Business owners on a Penryn industrial estate are worried they could be evicted to make way for student accommodation after plans for a new 264-bed development were revealed last month.

Last year traders working from units off Jennings Road were relieved to see plans for a retail warehouse on the site thrown out by Cornwall Council, to preserve area for industrial purposes, but now a new "masterplan" could force them to make way for a mixed-use accommodation and retail complex.

A current planing application for the area proposes to turn the former Homeshed into new retail units and a doctors' surgery and pharmacy, with land behind the building used to build a two to four-storey accommodation block out of repurposed shipping containers prefabricated in Truro.

But that application also includes outlines of a plan to grow the development out from the first phase, taking over much of the land to the south of Kernick Road, including that occupied by the small industrial units and a tranche of property belonging to housebuilders Walker Developments.

One of the small business operators who leases a unit at the Jennings Road site, who did not want to be named for fear of having their lease terminated, said: "We'll get another year out it before this phase two happens... we probably won't get another two years, we'll just get kicked out."

They added: "I don't think it should be happening, this area should be reserved, it's meant to be reserved for industrial and employment use. The jobs they say they are going to create - I can't see they are going to create that amount of jobs. There's a massive shortage of B and B1 units because a lot of them are just getting sold off for the development of houses and student stuff.

"A lot of the big businesses like Kernow Casings and Watson and Marlowe are all secure because they own their sites, but it's the small and growing businesses who it's killing off completely. They are going to be forcing all these businesses out of Falmouth and the surrounding area. It really shouldn't be happening."

They also pointed out that a lot of developments on Kernick are offering start-up units for university based businesses, but asked "where do they go once they've started up?"

The developer, Irregular Cornwall, said in a design statement accompanying the application that the masterplan: "Gives the opportunity to make a strategic decision to safeguard the employment space on the northern side of Kernick Road by concentrating the new student complex in this obvious area of transition."

It added that the scheme will "enhance the economic performance of the employment land" where the development will go, and that the masterplan covered land brought together through taking ownership and having "agreed land options with neighbouring stakeholders."

Cornwall Councillor Mary May said last month she was "not in favour" of the accommodation due to its proximity to some of her constituents in the nearby Walled Garden. She also pointed out that the site was not on the council's emerging Development Plan Document, which sets out strategic planning sites around the county - while the council had hoped to keep student development contained to the area of Kernick closest to the Penryn Campus.

However, she did say that "some aspects of the application are favourable" and she understood that the small businesses' situation "would be taken into account and incorporated into the masterplan."

A spokesperson for Irregular Cornwall said the plan "solves a number of issues in the area, such as the health centre and student accommodation."

They added: "The vision for the wider masterplan carries on with that theme and as we refine the plans next year we will pick up the views of the community and local businesses to ensure any development takes on board these needs. Our ambition is to provide a thriving mixed use development that Penryn and Cornwall can be proud of, the health centre and student accommodation is the first step towards this vision."