Cranbourne West Economic and Planning Analysis. Prepared for Leighton Properties

Transcription

1 Cranbourne West Economic and Planning Analysis Prepared for Leighton Properties February 2015

2 STAFF RESPONSIBLE FOR THIS REPORT WERE: Director Consultant Job Code Rhys Quick Dene MacLeod MPE Urbis Pty Ltd ABN All Rights Reserved. No material may be reproduced without prior permission. You must read the important disclaimer appearing within the body of this report. Australia Asia Middle East urbis.com.au

3 TABLE OF CONTENTS Executive Summary... i Introduction History of Planning for Cranbourne West Casey C21 A Vision for Our Future (2002) Strategy Purpose and Themes Industrial Development Cranbourne West A Flexible Approach Smart Growth Committee Final Report (2005) Casey-Cardinia Growth Area Framework Plan (2006) Cranbourne West Urban Growth Plan Issues Paper (2007) Cranbourne West Precinct Structure Plan (2010) Employment Land Sizing Report Growth Corridor PLan (2012) Casey Planning Scheme Amendment C Plan Melbourne (2014) Regional Employment Nodes Minute Neighbourhoods Platform Section Summary Factors Influencing Melbourne s Employment Land Development Implications of Plan Melbourne S Regional Focus Trends in Industrial Development Industrial Demand on a Regional Basis Changing Nature of Industrial Employment Job Containment Section Summary South East Region Industrial Supply and Demand Industrial Land Supply Zoned Supply Urban Growth Zone Future Proposed Supply Industrial Land in Other Commercial Precincts Total Future Supply Industrial Land Demand and Adequacy of supply Additional Vacant Industrial Floorspace section Summary Current Status of Subject Land Site Context Requirements for Industrial Land Market Response Conflicts Between Residential/Industrial Land Section Summary Highest and Best Use of Subject Land Impact of Rezoning on Local and Regional Employment... 47

4 6.1 Change From Industrial To Residential Land Cranbourne West Employment Yield Job Containment Local Jobs for Cranbourne West Residents Regional Jobs Provision Section Summary Conclusion Disclaimer Sources

5 Executive Summary Urbis has carried out a comprehensive analysis of the planning policy history underpinning Cranbourne West s designation for industrial and other employment land uses. The strategic justification for this policy position has been analysed with regard to industrial land demand and supply, and other factors influencing the appropriateness of the land for industrial/other employment land uses. Planning Policy History for Cranbourne West The designation of industrial land at Cranbourne West has been driven by a policy vision focussed on job creation rather than the requirements of the market. Further, at no stage over the last twelve years has there been any strategic demand and supply analysis undertaken to determine the amount of industrial land specifically required. The following summary provides an overview of the strategic planning policy basis for setting aside a significant tract of land for industrial and other employment uses at Cranbourne West: The original key planning strategy for the City of Casey, C21, introduced an indicative concept of around 250 hectares of industrial land in a narrow strip along the Western Port Highway in Cranbourne West to increase job opportunities for local residents. This amount of land was not supported by a supply/demand analysis The Casey-Cardinia Smart Growth Committee reiterated 250 hectares of employment land, although the area identified specifically for industrial use was much less due to the need for significant buffers to residential areas The Casey-Cardinia Growth Area Framework Plan showed an expanded industrial area of 400 hectares at Cranbourne West. This Plan was not underpinned by any analysis of future need for industrial land in this location Technical reports were prepared underpinning the development of the Cranbourne West Urban Growth Plan. This plan indicated 250 hectares was more than enough to support more than 14,000 jobs at Cranbourne West The Cranbourne West PSP allows for gross employment land of almost 450 hectares. The PSP notes for a mixture of industrial, commercial and mixed use employment uses, with industrial land having a much lower job density than other employment land in the PSP area. The PSP provides that the industrial land is envisaged to service mainly large site requirements of transport and storage tenants with a regional focus. Buffers provided in the PSP between residential and the industrial area are significantly less than previously recommended or completely removed. Again, the supporting economic documents prepared by MacroPlan did not include an analysis of the requirement for employment land The Growth Corridor Plan saw only a modest increase in employment land being necessary to provide for the employment needs of the southeast growth corridor for the next years as vast tracts of land were also proposed within the pre-2010 urban growth boundary in Officer/Pakenham. Three supporting technical reports assessed the requirement for employment land with general agreement that the southeast region was well served by existing vacant land in Dandenong South and other nearby areas Plan Melbourne shifts the focus of employment generation to regional planning, centred around state-significant elements, such as National Employment Clusters and state-significant industrial precincts. Cranbourne West is classified as a locally significant element, thereby serving only a sub-regional role. Plan Melbourne introduces the concept of 20-minute neighbourhoods into the Victoria Planning Provisions where all community services, including jobs, should be readily available within 20 minutes of where people live. Cranbourne West is within 20 minutes of all major employment precincts within the southeast region. EXECUTIVE SUMMARY i

