Called The Collective, the space – which was formerly home to QVC – will house up to 10 independent businesses, with work set to begin in the autumn.
It is part of Shropshire Council's plan to establish the Darwin Centre as Shrewsbury’s main retail centre.
With the town’s Pride Hill Centre set to be redeveloped, several businesses will soon relocate to the Darwin Centre, including some national stores.
Independent businesses will be offered the opportunity to relocate to The Collective.
Shropshire Council owns the Darwin, Pride Hill and Riverside centres in Shrewsbury town centre, having bought them for £51 million in January 2018.
The most recent valuation, carried out in March before the coronavirus pandemic caused retail revenues to plummet, valued the centres at £17.5m - £33.5m less than the council paid for them.
The council says independent traders within The Collective will benefit from higher, regular, footfall in the Darwin Centre, and will be able to trade alongside other established brands.
Steve Charmley, Shropshire Council’s cabinet member for assets, economic growth and regeneration, said: “Shrewsbury has a wonderful history of independent and small business success and the council intends to build on this foundation within the Darwin Centre by relocating a number of independent businesses from the Pride Hill Centre to The Collective.
“The vision is for the Darwin Centre’s retail mix to evolve into more of a community-led shopping centre with more regional and independent stores whilst retaining some popular national brands.
"Recent events and research have shown that people want to shop locally and minimise travel.
"There is an increasing desire to support UK, regional and local businesses and we’re responding to this trend and helping small independent shops trade in the Darwin Centre by offering affordable and flexible terms in this new, attractive and well-designed space.”
Kevin Lockwood, Shrewsbury shopping centre manager, said: “The long-term ambitions for the Pride Hill, Darwin and Riverside centres are now taking shape.
"Visible progress continues to be made in the Darwin Centre, which has been able to trade throughout the current refurbishment works and our footfall levels are already improving, restoring confidence and spend in town centre stores.
"We are especially excited about The Collective project, which will offer a unique destination for independent businesses.”
Meg Hawkins, owner of Meg Hawkins Art in the Darwin Centre, said she was delighted to have relocated her homeware and gift shop from Pride Hill to the top level of The Darwin.
"Liaising with the centre management team, our move has enabled us to create our bigger, enhanced offer, including our gallery and workshop space and Instagram selfie wall," she added.
"Since we opened our doors a few weeks ago, there has been a really positive and warming atmosphere and we have had fantastic feedback from our new and existing customers.
"We love being in the heart of town and we look forward to seeing what new independents will join us in the build up to this bright future.”