The dangerous building, which is between mobile phone repair shop Coastal Communication and Spencers cafe on North Street has been empty for more than 20 years.
Plans have now been approved to partially demolish the fascia, with work already underway, and build two new two-bedroom apartments above a new bar and bistro unit.
Existing buildings at the rear of the property will also be brought back into use as office space.
Scarborough Council's Environmental Health team did not object to the plans and a structural engineer did not raise any concerns. The proposals received no objections during the public consultation period.
North Street was partially closed in August last year after concerns were raised that the building was a danger to the public. The damage to the front of the building meant that a hoarding was erected, blocking the street, which still remains.
The building falls within Scarborough's conservation area, but during consideration, a council report said that the property had been partially boarded up for many years "with no shop front details worthy of retention". The front of the building could not be saved and had to be removed as it was no longer structurally sound.
The building was last bought in 2017 and plans were submitted to Scarborough Council in November of the same year to convert the shop and workshop into a restaurant or bar with a residential flat and raised terrace with a new fascia.
Permission for the plans was previously granted with conditions in June 2018, however, the repair work never came forward.
The latest proposals were recommended for approval and given the green light in February this year by councillors who said the "scheme would see the property brought back into viable use within the town centre".