English Heritage and conservation group SAVE had called for a planning inquiry into Thornfield Properties plans to replace the 125 year old structure with a six storey building.
The inquiry focused on a deteriorating Victorian rail tunnel running under the site.
The tunnel comprises two masonry walls with a roof of lateral wrought iron beams and masonry jack arches spanning between them.
Thornfield argue that the tunnel is in such a poor condition that the tunnel roof structure needs replacing and that the only way to do this in the timeframe available is to demolish the buildings above.
The tunnel is used by the Thameslink rail service and there are plans to upgrade it as part of the coming Thameslink upgrade. Thornfield also argues that the size of the development will generate enough revenue to enable it to finance the tunnel repairs.
"We have agreed as part of the [council planning agreement] S106 to contribute £30M to the cost of replacing the tunnel lids. If the existing buildings were refurbished, we believe that the development wouldn’t be viable."
English Heritage and SAVE believe that the tunnel lids can be repaired rather than replaced and have used consultants Morton Partnership to produce a number of alternatives to the Thornfield plans.
"It shouldn't be thrown away because it's been allowed to deteriorate," said English Heritage Chief Engineer, Terry Girdler.
"We've demonstrated that the tunnel lids are not a structural disaster about to happen. It takes engineering judgement to say we can keep this. It takes no engineering judgement to take it down."
Speaking at the inquiry Network Rail major programme director Andrew Mitchell said he was "comfortable" with the safety of the structure. He showed no preference between replacement and repairs to the tunnel roof, only that it should be done with "minimum disruption for passengers".
The planning inspectorate will now report to the Secretary of State and a decision is expected in June or July later this year.