Up to 30 businesses will be asked to move as part of a £90m regeneration plan for a run-down town, a council has said.
Gateshead Council wants to bulldoze a 20-acre site off the High Street for new housing and green spaces.
Some traders have said relocating would mean they would lose business.
A spokeswoman for the authority said it was a "sensitive time", adding everything would be done to help businesses with "relocation options".
The proposals also include community facilities as well as revamped pedestrian and cycle routes to the town centre and Gateshead Interchange.
"We would like to reassure those affected that we have robustly explored the options for this area to bring about positive change in response to the challenges facing the High Street," the Gateshead Council spokeswoman added.
"The new homes, mixed uses and green space will meet the needs of residents and users of the town centre."
Michelle Teasedale, who runs GBC Flooring, told the Local Democracy Reporting Service: "We wouldn't want to go anywhere else.
"I feel safe here, we have really loyal customers who come back time and time again, we wouldn't be here without them. We would be sad to go."
Jennifer Wallace, who also works in the area, has welcomed the proposals.
"Something needs to be done as there are a lot of derelict buildings," she said.
She added she hoped the proposals would include affordable housing.
The council said it would be working with a range of partners to realise the plan.
A drop-in event is being held at Gateshead Council Civic Centre on 28 November.