Developers were eyeing up the land in Foredraft Street, in the Cradley area of Dudley.
But Dudley Council's planning committee refused the application during its meeting last Wednesday .
Alan Morris, aged 52, who lives on Foredraft Street, welcomed the outcome having campaigned to halt the plans. He spoke against the proposals at the meeting.
He believes developers will return with a future application. The proposal was put forward by S P Faizey Chartered Accountants.
Mr Morris said: "I did not think in our wildest dreams that we would get the plans stopped completely.
"It is joy for the shops but we do not know what is to come."
The walkway was closed 20 years ago over antisocial behaviour. He said there are currently antisocial issues at a set of shops nearby, on Windmill Hill.
Mr Morris said the car park area is "rife with drug taking, drug dealing, graffiti and all sorts of behaviour", which has been going on "for years".
Cradley and Wollescote ward councillor Gaye Partridge said the car park become "a magnet for relatively low level anti-social-behaviour".
"You could probably expect to witness some drug dealing, if you happened to go along there," she said.
But in response to concerns about antisocial behaviour, a spokesman for West Midlands Police said: "We are not aware of increased levels of reported crime or anti-social behaviour around Foredraft Street and the surrounding area in Cradley.
"Our local police team work in close partnership with Dudley Metropolitan Borough Council and other partner agencies to address concerns reported to us.
"We would encourage residents to report any incidents to us online at www.west-midlands.police.uk or by calling 101."
Councillor Paul Bradley, who is vice chairman of the council's planning committee, said the application was refused on the grounds of "over development, loss of public parking and concerns about antisocial behaviour".
He said: "This area used to have antisocial behaviour issues and there used to be a path. By having this development, it was going to be reopened up, and the locals were concerned because it was being misused for drugs.
"West Midlands Police didn't actually have any concerns so it was a little awkward for the committee.
"But when we were talking about it, some of the councillors knew the area, and they knew of the problems, so when it came down to it, the decision was refused."