Citizen Chant coordinator Yan Lee said several residents and traders had approached him to complain about the project, which had been converted into a SOHO (small office home office project) with no setback.
The project is being built on a former open-space car park and Lee said the council had failed to prepare alternative car parks for people going to the market.
There has been a number of protests lately against projects in Penang, which is controlled by the Pakatan Rakyat (PR) government, in the run-up to elections, which must be held this year.