AS THE Blackmarket Cafe nightclub, the ugly, washed-out building in Chippendale had it all: bizarre simulated sex routines, uninhibited drug cartels - and so much more.

Most infamously, it had the Hellfire Club, a bondage night in which brutish, leather-clad men and women would test whips, hot wax, ropes, and an assortment of more obscure instruments on fetishists.

Chippendale residents and conservative politicians spent years lobbying to have the nightclub shut. Even after a 1997 shoot-out in which two members of the Rebels bikie gang gunned down three Bandidos in the building's basement, it took two years to close its doors.

Now residents fear regular bouts of late-night mayhem will return to the neighbourhood around 111 Regent Street, which has been vacant since the nightclub was shut.

An application to turn the building into a brothel, lodged three weeks ago with the City of Sydney, has dozens of residents worried that their gentrifying inner-city suburb will turn into "the new Kings Cross".

"Everyone remembers the Blackmarket Hotel and … disturbances, criminal activity, hundreds of people standing around on the street at 3am on drugs," said a spokesman for the Coalition Chippendale Groups who asked not to be named.

Another resident, who also requested anonymity, said: "You already have the Oasis brothel nearby, which has bulletholes in the walls, and there's another one just across from that."

The applicant company, listed only as Bright Horizons Designs, wants to spend $135,000 fitting out the refurbished building with 11 sex rooms and a small cinema.

The brothel would operate under the management of a company called Midas Massage Studio/Spa/Sauna every day, for almost 18 hours a day.

Under the council's anti-clustering policy for sex businesses, brothels must not be located within a 75-metre radius of an existing, approved sex-industry premises.

But in its environmental impact statement, town planners said the building's proximity to another brothel was mitigated by factors such as its distance from residential activity.

Neither the management company nor the architect firm could be reached for comment.