6 2014 The new Labor government s pre-election policy platform shows preference for development of a major port activity on the western side of Port Phillip Bay (Bay West), rather than expansion of the Port of Hastings, further reducing the strategic value of Cranbourne West as a regional industrial precinct. Factors Influencing Melbourne s Industrial Land Development Plan Melbourne s regional approach to jobs will see development and investment primarily directed to key employment nodes, including the CBD, National Employment Clusters and State-Significant Industrial Precincts. Cranbourne West is not part of these major employment precincts and is therefore a secondary location for industrial development. Nearby precincts of greater strategic importance, such as Dandenong South and in time, Officer/Pakenham, will be preferred. Future industrial demand across Melbourne will be focussed in the north and west, due to strategic locations close to airports, the Port of Melbourne, rail links and advanced road network. The southeast will only require a small share of the future allowance for new employment land supply as a result of a large existing supply of employment land and modest demand. This is consistent with the findings of the GAA in preparing the Growth Corridor Plans. Employment densities on industrial land, particularly for transport and storage uses, as intended for the industrial land at Cranbourne West, are declining. Greater employment yields can be generated from business parks, mixed use precincts and small lot industrial areas. As these uses make up the majority of Cranbourne West s employment land outside of the Leighton Properties/Kelly land, other sites will provide the majority of the jobs in Cranbourne West. The concept of 100% job containment within a municipality is no longer applicable. A shift to more regional planning in documents such as Plan Melbourne and the associated Growth Corridor Plans suggests the important area for considering job provision is at the regional level, or 20-minute neighbourhood. Cranbourne West and the surrounding areas are generally well-located to access major employment nodes within 20-minutes drive, including Dandenong South, Officer/Pakenham, Thompsons Road (Clyde North), Carrum and potentially the Port of Hastings. As such, Cranbourne West is likely to serve a supplementary local service role. South East Region Industrial Land Supply The combination of the availability of existing building stock, abundance of existing vacant land supply in surrounding areas and planned new supply emerging in PSPs indicates there is ample supply in the south east to service the needs of the industrial land market for a number of years. There is an estimated 3,633 hectares of land that will be available for future industrial development across the south east industrial region, with 977 hectares of that in the City of Casey. On the basis of industrial land consumption estimates that are significantly higher than what has been observed in recent years, the future industrial land supply will last for 43 years across the municipality, and at least 65 years in the City of Casey. The rezoning of the Leighton Properties/Kelly Land at Cranbourne West will only have a minor impact on the significant level of supply. In addition to future industrial land supply, there is a significant proportion of existing industrial buildings in the south east that lie vacant, providing alternative locations for tenants looking to locate in the region or expand their presence. Many of these vacancies are prime or modern facilities, extending further the years of supply. Current Status of Subject Land Despite strategic designation, there has been little interest shown from industrial users in the land set aside for that use along the Western Port Highway in Cranbourne West. None of the land has been taken up by potential tenants, and is unlikely to be in the foreseeable future. Cranbourne West cannot compete effectively with larger, established precincts such as Dandenong South where available supply is still significant, locational and amenity attributes are superior, and the synergies of clustering in a state-significant employment node is greater. Development of the land for industrial purposes is therefore a very long-term proposition. ii EXECUTIVE SUMMARY

7 The greatest inherent disadvantage of the Cranbourne West land is its proximity to residential areas. Significant issues still exist where large industrial uses interface with the residential uses. This concern has been reflected in the market response to Cranbourne West, with numerous larger industrial uses dismissing the location as they require more significant buffers from residential areas. Given the lack of interest from large users, it is arguable that the land may be better for smaller format industrial use. However, with a more than adequate supply of land already set aside for local employment needs (e.g. Thompsons Base and Evans Park Business Parks), there is a prospect that the subject land could lie vacant until better located supply is exhausted in other more established locations. Restricting the subject land to industrial use or higher density employment uses could serve to sterilise the subject land and run contrary to the intended objectives of delivering a range of employment opportunities to local people. Provision of an alternative use could deliver economic benefits to local communities in the meantime. The subject land is readily serviceable urban land and can provide additional housing proximate to existing state and nationally significant employment nodes. Highest and Best Use of Subject Land It is unlikely that large industrial uses would be developed at Cranbourne West given interface issues and the ready availability of a significant supply of better located industrial land in State-significant industrial precincts. Whilst the land could be developed for smaller warehousing facilities, there is currently a ready supply of appropriate land for this purpose fronting Thompsons Road in Cranbourne West. Under its current designation, it is considered likely that the land will remain vacant for a considerable period of time. Job creation goals are not met if the land remains vacant. There is also a very limited market for offices to be developed on the subject land, given it would be removed from more major activity areas and lacks access to a large, skilled workforce. Community facilities such as health, education and neighbourhood retail may be appropriate, although limited population in the vicinity will restrict demand unless further residential development occurs. Bulky goods facilities are a likely development outcome on the subject land over time as they are an as-of-right use if the Commercial 2 zoning remains in place. Improved exposure along the Western Port Highway makes these facilities a relatively attractive development option. However, this outcome is likely to be contrary to the retail strategy for the area. Although there will be a lack of demand for high density residential development in the area, medium density and conventional density residential appears to be the highest and best use for the subject land. Development of housing and associated community infrastructure on the land will require amending the Cranbourne West PSP. The community benefits arising from allocating the subject land for housing include additional developer contributions to fund more community facilities for the residents of Cranbourne West, and avoiding the interface issues associated with industrial and other employment land uses in terms of neighbourhood character and amenity. Impact of Rezoning on Local and Regional Employment The quantum of land that is currently designated for employment uses (including the subject land) in the Cranbourne West PSP is likely to generate around 11,200 jobs. The largest share of these jobs are planned to be realised in the higher yielding business park land fronting onto Thompsons Road and Evans Road. Industrial land overall, while representing 60% of the total land set aside for employment related uses in the PSP, is expected to yield approximately one quarter of all jobs as the job density for large scale industrial uses is low. The Leighton Properties/Kelly land at 139 hectares net represents around 43% of the Cranbourne West employment land. If the land was fully occupied for its intended purposes (industrial), it is likely that it would provide just over 2,000 jobs, only 18% of the total employment within the PSP area. The number of jobs that will be provided in Cranbourne West even with the Leighton Properties/Kelly land developed for housing will be more than is required by the residents of Cranbourne West. As a result, even if the employment precinct was to provide 100% containment of local resident jobs, the area would still be a net importer of workers. EXECUTIVE SUMMARY iii

