Palmerston North needs to roll out the red carpet, not the red tape, if it wants to grow, says city developer Brian Green.

Green said a commissioners' decision denying consent for Progressive Enterprises' supermarket plans for Pioneer Highway was an example of the city council making it too difficult for businesses to invest.

He said developers were finding Palmerston North one of the hardest places to work, and mayor Grant Smith's slogan that the city had to be "open for business" was not happening.

The decision about the Pioneer Highway land meant it was likely to remain "a bomb site" for another five, six or seven years.

The commissioners found that the layout of the large supermarket with most of the parking in front did not measure up to urban design standards.

But Green said he would have thought that Progressive knew more about how to design a supermarket than council planners did.

Green conceded rules in the District Plan, which had proved a stumbling block for the proposed development, needed to be respected, but the council retained some discretion and ought to have used it.

The decision of independent commissioners Mike Lester and Jane Black, released on Monday, has drawn dozens of comments on the Manawatu Standard's Facebook page, mostly expressing disappointment about the lost opportunity.

Dawn Hall said the new rules must be far too stringent, and that Progressive bent over backwards to make it a nice area.

The supermarket giant changed its original plan before August's hearing, and again in its right of reply, in an attempt to satisfy council planners.

Kirstein Broom said it had been a waste of time and money.

"A lot of people would use this supermarket no matter who was behind it."

But council planning and policy committee chairwoman Annette Nixon said while a new supermarket would be welcome, it could not be allowed to compromise the integrity of the District Plan.

"That is a document that was consulted on, there was discussion with residents in the city, and it follows best practice for urban design and development.

"I regret that the opportunity to have a supermarket there was not able to go ahead, but that's not to say it won't go ahead at some stage. That depends on Progressive."

Nixon said developers had to be aware of the requirements of the District Plan, and respect them.

She said the development was not just about a supermarket, but about a neighbourhood centre.

The site, running through to Rugby St, provided a neighbourhood renewal opportunity that could be something really positive for the Awapuni area, she said.