Old lady going over commercial area in Spanish city (7)
I believe the answer is:
granada
'spanish city' is the definition.
(Granada is a city in Spain)
'old lady going over commercial area' is the wordplay.
'old lady' becomes 'gran' (short for grandmother).
'going over' says to put letters next to each other.
'commercial' becomes 'ad' (abbreviation for advertisement).
'area' becomes 'a' (maths abbreviation).
'gran'+'ad'+'a'='GRANADA'
'in' is the link.
(Other definitions for granada that I've seen before include "car in > Spanish city" , "Andulasian city" , "City of Andalusia" , "Andalusian city" , "Spanish city, site of the Alhambra" .)