Birmingham’s wholesale markets will be moved from Digbeth to a site outside of the city centre and halved in size.

The city council decision could end years of argument about the future of the only market of its type anywhere in the Midlands, although the drama may yet have a final act to play.

Before taking control of the council last May, Labour politicians questioned plans by Birmingham’s Tory-Liberal Democrat coalition to move the loss-making market to a more suitable site.

While taking care not to make outright promises to refurbish and improve the existing market, they promised discussions with traders who wanted to remain in Digbeth.

Having held their discussions, Labour council leaders have decided to follow the course adopted by the Conservatives and Liberal Democrats. The only sensible option, according to deputy council leader Ian Ward, is to build a new market on one of two possible sites – on development land at Witton in the north-west of the city, or on the former LDV Vans site at Washwood Heath.

Built in 1970, the wholesale market buildings are in a poor state of repair and one-third of the stalls are empty, according to the council.

The new market will be about half the size of the Digbeth outlet, with room for 72 traders rather than 90. The plan is to open the new facility in 2016.

Cllr Ward claimed the decision to relocate meant that the future of Birmingham wholesale markets would be secured for 60 years at a modern and fit-for-purpose facility.

However, Cllr Ward didn’t say what would happen if the majority of traders refuse to be relocated.

He admitted news of the forthcoming closure of the Digbeth market has been greeted with “disappointment” by businesses at the wholesale markets, who were informed minutes before Cllr Ward announced the decision to a media briefing.

Nor would Cllr Ward be drawn on financial details. He was satisfied that “the indication is that we simply cannot afford the investment required to continue with a wholesale market on the current site”, but refused to say how much it would have cost the council to keep the market at Digbeth.

Cllr Ward said he was acting under the advice of council lawyers that estimates were “commercially sensitive” and could not be put into the public domain.

He added that the new market would be built by a private developer and then leased or sold to the council. The impact on the public purse of the venture would be “cost neutral”.

The decision to move the markets, which will be ratified by cabinet members at the end of the month, opens up the prospect of redeveloping the 20-acre Wholesale Markets site at Digbeth. The land, which sits at the back of the Bullring shopping centre, is in the new city centre enterprise zone and is expected to appeal to developers.

Cllr Ward moved quickly to quash rumours that Birmingham’s retail markets, next to the wholesale markets, might be at risk. He said redevelopment of the land would be based on improving pedestrian links between the Bullring and the retail markets.

He added: “I have talked to traders from both the wholesale and retail markets not only about these proposals but also about doing what I can to develop the city centre site for the retail markets and increase the footfall from the Bullring.”