8 Residents in Cranbourne West and neighbouring suburbs can generally access all major employment destinations within the south-east within 20 minutes. In this context, the vast areas of land set aside for future employment in the south-east will be sufficient to provide 100% regional containment of jobs, with or without the subject land. The Leighton Properties/Kelly land as industrial land is only likely to provide 1.7% of the regional employment yield. Conclusion The market response to the Leighton Properties/Kelly land for industrial uses has been poor despite Leighton Properties national marketing campaign and DSDBI s efforts to facilitate introductions for Leighton Properties with potential operators. This reality evidences that the designation of the subject land for industrial uses lacks strategic justification. On the basis of the extensive policy review set out in this report, it is clear that a strategic demand/supply analysis has not been carried out to justify the setting aside of the land for industrial use. Further, given the superior strategic location of an already abundant existing supply of State significant industrial and employment land, the subject land is likely to remain vacant in the long-term if it remains designated for industrial/employment use. Given the subject land s interface with existing residential areas and the already sufficient supply of employment land within the Cranbourne West PSP area and the south-east region, residential use on the subject land is indeed its highest and best use. iv EXECUTIVE SUMMARY

9 Introduction Leighton Properties (Vic) Pty Ltd and the Kelly Family own approximately 203 hectares of land within the Cranbourne West PSP Area comprising: 635 Hall Road & 690 Dandenong-Hastings Road Leighton Properties; and 590 and 620 Dandenong-Hastings Road Kelly Family. Urbis has been commissioned by Leighton Properties to investigate the economic case for rezoning this land from industrial to residential use. This report presents the results of our analysis into this matter which reviews the history that has led to the land being set aside for industrial use, and the reasons for the current evident lack of demand for industrial use on the subject land. The analysis draws on past and forecast trends in industrial land use as well as the subject land s suitability for industrial and residential land use. The remainder of this report is set out as follows: Section 1 History of Planning for Cranbourne West Section 2 Factors Influencing Melbourne s Employment Land Development Section 3 South East Region Industrial Supply and Demand Section 4 Current Status of Subject Land Section 5 Highest and Best Use of Subject Land Section 6 Impact of Rezoning on Local and Regional Employment Section 7 Conclusion INTRODUCTION 1

10 1 History of Planning for Cranbourne West In this first section we consider the history and evolution of planning for employment land within Cranbourne West through a number of local and regional planning documents. 1.1 CASEY C21 A VISION FOR OUR FUTURE (2002) STRATEGY PURPOSE AND THEMES The C21 Strategy was written well over a decade ago and was approved in The purpose of the C21 Strategy was to provide a vision for the City of Casey over the next 50 years and beyond, as well as providing a framework to facilitate the delivery of that vision. As detailed in the Strategy, it includes: - our visions, values and aspirations; - the strategy outcomes (regional outcomes, C21 outcomes and community outcomes); - the 12 themes that drive the achievement of the strategy; - the goals, objectives, actions, decision guidelines and C21 planning principles to achieve each theme; - detailed plans for the future, including a Casey C21 plan; and - C21 indicators, so we can tell if we are on track 1 One of the 12 themes for C21 is jobs. Under the C21 jobs theme, particular goals are as follows: 1 Casey: A Great Place to Live the liveability of a community directly influences its prosperity. 2. Casey Technology Park a collaborative strategy to develop the Casey Technology Park. 3. A CBD for Casey facilitate the development of Melbourne s premier suburban CBD 4. Casey C21 Jobs Corridor a diverse, densely developed business and employment corridor for Casey. 5 Embrace Technology encourage businesses to embrace technology. 6 Foster Opportunities in Multimedia foster employment and investment opportunities in the area of multimedia. 2 As these goals suggest, the focus for job creation in Casey at the time C21 was written revolved around three major projects, being the Casey Technology Park, to the south of Berwick; the CBD at Narre Warren/Fountain Gate; and the jobs corridor. At this time, the corridor appeared to run along the freeway, highway and railway corridor from Dandenong in the west to Pakenham in the east and therefore did not specifically include Cranbourne. 1 Casey C21 A Vision for the City of Casey, Volume 1, page 1 2 Casey C21 A Vision for the City of Casey, Volume 1, page 11 2 HISTORY OF PLANNING FOR CRANBOURNE WEST

