Industrialization in coastal settlements located in Kepulauan Riau triggers spatial transformation and physical barriers, yet its impact on micro-community livelihoods is often overlooked. The main issue addressed in this study is the emergence of physical barriers and micro-scale environmental degradation resulting from industrial expansion, which has led to spatial conflicts and the marginalization of local communities. Therefore, this study aims to analyze the impact of industrialization activities on changes in the physical spatial structure and its influence on the limited access to livelihoods for traditional communities in Teluk Mata Ikan, Nongsa, Batam. A qualitative approach using the case study method was applied in this study. Data were collected through field observations and semi-structured interviews with four informants representing various local professions. Data analysis utilized the interactive model of Miles and Huberman through the stages of condensation, data presentation, and drawing conclusions. The study results indicate a double-edged impact, positive impacts are felt by informal sector vendors and retailers, who gain daily revenue due to the arrival of industrial workers during specific hours. Conversely, severe negative impacts were experienced by fish farmers and small-scale farmers. Landfill activities without adequate drainage triggered sediment flows that damaged aquaculture ponds, while the installation of project fences created enclaves that restricted the community’s socio-economic mobility. The significance of this study lies in providing empirical evidence regarding the marginalization of traditional communities due to the spatial transformation in coastal areas that experience spatial conflicts between industrial zones and traditional settlements.