'In a way, Oxford Street's been a victim of its own success,” says Clive Faro, author of Street Seen: A History of Oxford Street. “The people who own the buildings are not the people who live there.”

Like many who live on Oxford Street, which stretches from Hyde Park to Bondi Junction, Faro has watched the street's dynamic change from one of upbeat experimentation and blase commerce to a strip characterised by humility. Shoppers and tenants have moved on and, today, some landlords are said to be accepting 30 per cent of what they commanded in 2008.

Perhaps if they lived there, as Faro suggests, things might be different.

The strip's long and entrenched retail slump is the clearest symptom of a street blighted by vested interests, political wrangling and a spectrum of landlords who rarely see eye to eye.

Snaking through three councils, the City of Sydney, Woollahra and Waverley, the road's middle portion is split between Woollahra to the north and Sydney to the south. Stakeholders are as diverse as its history, from the army to the Greek Orthodox community, former James Packer business partner and commercial landlord Theo Onisforou to the mega-pubs. Only adding complexity are heritage architecture, schools, churches, courts of law, parks and heavily used traffic and parking lanes with competing priorities from the Roads and Maritime Services, NSW Transport and local councils. This singular nature, means, of course, that consistency has never been its strong point.

Michelle Cooke, from fashion label Billion Dollar Babes, remembers the hedonism, promise and thrill of the 1980s and '90s, the days of retailers Mark Keighery and Michael Bracewell, the fashion-incubating Paddington Markets and Saturday afternoon crowds from the Paddo Inn spilling onto bustling pavements.

“It felt like Miami," she laughs. "It was people-watching in the sunshine. . . . It used to be hip, now it's full of investment bankers."

As demographics around Oxford Street's spine shifted, its retail dominance began to unravel. The perfect storm of the financial crisis, clearway traffic, Ausgrid roadworks, competition from Westfield, the strong dollar, lack of mixed retail, sophisticated online shopping and a failure of landlords to react to the changes unfolding before them produced a storm cloud that settled from Darlinghurst to Oxford Street Mall, scattering a fine drizzle on some areas and epically pouring down on others.

Eighty-nine shopfronts from Oxford Street's beginning to end are closed, empty, for lease or closing soon. While numbers change almost daily, of those, 29 are in the City of Sydney, 41 are in Woollahra and 19 are in Waverley. While few buildings are for sale and thus shielded from plunges in asset values, Steffan Ippolito of Oxford Real Estate sold 30-36 Oxford Street in February to an eastern suburbs investor for $4 million. "His theory was that the strip can't get any worse than it is at the moment," the agent, whose name frequents boards along the strip, said of the buyer.

In fact, many suggest its nadir was about a year ago. Of the 253 shops, businesses and restaurants counted in the Paddington stretch, just over 18 per cent are for lease, empty or closing down. In May last year, the figure was reportedly more than 25 per cent.

Ippolito watched on as landlords reacted slowly to the realisation that pots of gold from tenants had reached an unsustainable peak. It was not until 2010 that rents started to come back, and by 2012, rents had been cut by 30 to 50 per cent.

Some landlords are simply refusing to budge on price on the correct basis that property values are entirely dependent on the rents those buildings command. One convenience store in Bondi Junction pays $11,337.50 a month, while no more than 300 metres away, a similarly sized, newly arrived guitar shop pays less than half that. Rates, in the meantime, have not shifted.

Others may be taking advantage of what fashion investor David Rowland calls the “last bastion of middle-class tax breaks” and what Moore brands "just terrible for the area": negative gearing. Leaving a shop empty is no calamity when a landlord is able to pick up a higher tax break for loss of rental income along the way, argues Rowland, who believes closing the loophole would give Oxford Street – and many other ailing strips around the country – a fighting chance.

Behind the scenes, councils and stakeholders have not been oblivious to the slide into gloom. While some predicted and planned for the bad weather many years before it hit, others have reacted slowly. Groups of business owners, locals, landlords, state government agencies and councils have been pushing for a rejuvenation of the strip, much of their work motivated by frustration at a lack of action. In the words of Peter Sullivan, whose family owns the Arts Hotel in Paddington: "If we do nothing, what we'll end up with is a gradual decay of the street and we'll end up like Parramatta Road.”

The March publication of Activate Oxford Street's draft place-making road map – commissioned by Woollahra council as a blueprint for breathing life into the moribund shopping precinct – was, to many, long overdue. With recommendations for a place manager to oversee the precinct, ensuring a diverse retail mix, beautifying the street, lowering speed limits and boosting its night-time economy, the report's application will test the ability of the City of Sydney and Woollahra to reach agreement over their shared portion of the strip.