11 1.1.2 INDUSTRIAL DEVELOPMENT In relation to industrial development, C21 highlighted the large tracts of undeveloped land in the region which could be used to the municipality s advantage, with decisions about the use of this land needing to consider the following: Within Casey, large areas of vacant industrial and residential available for development. The residential land will cater for an additional 50,000 homes, there are hundreds of hectares of industrial land and scope for doubling our retail and peripheral sales floorspace. The role of the Hallam industrial area as Casey s premier industrial precinct. It is important to recognise that it forms a substantial part (about 20%) of the much larger Dandenong South industrial area which has significance for the Victorian economy. The need to plan for a large, new Cranbourne Industry Park in Cranbourne West. The significant vacant land resources available, both in the Hallam and Dandenong South industrial precincts. The need for additional land for service industry in central and southern Casey, as shown in the C21 plan CRANBOURNE WEST As indicated above, there is reference in C21 to the need to plan for a new industrial area in Cranbourne West, although there is no analysis provided in C21 or its supporting documents that indicate any analysis of the quantum of the requirement for industrial land. The Strategy goes on to detail the Cranbourne West community outcome: a quality, treed, suburban environment, with diverse housing opportunities, a new Cranbourne Industry Park, a range of local shopping and community services and facilities that retains a country feel and strong links to Cranbourne. 4 The first indication of the Cranbourne West industrial area is shown in the C21 plan (Figure 1). As can be seen in this plan, the industrial area is a relatively narrow strip along the Western Port Highway, and then halfway across to Evans Road. The land set aside for industrial land in the plan is estimated to be 256 hectares. C21 suggests that rezoning of this land is not required immediately due to sufficient land in Dandenong South and Lyndhurst 5. This appears to recognise that Cranbourne West would be a secondary location to larger and more established precincts further to the north. Furthermore, C21 aligns the need for significant buffers between industrial land and other areas: Design and development guidelines are to be introduced from the outset that ensure a high quality development that includes 20 metre wide, mounded landscape setbacks to all roads. A key local road is to traverse the eastern boundary of this industrial estate with no connections to the east. Immediately east of this road will be a wide, linear park, with residential frontages. 6 These buffer guidelines appear not to have been maintained in subsequent planning for the precinct. 3 Casey C21 A Vision for the City of Casey, Volume 2, page 96 4 Casey C21 A Vision for the City of Casey, Volume 2, page Casey C21 A Vision for the City of Casey, Volume 2, page Casey C21 A Vision for the City of Casey, Volume 2, page 169 HISTORY OF PLANNING FOR CRANBOURNE WEST 3

12 C21 PLAN FIGURE HISTORY OF PLANNING FOR CRANBOURNE WEST

13 1.1.4 A FLEXIBLE APPROACH The C21 Strategy recognises that circumstances can change over time and that there is a need for the strategy to be flexible enough to evolve: We cannot foresee the future. What this Strategy seeks to do, is provide a clear direction to the community as to a preferred future and outline what steps are required to achieve it. As the future unfolds, so will the need to revisit aspects of the Strategy. In fact, as the future unfolds, new opportunities will be created which may also require a need to revisit aspects of the Strategy. The Strategy will evolve as issues are further explored during the implementation phase and as our future unfolds before us. These changes will require regular refinements to the contents of the Strategy, and the overall performance of the Strategy should come under review every 3-5 years. 7 As discussed later in this section, C21 has been revised in recent years, however, the general intent, goals and objectives of the plan have largely remained unchanged. While these goals may be still appropriate, the specifics of the plan are now outdated due to a combination of development that has progressed which is not consistent with the plan, and also it doesn t reflect current economic and social trends that have changed where and how people live. Given the lack of technical basis behind it, there would appear to be no reason to continue to adhere to the details of the plan. 1.2 SMART GROWTH COMMITTEE FINAL REPORT (2005) In 2003, the government appointed the Casey-Cardinia Smart Growth Committee to provide advice on future development and resulting land needs in Casey-Cardinia. The committee was led by an independent chairperson, Tim Offor, and included community, industry, and local and State Government representatives. They carried out technical investigations and conducted public workshops to inform the government s decisions about how future growth can be best managed in Casey-Cardinia. The recommendations of the committee have been used as a source of information for government, council, agencies, and the Growth Areas Authority as it was known at the time. The final report of the Casey-Cardinia Committee for Smart Growth developed framework plans for various precincts of Casey and Cardinia. The Casey Southwest Framework Plan was specific to the Cranbourne West area. As shown in Figure 2, that Framework Plan maintained industrial land in the western half of the area bounded by the Western Port Highway, Thompsons Road, Evans Road and Hall Road, although with significant commercial land buffers, particularly to the east of the industrial areas where residential development was proposed. The Smart Growth Committee therefore maintained an employment precinct along the Western Port Highway frontage of 250 hectares, although the industrial land component of that area was significantly reduced by the commercial land buffers to roughly 170 hectares. The purpose of the other commercial land buffers was to separate the industrial uses from an residential areas. A number of other alternative Framework Plan options were considered by the Smart Growth Committee which indicated varying potential distribution of the employment land. However, none of the potential plans considered the employment land to be any more than the 250 hectares, of which industrial land was only a part. 7 Casey C21 A Vision for the City of Casey, Volume 2, page 1 HISTORY OF PLANNING FOR CRANBOURNE WEST 5

14 SMART GROWTH PLAN FIGURE HISTORY OF PLANNING FOR CRANBOURNE WEST

15 1.3 CASEY-CARDINIA GROWTH AREA FRAMEWORK PLAN (2006) The Casey-Cardinia Growth Area Framework Plan formed part of the Victorian Government s A Plan for Melbourne s Growth Areas which was a document considering how growth will be managed and how more affordable housing choices and jobs will be created in Casey-Cardinia, Hume, Melton-Caroline Springs, Whittlesea and Wyndham as the 5 key growth areas for Melbourne. In terms of the Casey-Cardinia growth area, it was indicated that the area was expected to grow by 135, ,000 people, accommodated in 65,000-85,000 households, and to provide employment in local businesses and industries of between 100,000 and 140,000 jobs. Among a number of other major employment growth areas, as shown in Figure 3, the plan indicates an industrial area along the Western Port Highway in Cranbourne West. Again, the industrial area is restricted only to the western half of the block bounded by the Western Port Highway and Evans Road, although the plan extended the proposed employment precinct to the south of Hall Road, which was not considered in previous plans. Again, there appears to have been no detailed analysis of the employment land requirement within the region, with the Cranbourne West employment precinct now increased to around 400 hectares, compared with the previously envisaged 250 hectares seen in the C21 and Smart Growth Committee documents. The increase in employment land from 250 hectares to 400 hectares is also acknowledged in the later document, the Cranbourne West Urban Growth Plan, as described below. HISTORY OF PLANNING FOR CRANBOURNE WEST 7

