The building has stood empty since 2018 and the funding will return the long-vacant property to productive use while improving the appearance of a key part of Rugby town centre.
While a business has not yet committed to move in, the terms of the lease prevent it from being occupied by a gambling shop, a takeaway, a charity shop, a tobacco or vape shop, a mini mart, or a hairdresser or barber.
The funding, awarded by the Ministry of Housing, Communities and Local Government, will cover refurbishment works to bring the building up to a lettable standard ahead of a future auction.
The HSRA programme is designed to tackle the problem of empty shops in town centres by helping local authorities intervene where properties have remained unoccupied for extended periods.
During the refurbishment, the property will be marketed through an HSRA process to attract a new occupier and help the building contribute to the town centre economy again.
The grant for 26-27 Sheep Street forms part of Rugby Borough Council’s wider efforts to improve the appearance and vitality of Rugby town centre while encouraging investment and new business activity.
Councillor Louise Robinson, Leader of Rugby Borough Council, said: "This funding gives us an opportunity to breathe new life into a building that has stood vacant for far too long.
“Bringing it back into use will improve the look and feel of this part of Sheep Street and Drury Lane, while helping attract a new business to the building.
"We are taking proactive steps to support the future of Rugby town centre, and securing this government funding is another example of us working creatively to make positive changes happen."
Councillor Jerry Roodhouse, Deputy Leader of Rugby Borough Council, added: "Empty buildings can have a real impact on how people feel about a town centre, so it is fantastic this property will gain a new lease of life.
"Residents want to see action being taken to improve Rugby, and this demonstrates that. It shows that we can help long-vacant buildings be used once again.
"I am delighted that external funding has been secured to help make this happen and look forward to seeing the building occupied again."
