Local residents and traders have expressed fears that proposals for a controversial fashion hub will increase divisions between the haves and have-nots in a deprived area of Hackney

Developers Chatham Works and Manhattan Loft Corporation – who first touted ideas for a fashion hub last November – have now submitted a planning application for the first phase of a £100 million eight-storey shopping outlet, design studios, restaurant and cafe in Morning Lane, Hackney Central.

The second phase will also convert the railway arches on Morning Lane into retail outlets – although Hackney Council has already spent £1.5 million out of a £5 million post-riot regeneration pot awarded by the Mayor of London regenerating them.

Fashion editor Ellen Grace Jones, 31, of Stoke Newington High Street, Stoke Newington did not welcome the proposals. She said: “We are not upset with some development going on, but it should engage the community. This is only going to benefit big global fashion labels and established designers. This will only increase social polarity and alienate sections of the community further.”

The ripple effects of the potential fashion hub are also causing waves on the surrounding community.

One local fashion designer in a neighbouring street, who did not wish to be named, is being evicted from her business premises because her landlord is selling the building to property developers. She said: “I’ve been in Hackney for over eight years. I feel it’s going to completely change Hackney and turn it into a Hackney for rich tourists.”

The plans also include knocking down the historic former Duke of Wellington pub –which is being used as an outlet by luxury brand Pringle – and the Gravel pit chapel where Joseph Priestly, who discovered oxygen, preached.

The developers say they have consulted with local residents and businesses, who they claim are broadly supportive of the hub. However, exact figures were not provided to the Gazette before they went to press.

Hackney Council say the hub could generate more than 400 jobs in the local area. A spokesman said: “We are actively working with existing businesses in the area to make sure they benefit from increased footfall of shoppers from outside the borough as well as creating an affordable incubator space for local designers and manufacturers.”

If the planning application is approved, work would commence in Autumn.

Harry Handelsman, chief executive of Manhattan Loft Corporation said, “This is the next step to delivering a truly inspirational fashion development at the heart of Hackney.

“We’ll continue working closely with local residents and retailers to make sure the Fashion Hub is a national, international and – most importantly – local success.”

• People can submit comments on the application until July 15 at http://apps.hackney.gov.uk/servapps/Northgate/PlanningExplorer/PLComments.aspx?pk=197661