16 GROWTH AREA FRAMEWORK PLAN FIGURE HISTORY OF PLANNING FOR CRANBOURNE WEST

17 1.4 CRANBOURNE WEST URBAN GROWTH PLAN ISSUES PAPER (2007) The Cranbourne West Urban Growth Plan Issues Paper was prepared by David Lock Associates and released in April The preface of the report contains the following explanation of the purpose of the report: Casey City Council, the planning authority for Cranbourne West, intends that the development of the growth area will represent best practice in sustainable urban development. Accordingly, the comprehensive urban growth plan has been prepared for the area that will incorporate leading edge thinking in all facets of community planning. The purpose of this report is to outline the key issues that should inform the development of the Cranbourne West Urban Growth Plan. Note, however that it does not set out to present a guide to best practice. 8 The report summarises the subject land conditions and planning, social and economic context for Cranbourne West, drawing on references to Cranbourne West, particularly in C21, but also Smart Growth Committee findings and the Government s Growth Area Framework Plan for Casey-Cardinia. An indicative land use budget is prepared, covering all key land uses, but in particular setting aside between 330 and 380 hectares of industrial land. These are net land areas, excluding undevelopable land and land required for primary infrastructure, and therefore the amount of gross industrial land set aside exceeds the 400 hectares that was shown in the Casey-Cardinia Growth Area Framework Plan. Again, there appears to be no justification for the increase in the employment or industrial land, other than the goal which originated in C21 of providing more jobs for local residents. Interestingly, the Issues Paper acknowledges that the brief from Council for the Cranbourne West Urban Growth Plan noted that it is of critical importance that the plan delivers an innovative employment precinct of approximately 250 hectares with comprehensive strategic and design principles to entice business and investment. This will provide opportunities for Casey residents to work within the municipality and reduce travel times to work 9 It appears that Council s brief for the Cranbourne West Urban Growth Plan was prepared prior to the Government releasing the Casey-Cardinia Growth Area Plan which indicated a higher 400 hectare figure, which appears to have become the target for the Urban Growth Plan for Cranbourne West. The Cranbourne West Urban Growth Plan Key Issues Paper is supported by a specialist report relating to the economic analysis of retail, commercial and industrial land prepared by SGS Economics & Planning in early This specialist report also mentions the Council s brief for an innovative employment precinct of approximately 250 hectares. 250 hectares is used as the basis for the analysis throughout the SGS report, with no reference to the need for 400 hectares. The SGS report, in considering the industrial development potential for Cranbourne West, considers various industrial land user classifications, including advanced manufacturing (production, research and development and management and commercial activities), production support (assemble, package and transport), regional services (fix and service things), and offensive manufacturing (make things using processes that are hazardous or noisy). Each classification is ranked against the desirability of having those types of uses in Cranbourne West. Clearly offensive manufacturing is seen as undesirable, with advanced manufacturing classified as highly desirable, and production support and regional services being appropriate but only to a limited extent. However, despite the focus being on how to attract advanced manufacturing to Cranbourne West, SGS rated the likely development interest of this group as only moderate to low, indicating the innovation and skills needed for this type of manufacturing is difficult to attract and that many regions in Australia have targeted this activity meaning competition is high. 8 Cranbourne West Urban Growth Plan Key Issues Paper, page 1 9 Cranbourne West Urban Growth Plan Key Issues Paper, page 55 HISTORY OF PLANNING FOR CRANBOURNE WEST 9

18 The development and employment outcome detailed by SGS in chapter 7 indicates that the highly desirable outcome of advanced manufacturing could generate more than 14,000 jobs in the 250 hectares of employment land and that around 250 hectares of industrial land would provide more than enough scope for the export-oriented (or basic sector) jobs required for Casey-Cranbourne SLA. 10 The SGS analysis indicated only 10,600 export industry jobs were required for the SLA. It should be noted that production support was not seen by SGS to be a desirable use in Cranbourne West due to the low employment yield relative to land area. This is now however, the intended use of the land along the Highway, targeting large format transport and storage users, although, as discussed later in this report, demand is low for this use too. It is clear that there was a mismatch between the job outcomes sought and the suitability of the land to deliver that target. The 14,000 jobs target would only be achieved if advanced manufacturing emerged, however SGS determined the market demand for this use would be moderate to low. There was still no demand-supply analysis undertaken to determine the actual land requirement, although SGS indicated the 250 hectares they were directed to consider was more than enough. 1.5 CRANBOURNE WEST PRECINCT STRUCTURE PLAN (2010) Amendment C102 to the Casey Planning Scheme introduced the Cranbourne West Precinct Structure Plan (PSP) in January The PSP is a mechanism to plan for major new urban development and the infrastructure and services required by the future community of Cranbourne West and the surrounding area. The strategic context to the employment land set aside within the PSP is provided as follows: The Casey Municipal Strategic Statement and C21 Strategy identify the need for the City of Casey to strengthen and diversify its employment base to achieve improved local job self-containment and prioritise the need to deliver a large new Cranbourne Industry Park in Cranbourne West. The Growth Area Framework Plan (GAFP) shows the macro-structure of the precinct is driven by the need to provide approximately 400 hectares of employment land in Cranbourne West to facilitate economic development and job creation in Melbourne s south eastern region. The Department of Industry, Innovation and Regional Development (DIIRD) is the key State Government sponsor of the precinct s regional employment role. DIIRD requires provision of some land suitable for large lot industrial subdivision (i.e ha). 11 From a review of the documentation presented to Panels in relation to the Amendment and the Amendment documents, it is clear that the Amendment was not informed by any analysis that considered the need for 400 hectares of employment land in Cranbourne West, in fact the background research was conducted on the basis of only 250 hectares being provided. The final Precinct Structure Plan (as shown in Figure 4), includes the entire western half of the block bounded by Thompsons Road, the Western Port Highway (indicated as the proposed Western Port Freeway), Evans Road and Hall Road allocated for industrial development. The north eastern corner of that block has been allocated to a business park and mixed use precinct, with further business park and business activity centre uses to the east of Evans Road, towards the Merinda Park train station. 10 Cranbourne West Urban Growth Plan, Economic Analysis Retail, Commercial, Industrial, SGS Economics & Planning, page Amendment C102 to the Casey Planning Scheme, Cranbourne West Precinct Structure Plan, January 2010, page 5 10 HISTORY OF PLANNING FOR CRANBOURNE WEST

