A total of 122 apartments and a commercial unit in a six storey block could be built alongside Shalesmoor in Kelham Island.
The site, which fronts on to the inner ring road dual carriageway, was on the market for £1.4m and was bought by R.S.Sabkha Construction and Developments Ltd in December.
The firm is close to completing a four-storey block of 90 apartments and commercial units to the rear, on Cotton Mill Row.
Number 180 Shalesmoor was originally a steelworks before being used for clothing distribution and latterly a car bodyshop, clutch centre, car hire and fishing tackle sales.
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The design was by CODA Architecture of Sheffield.
Managing director Matt Bowker said: “We have worked on many developments in Kelham Island and around Shalesmoor and Neepsend and we are confident that 180 Shalesmoor will prove to be as successful as all our earlier projects.
“CODA Studios is, of course, based in Kelham island and we have been passionate supporters of the regeneration of this historic part of Sheffield for many years now.”
It is the latest development in the former industrial area turned residential hotspot.
Nearby, developer Citu is building its Kelham Central housing development which has seen buildings go up on either side of the popular Kelham Island Tavern.
And the oldest buildings in the area - a row of cottages from 1804 on Alma Street - are set to be turned into 11 homes.