Published behind schedule by Woollahra Council, the independent report by Village Well in collaboration with BellRinger Property Group was seized upon by stakeholders who had, for years, been clamouring for help to reverse the fortunes of the strip. For others, Woollahra's efforts are too little, too late, lacking the teeth that the problem demands.

The draft went through multiple iterations before being released to the public, a request from the council that one insider said was “highly unethical”.

“If you engage an independent consultant, you then can't tinker with that to suit your own public needs,” the source said. Its authors are understood to have charged well below the going rate, with council minutes showing that no more than $70,000 was set aside for the research.

Theo Onisforou, founder of The Intersection, takes little comfort in Activate's recommendations, such as more roadside dining. “It's no use having ideas because they won't be implemented. I've been writing letters to the council for 10 years and ultimately nothing has been done,” he says. “I'm the major beneficiary of their incompetence. They just take money and move it elsewhere. All they've achieved is to ensure there is only one precinct of Oxford Street you should go to.”

The Paddington Business Partnership has focused on changes to the road's traffic use, pushing for the abolition of the clearway and a longer free parking period. Traffic data, yet to be released since an hour was sliced from clearway restrictions in November 2012, will show whether the vehicle count necessitates a clearway, after all. Others argue that discrepancies in the clearway width undermine its validity.

"The thing about Oxford Street is people walk through rather quickly with the fast-moving traffic hurtling by, it's just really unpleasant as a pedestrian," Sydney lord mayor Clover Moore said. “If you removed that clearway, it would not only help business, it would help everything. If you had parking along there, it would really help the ailing businesses."

Robert Bleakley, the cycling and public transport-loving landlord of the Palace Verona cinema, says a lower speed limit would help. "We've given over the street to vehicles."

The Paddington Society and BIKEast have a more daring proposal for their village redesign – a mixed-use space for cars, bikes, pedestrians and buses that includes a wide median strip and traffic calming that keeps vehicles moving at a steady 40km/h, not dissimilar to a successfully becalmed Kensington High Street in London.

"The real question is getting [councils] to agree on a vision that compels the RMS [the state Roads and Maritime Services] to play ball," says Geoff Ludowyke, of the Paddington Society, which aims to decentralise the accent on commerce on the street. "What we're interested in is making a cohesive high street for the village," he said. "If you make it pedestrian-friendly, family-friendly, cycle-friendly, the people themselves will demand what they're attracted to." Fostering that community would come at the cost of longer journey times for commuters and buses.

Almost everyone agrees that place-making is about creating environments in which people want to linger.

Parking meters charge $4.80 an hour, with all councils making a tidy sum from parking fine collection – a figure that would likely grow if clearways were quashed.

Ippolito, taking a lead from Mosman's Military Road, supports two hours of free parking; the Paddington Business Partnership is barracking for 30 minutes. For now, it sees a compromise of 15 minutes as a major win, when the City of Sydney's 15-minute free parking was matched by Woollahra last November.

But away from roads, the environment of the strip is largely down to civic works by councils and to private upkeep by landlords. Though not without criticisms, the City of Sydney has made highly visible attempts to beautify Oxford Street with hanging plants, flagpoles and fountains; Waverley, with its weekday market and street art installations and seating areas, the same.

Woollahra is conspicuous in its lack thereof, a consequence of what its director of planning and development, Allan Coker, puts down to budgets and red tape. What is seen as a frustrating lack of action from the outside, including reports of very slow development application processes, is in his view simply an adherence to the system.

Coker makes no bones about the difficulty of working within a system that is due for a nip and tuck, but admits the council could do more to help. He said the council is looking at standardising rates and omitting the development application phase from the long and painful process of open air dining approval.

Stakeholders speak about non-existent street cleaning, the lack of public toilets, hygiene problems that have arisen from the loss of the Eddie Dixon Centre drop-in homeless shelter (a sad byproduct of the non-profit Paddington Markets' barely justifiable stall rates, which funded the shelter). And simple street beautification such as pot plants, street flags, signage, a welcome to Paddington sign – all minimum entry stuff, as Clarke puts it – needs to go through the requisite rubber-stamping process.

From this side of the table, it appears councils are at times choked by risk aversion. “I kind of share your view,” Coker says. “So much of what we do is regulated.”