19 CRANBOURNE WEST PSP FUTURE URBAN STRUCTURE PLAN (2010) FIGURE 1.4 HISTORY OF PLANNING FOR CRANBOURNE WEST 11

20 As described in the PSP: The precinct consists of two principal land uses: residential and employment. The structure of the precinct is determined by the need to achieve a dwelling yield sufficient to sustain core community infrastructure (i.e. schools, kindergartens, local social and health services, local shops and parks) and the Melbourne 2030 expectations, whilst providing maximum employment land. 12 The PSP refers to that lower job intensity land uses, such as distribution centres, envisaged for the land to the southwest of the precinct, including the Leighton/Kelly land. On page 12, the PSP specifically provides that the PSP area is forecast to accommodate between a minimum of 10,626 and up to 16,762 new jobs. 13 This job forecast is derived directly from a supporting Employment Land Sizing report prepared by MacroPlan. The land budget on page 14 of the PSP document indicates total employment land of hectares, which provides a net developable area of almost 350 hectares, with the industrial land yield being 194 hectares in net terms. As noted above, this quantum of employment land is substantially more than previously envisaged for Cranbourne West, in particular the C21 Strategy and Smart Growth Committee findings, which indicated around 250 hectares gross, almost 200 hectares less than the PSP. To date, the planning policies providing for the setting aside of employment land at Cranbourne West do not appear to have been informed by a demand and supply analysis ascertaining the need for land to be set aside. Rather, the allocation appears to be based on an arbitrary vision. Also contrary to C21, the southern part of the industrial land allowance to the Cranbourne West area has very limited buffers to residential and community uses to the east, and with a number of roads crossing from east to west, between industrial and residential land EMPLOYMENT LAND SIZING REPORT The PSP has been informed not only by the previous planning documents and technical reports, but also a specific Employment Land Sizing report prepared by MacroPlan Australia with a final report dated January The original report was prepared by MacroPlan in 2008, with the 2009 report presenting the original report with another attachment detailing an updated employment yield assessment. The purpose of the report was to assess the employment land opportunity and the likely employment yields across various land parcels in the Cranbourne West employment and urban growth area. The MacroPlan analysis also included a peer review of the SGS Economics work undertaken (mentioned above), which informed the Cranbourne West Urban Growth Plan Key Issues Paper. MacroPlan highlighted the growing population within the City of Casey and also the deficit of jobs provided in the City relative to the resident labour force. However, analysis of the employment land requirement in Cranbourne West appears to have been restricted. In the 2008 report, MacroPlan completed their analysis on the assumption of the land budget presented in the draft Precinct Structure Plan at that time, which included 331 hectares of net employment land. The 2009 update included an increased employment area of 373 hectares across the following uses: Industrial 221 hectares Business Park 108 hectares Mixed Use 17 hectares Employment Interface 17 hectares 12 Amendment C102 to the Casey Planning Scheme, Cranbourne West Precinct Structure Plan, January 2010, page Amendment C102 to the Casey Planning Scheme, Cranbourne West Precinct Structure Plan, January 2010, page HISTORY OF PLANNING FOR CRANBOURNE WEST

