The company behind Callow's Yard in Castletown says it wants to turn two shop units into homes because it can't find commercial tenants for them.
The Courtyard Ltd, based at the development, says the two units in Malew Street housed shops when the complex opened in 2009.
But since they closed the units have been empty - and even specialist retail consultants from the UK offering rent-free honeymoon periods have been unable to find tenants.
And the company says the number of people shopping in Castletown since 2009 has dropped dramatically.
The Courtyard Ltd says under its plans the two shops will be transformed - with the shopfronts removed and the units turned into flats.
It cites the withdrawal of employers, doctors, dentists and opticians for the decline in shoppers, as well as a downturn in tourism, the expansion of nearby garages and the growth of internet shopping.
The company says there have been no successful shops at that location for more than 30 years, and converting the units for residential use would return the street to its 'previous historic language'.
But it says if the local authority can come up with a plan to improve footfall, it may consider changing the units back into shops in future.
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