Officers recommend that when councillors meet next week, the proposal for Yorkshire Trading Company's Tirusk Market building should be rejected.
The scheme saw an existing previous bank and a new 545 square metre extension at the rear of the building used by the store, creating two flats on the first floor.
Thirsk Town Council supports redevelopment, but historic England said it is worried that the plan will harm local conservation areas.
Case Officer Connor Harrison said in a report to members that the scheme would create 18 full-time jobs and use redundant buildings.
However, he agreed that it would harm the conservation area and “mainly erase” the well-defined historic baggage group on which the property was standing.
The officer said this would allow us to understand the medieval origins of Thirsk and how this shaped the subsequent developments in the town.
The recommendation for the scheme was rejected, and Harrison said: “The proposed development will not cause much harm to the character, appearance and importance of the Tirusk and Sourbee conservation areas through the introduction of development forms that are inadequate in scale and mass.
“In addition, the medieval Belugier plots that make up the wider site are completely obscure and have a negative effect on the readability of the historical planar form.”
Support for documents submitted in the planning application: “This proposal will help support existing communities by providing a wide range of products in town centres and reducing travel needs.
“It offers a variety of good job opportunities, and this scheme protects the contribution to existing marketplace entrances and conservation areas.
“The existing buildings will be reused and the underused rear section of the site will be used for the benefit of the town and the community.”
The Thirsk and Malton Area Planning Committee will discuss the application next Thursday.
