Planning permission was granted for the conversion of the Heene Road building, which will see 33 retirement flats, 59 assisted living properties and 10 affordable apartments.
Dozens of residents had objected to the plans.
But Worthing Borough Council’s planning committee approved the application by a margin of five votes to three, with the provision of new homes outweighing the loss of employment space.
Chairman Kevin Jenkins said: “We have become a very large town with a growing population. We are a town that needs to aspire and sometimes we need to accept it needs to change.
“Right now there is 180 employed people in that building. Who will represent them? I think we have got a debt to those people aswell.”
Residents had lodged a petition against the loss of a landmark oak tree last month.
Council officers said the loss of the tree was ‘unavoidable’, despite it being covered by a tree protection order (TPO) which prevents it being felled without permission.
The tree was originally retained but was lost in revised plans, which were deemed more suitable by officers.
Addressing the committee, resident David Lincoln-Howells said: “I would like to say that I find it disappointing how easily a protection order of a tree can be revoked.”
The committee heard from MGM property manager, who said the firm planned to relocate.
He argued the conversion would save more than 180 jobs.
He said: “MGM’s head office relocated here 40 years ago, and I would like to make it clear it has always been our intention to remain in the area, but we have to relocate to survive.”
Councillors were divided over the plans, with design a subject of disagreement.
Heene councillor Diane Guest said: “You are bringing a modern monstrosity like this to the edge of the building line in the middle of a Victorian area.”
Councillor Noel Atkins disagreed.
He said: “I think the design is very appropriate. It will give us 102 units, affordability housing, and allow MGM to find a new location.”
As the crowd left the chamber, one woman shouted at the council they were “messing with people’s lives.”