A study by Knight Frank and the Westminster Property Association (WPA) has revealed that 3.8m sq ft of offices between Tottenham Court Road and Marble Arch could be unlettable by 2030 under planned energy regulations, posing a risk to Oxford Street's revitalisation plans.

The analysis shows more than 800 workspaces within 500m of Oxford Circus alone fall below a ‘C’ to ‘G’ energy rating. Under Minimum Energy Efficiency Standards (MEES) expected to come into effect for commercial spaces in 2030, the minimum requirement would be ‘B’.

The WPA and Knight Frank said this outdated workspace could undermine the planned revitalisation of Oxford Street. They urged the Oxford Street Development Corporation (OSDC) to address the problem and prevent the street being weighed down by vacant offices.

The OSDC was formed in January by London mayor Sadiq Khan and is set to assume planning powers in early summer.

According to the report, nearly one third of West End office lettings in the past five years have been completed close to Oxford Circus, showing the area’s importance, but a shortage of modern, prime workspace threatens growth.

The analysis shows availability of prime and grade-A office space around Oxford Street is just 1.5%, well below the central London average of 2.5%, while no floorplates above 40,000 sq ft are available in the OSDC area. There are just two available in the wider Westminster borough, both of which are in Victoria.

Upgrading secondary stock in the area to a prime or grade-A standard could create £17.2bn of prime capital value, generate £328m in annual rental income and deliver a significant uplift in business rates revenue, according to the report.

Plans to revitalise Oxford Street got the green light in February and are expected to be in place by the end of the summer, although the local council, which switched back to Conservative control in last week’s council elections, has vowed to fight the plans.

James Raynor, chair of the WPA and chief executive of Grosvenor Property UK, said: “Revitalising Oxford Street would greatly benefit from delivering the modern workspaces that attract companies and talent. This is a once-in-a-generation opportunity to ensure Oxford Street is fit for the future as an internationally recognised retail, leisure and business destination.

“This will help support further investment to address the lack of high-quality office space that is holding back the economic potential of the West End, particularly the strategically important area between the Elizabeth line stations at Tottenham Court Road and Bond Street.”

Shabab Qadar, head of central London research at Knight Frank, added: “Our analysis shows a clear dysfunction in the market whereby the most attractive, best-connected office locations along Oxford Street are also the areas where we see the highest concentration of older, outdated workspaces.

“Given the shortage of modern office space in other parts of the West End, a flexible and pragmatic approach to retrofit and redevelopment along Oxford Street could have a huge impact in attracting businesses and talent to the area and creating a dynamic, seven-days-a-week destination, while generating vital funds for the transformation of the West End, helping it retain its position as a global destination for visitors, workers and businesses.”