21 Business Activity Centre 10 hectares 14 The only employment land requirement analysis in the MacroPlan report appears to be a rule of thumb approach presented on page 11, which is summarised as follows: The draft PSP would accommodate up to 10,000 residents, translating to a resident labour force of at least 4,500 people, based on an average employment yield of 50 jobs per hectare, across all industries; Around 90 hectares of employment land was indicated as being required to service local opportunities for residents; In order to eliminate the current job deficit in the Cranbourne SLA of 19,296 jobs, a further 385 hectares of employment land would be required. The job deficit was simply a calculation of the number of jobs currently provided in the SLA relative to the resident labour force. This implies MacroPlan were targeting 100% containment of jobs in the SLA, which aside from central city areas, virtually no SLA in the country can achieve. Most areas only have around 30-35% containment. Clearly, the amount of employment land set aside in PSP was substantially greater than required to service the Cranbourne West local resident population. Of course, a larger employment land provision is appropriate to provide jobs for other residents outside of Cranbourne West. However, it is unreasonable to expect that Cranbourne West would provide for the entire employment land requirement for the whole of the Cranbourne SLA, and that the SLA will achieve 100% containment, as MacroPlan seem to be suggesting should be the case. There are various other activity areas within the Cranbourne SLA that will provide other jobs for Cranbourne residents outside of Cranbourne West, such as the Cranbourne Activity Centre, new industrial land allocated to the southeast of Cranbourne and Thompsons Road in Clyde North. As such, the amount of land set aside for employment in Cranbourne West would seem excessive. MacroPlan appear to have recognised that a detailed employment land analysis has not been undertaken throughout this entire process: MacroPlan considers that Council should undertake a more detailed commercial strategy that assesses the latest trends and commuting patterns of residents to ascertain the City of Casey s future employment land requirements in more detail and understands the interrelationship with other municipalities including Cardinia. Demand for mixed use and higher employment yield commercial office floorspace will take time to be generated and Council will need to consider how the supply of significant volumes of office floorspace at Cranbourne West may influence the development of the Cranbourne CBD as a Principal Activity Centre. 15 The MacroPlan report goes on to consider the employment land mix and job outcomes for a variety of development scenarios. The employment yields for the three different scenarios, based on the revised 2009 analysis which relied upon an updated land budget showing more than 372 hectares of net employment land, is summarised in Table 1.1 below. 14 MacroPlan Australia, Cranbourne West Urban Growth Plan, Employment Land Sizing, page MacroPlan Australia, Cranbourne West Urban Growth Plan, Employment, Land Sizing, January 2009, page 11 HISTORY OF PLANNING FOR CRANBOURNE WEST 13

22 Cranbourne West Employment Yields MACROPLAN SCENARIOS BY USE TABLE 1.1 Net Scenario A Scenario B Scenario C Land Base Case Dynamic Case Advanced Case (ha) Emp./ha Emp. Emp./ha Emp. Emp./ha Emp. Business Park , , ,529 Mixed Use , , ,370 Industrial , , ,427 Employment interface Business Activity Centre Total , , ,762 Source: Cranbourne West PSP ; MacroPlan Australia, Cranbourne West Urban Growth Plan, January 2009 ; Urbis The lower jobs outcome in the base case is based on more conservative estimates of jobs per hectare, reflecting current market conditions and an assumption that development in Cranbourne West will be broadly in line with other growth areas in the southeast of Melbourne. The advanced scenario is a higher but moderate growth model that assumes the ability to increase the density of white collar workers, while the dynamic outcome is an aspirational outcome which sets a new standard and attracts a level of white collar employment that hasn t been achieved anywhere in the southeast to date, along with higher levels of employment self-sufficiency. The advanced and dynamic outcomes are not reliant on the outcome in the industrial land areas, with the jobs per hectare figure for these two scenarios being 20 jobs per hectare net. The jobs range of 10,626 to 16,762 for Cranbourne West is directly quoted in the final PSP document. The likely outcome according to MacroPlan was their dynamic scenario which generated 13,768 jobs, including 4,427 jobs from the 221 hectares of industrial land. 1.6 GROWTH CORRIDOR PLAN (2012) The Growth Corridor Plans were released by the Growth Areas Authority (GAA) in June The Growth Corridor Plans provide a framework to guide the planning of new communities in each of Melbourne s four major growth corridors, namely the west, the north, the southeast (Casey and Cardinia) and the Sunbury/Diggers Rest corridor. As with most high level planning documents, the GAA have indicated that the plans are a tool to guide decisions over the next years: These plans set out the strategic plan for the future development of Melbourne s growth corridors over the next years. The plans are a tool to guide and inform future decisions regarding urban development and infrastructure that may be required to service these new communities over the long term. They should not be interpreted as a delivery mechanism or program committing the government to specific infrastructure or development projects or specific levels of service provision. 16 The Growth Corridor Plans make provision for the following population and jobs for the southeast: DWELLING CAPACITY POPULATION CAPACITY JOBS CAPACITY 83, , , ,000 86, , Growth Corridor Plans, GAA June 2012, page 6 14 HISTORY OF PLANNING FOR CRANBOURNE WEST

23 Again, these numbers come with a proviso: Over the next years it is possible that household sizes, the mix of dwelling types and average dwelling densities, and the extent of areas that need to be put aside for conservation and non-urban purposes may vary significantly. Similarly, demand for industrial land and average employment densities in industrial areas may also vary. The corridor plans need to allow for such variations so that sufficient flexibility is incorporated in planning for possible future infrastructure and service needs. The table above shows the likely upper and lower limits on the population, dwelling and housing capacity of the growth areas. 17 The Growth Corridor Plan for the southeast region, as shown in Figure 5, allows for 2,370 hectares gross of industrial land, 1,290 hectares gross of business land and a further 60 hectares gross of additional land which could be provided for a range of local industrial and commercial activities across residential areas to be identified through the PSP process. These figures include the entirety of the Cranbourne West employment land (defined as industrial), while 3 major new industrial or employment land precincts are allowed for within the Growth Corridor Plan, namely employment and industrial land south of Pakenham/Officer; the Thompsons Road business precinct between Cranbourne and Clyde North; and new industrial areas adjacent to the South Gippsland Highway, to the southeast of Cranbourne. As discussed later in this report, the amount of land now set aside for employment and industrial use through the southeast corridor is far more than is required to meet the target of 1 job per household in the region. 17 Growth Corridor Plans, page 8 HISTORY OF PLANNING FOR CRANBOURNE WEST 15

