
Mr Webster said while the application before council was a well designed building he was more concerned about the next building that would be 21m and not as well considered or designed.
"It is well designed, but I think it is too big," he said.
Resident Jenny Fletcher shared similar concerns, while she liked the design of the building and thought it would bring vibrancy to the town centre she was concerned about the height.
Ms Fletcher said the building would be double the height of surrounding buildings in Dunsborough and made comparisons to other small Australian coastal towns with lower height limits.
Representing the applicant, LB Planning director Stan Lawerence-Brown said the height was something that was yet to be experienced in the town.
"We have to look at it on its own merits and what is good for the town," he said.
"I understand why there is a concern and it is something we have to try and get our heads around but I do not think it is as scary as we think.
"I think the council has put this zoning in place and supported this because we have to be very careful not to contribute to further urban sprawl in Dunsborough."
Mr Lawerence-Brown said it was predicted the town would triple in population within the next 15 years and they could not keep sprawling it out.
"Using a vertical space is a solution to having people living in the town, not relying on their cars and having a more walkable town centre."
Now the development application has been approved, Mr Lawerence-Brown said the proponent would take stock of what has been approved and make sure it was still a viable project.
The building's designer Dane Richardson, from Dunsborough, said the whole process had not been taken lightly and there was a great deal of responsibility with a project of this nature.
Mr Richardson said he was aware of the large projected growth in a tight and compact town.
"I do believe the current town planning settings were correct and we should be envisaging a medium density town of excellence," he said.
"Let's be certain we do not jump Caves Road in 15 years or ever encroach on our developments into our surrounding pristine environment."
Mr Richardson said high quality, higher density developments in a town centre that took five minutes to pass end-to-end would provide a "fantastic village atmosphere that was full of people at play and work."
"We would be the town other coastal towns pointed to as an example to grow," he said.
"Keep it tight and compact, push cars to the periphery so it was only a short walk to your favourite shops or workplace and we would be able to maintain all the charm the area has.
"I would like to thank all of the people who took time to review the building design and provide their view, those comments were appreciated and many were acted on to tune aspects of the proposal."
City of Busselton mayor Grant Henley said the town planning scheme acknowledged restraints to prevent urban sprawl in Dunsborough, and it would be hypocritical of the council to knock back the application.