A landmark building with shop space, offices and 14 flats for hospital staff will be built in a "tired" Headington shopping parade -- despite concerns from residents.

Premises at 138-140 London Road, partly occupied by The Cotswold Collection furniture store, will be demolished and replaced with a contemporary building, which developers said would create a focal point for Headington shopping centre.

There were concerns over whether some of the new building's 14 flats should be set aside for affordable housing, instead of key worker accommodation.

But Huw Mellor, for applicant Fisepa 187, told members of Oxford City Council's north east area committee at a meeting on Tuesday that the offer of 100 per cent key worker housing was unique and extraordinary.

City council leader and Barton and Sandhills councillor Alex Hollingsworth said only four to five units would be set aside if the development was instead used for affordable housing.

The developer had already contacted NHS health managers, which said the flats would be ideally located for hospital workers, particularly staff at the John Radcliffe Hospital.

Mr Mellor said the developer and architects had spent 18 months designing the building, which will have about 1,000sq ft ground-floor retail space -- more than 4,000sq ft less than the existing site.

"It unashamedly makes a statement and it is a positive one, both in terms of image and it becoming something of a landmark building," he said.

"The shopping centre has somewhat a tired image and this building would send out all the right signals and messages in terms of attracting future investments."

Residents told committee members they were concerned about the building's design and the effect it would have on the small shopping parade.

Michael Ponton, who lives opposite in Holyoake Road, said: "These plans will mean a loss of 80 per cent of retail space.

"This has been a business area for at least 100 years and to lose 80 per cent of shop space is very serious.

"The new building has been described as modern and contemporary. One interpretation could be that it's going to stand out like a sore thumb."

Council planning officer Paul Semple said while the loss of retail space was substantial, it would be difficult to argue it would affect the shopping centre's viability and vitality.

Officers felt the design would enhance the area. Four committee members voted for the plans and three against.

In October, planning permission was given for Oxford Snooker Club in Holyoake Hall to be converted into 15 flats. Five will be used for key worker housing.