The Central Otago District Council decided at a meeting in Alexandra yesterday to notify a request for a private plan change for the 5.8ha section.
A council report said the decision was not about making judgements on the request, but was an agreement to process it.
It would be publicly notified and ''fully considered and assessed in the statutory process''.
Central Otago Mayor Tony Lepper questioned whether Cromwell needed more industrial land.
Cr Malcolm Topliss said the town could face a shortage of spaces to build residential properties in the future.
''I don't want to see us sitting on our hands.''
Cr Neil Gillespie said the property developer wanted to split the land into 18 industrial sections.
''But we're not to take any views about the rights or wrongs of it at this stage.''
There was still land in Cromwell available for residential development, he said.
Council planning and environment manager Louise van der Voort said the length of time to process private plan changes differed, but some could be done in six months.
The public would be notified in about a week, she said.
In June, some Upper Clutha farmers criticised the sale of the site.
At that time Tarras farmer Beau Trevathan told the Otago Daily Times the sale by the Cromwell Saleyards Company's directors to property developers was ''bizarre'', saying they were elected to run the facility and ensure it was there for future generations.
''They've allowed it to be sold out from under us. As far as the farming community here is concerned, the majority of people are bewildered, to say the least,'' he said.
General manager of the site Pat Cummings declined to comment yesterday until he had read the council's decision.
