House of Fraser’s flagship Oxford Street store will close its doors for good in January.
The Art Deco building will be turned into an office block with shops, a gym and a rooftop restaurant.
Westminster City Council gave the green light to redevelopment plans and the landlord has now given notice to quit.
Owner Fraser Group has blamed “archaic business rates” and warns further closures are “inevitable” without reform.
Number 318 Oxford Street has been a feature of London’s most famous retail avenue for decades.
It was purpose-built as a department store and traded under the name of DH Evans until it was rebranded as House of Fraser in 2001.
Fraser Group, formerly known as Sports Direct International plc, took ownership of the store in 2018 but its tenure has come to an end.
Westminster councillors unanimously approved the plans, which will see £100m spent on revamping the building.
West End ward councillor Tim Barnes, who spoke in support of the plans at the meeting, welcomed the proposal.
“Oxford Street has suffered particularly badly during the pandemic, but Covid-19 just accelerated changes to retail habits that were already taking place,” he said.
“By investing in this flagship building and creating a vibrant mix of uses, the vibrancy of Oxford Street can be assured for residents, visitors and workers.”
Andrew Davidson, a partner at architects PDP London, said the landmark store would now undergo a “once-in-a-hundred-year” transformation.
He said the building, which dates back to 1937, would become “a vibrant and flexible mixed-use destination, where Londoners will enjoy working, keeping fit, shopping and relaxing”.
New owner, Publica Properties Establishment, will demolish the two existing top floors and build three new floors, making the building eight storeys high.
A rooftop restaurant will be created with 360 degree views across London and access to external terraces.
Offices and shops will fill the remaining storeys, with lower floors being converted into a gym and a basement swimming pool.
A Fraser Group spokesman warned that dozens of other House of Fraser stores across the UK were now at risk.
He said: “As a business which is continuing to invest significantly into the British High Street, we feel it’s only fair to recognise and request an urgent review of the current archaic business rates, which continue to be astonishingly outdated.
“If business rates were reviewed it would support the future of House of Fraser. Without this, further store closures are inevitable.”
A spokesman for the Treasury said the budget last month froze the business rates multiplier and provided almost £1.7bn in further business rates relief for 2022-23.
He said: “We’ve just concluded a review of business rates.
“We think a tax on the use and value of commercial property remains an important part of a balanced business tax system and we’re making changes to make their operation fairer and more effective for businesses.”