24 GROWTH CORRIDOR PLAN FIGURE HISTORY OF PLANNING FOR CRANBOURNE WEST

25 The Growth Corridor Plans are supported by three separate employment and industry technical reports, commissioned to assist in estimating the like future demand for industrial land in the growth areas, and to identify the critical factors that should guide the location and planning of future industrial estates. The three reports have differing scopes and were prepared using differing methodologies: The Jones Lang LaSalle report focused specifically on the drivers of future demand for industrial land in the growth areas. The Essential Economics report examined land requirements associated with the full range of future employment types in the growth areas if the aspirational employment target is to be achieved. The Spatial Economics report focused on the level of vacant industrial land stocks and recent trends in the take up of industrial land. Unlike the other two reports, its forecasts of the level and distribution of future industrial land demand were entirely trend-based. 18 The three different reports produced very different outcomes. In total, the additional requirement for employment land (industrial, commercial and mixed use) indicated by the three consultants ranged between 3,600 and 6,800 hectares across Melbourne. The summary document prepared by the GAA, which informed the Growth Corridor Plans, indicated that a mid-point of those estimates was ultimately adopted at just over 5,000 hectares. In relation to the southeast region, again the three consultants had vastly different indications of required demand. Essential Economics and Jones Lang LaSalle both indicated that the majority of additional employment land in Melbourne was required in the north and west, recognising that there was already significant access to large tracts of available industrial land in the southeast in areas such as Dandenong South and Hallam. The various outcomes for all of Melbourne and the southeast from each consultant are summarised in the table below, noting estimates for the southeast do not include land in Officer- Pakenham as this was already proposed at the time: CONSULTANT Jones Lang LaSalle Essential Economics TOTAL MELBOURNE EMPLOYMENT LAND REQUIREMENT 3,378 ha additional to 2030, 90% in north and west. 3,760-4,320 ha required under low growth scenario, up to 6,080-6,845ha under high growth. SOUTH EAST GROWTH AREA EMPLOYMENT LAND REQUIREMENT Casey to require additional 328 ha gross, Cardinia to have surplus of 587 ha net. Combined, south east 320 ha in surplus ha low growth, 1,000-1,125ha high growth. Spatial Economics 6,702 ha gross 1,891 ha gross in the South region 19 Ultimately the GAA in their employment and industry summary report prepared as background to the Plan, adopted 810 hectares gross of employment land (industrial, commercial, mixed use) required in the south east region. This was additional to the current supply and also on top of the approximately 2,700 hectares of employment land already identified within the pre-2010 urban growth boundary in the southeast growth area. Most of this 2,700 hectares is in the Officer-Pakenham Employment Corridor, but also includes the Cranbourne West precinct. The final Growth Corridor Plan report refers to the additional land requirements inclusive of Officer-Pakenham. 18 Planning for Employment and Industry in Melbourne s Growth Areas, Growth Areas Authority, October 2011, page 3 19 A larger area than the south east growth corridor including the municipalities of Bayside, Cardinia, Casey, Frankston, Glen Eira, Greater Dandenong, Kingston and Mornington Peninsula. HISTORY OF PLANNING FOR CRANBOURNE WEST 17

26 1.7 CASEY PLANNING SCHEME AMENDMENT C50 Amendment C50 introduced changes to the Casey Planning Scheme to reflect the intent of the C21 Strategy, which was updated for the purposes of the Amendment in the document entitled Casey C21 Building Our Great City. This report was adopted by Council in July The Panel report in relation to the Amendment was released in April 2014 and we understand that the changes to the Planning Scheme are now with the Department for approval. The Building Our Great City document is described as an updated, refreshed and more accessible version of Casey s long term strategic planning presented in the original report in 2002 (described in 1.1 of this section). On review, it appears that there are no substantive changes to the intent of C21 presented in the new document, with in general the key themes and objectives being maintained. Some specific references have, however, been updated to reflect changes in the development of the municipality since In terms of employment and economic development objectives, the focus of C21 remains on some specific employment clusters, including updated references to an education and medical precinct incorporating the precinct in Berwick with Monash University, Chisholm TAFE and other businesses; development of a CBD for Casey in Narre Warren; revitalisation of the Cranbourne Town Centre; and the focus on the jobs corridor linking the employment areas of Dandenong and Cardinia with Casey s employment centres. The area included within the jobs corridor appears to have been altered. Although the focus remains on the links between Dandenong and Cardinia along the Princes Highway / Monash Freeway and the Pakenham rail corridor, the jobs corridor has been extended further to the south to include the Thompsons Road business precinct and also Cranbourne West. A new map is shown to illustrate this corridor, shown here as Figure 1.6. It appears the corridor has been extended to reflect the future land that has been set aside for employment, even though Cranbourne West was not seen as a strategic part of the corridor when it was first defined. 1.8 PLAN MELBOURNE (2014) Plan Melbourne is the current metropolitan planning strategy, incorporated as part of the City of Casey s Planning Scheme at Clause 9. Plan Melbourne is the vision for Melbourne. It is an evidence-based plan designed to guide Melbourne s housing, commercial and industrial development through to It seeks to integrate long term land use, infrastructure and transport planning to meet the population, housing and employment needs of the future REGIONAL EMPLOYMENT NODES The document represents a shift towards a more regional approach to employment planning with a focus on key nodes for job provision: Plan Melbourne supports the new geography for jobs and productivity, through driving the expansion of the central city and through helping the growth and development of significant employment nodes across the metropolitan area, in national employment clusters, metropolitan activity centres and state-significant industrial precincts. 21 Plan Melbourne includes a number of outcomes and objectives. One of the outcomes relates to delivering jobs and investment. The directions relating to this objective are as follows: Direction 1.1. To find a new city structure to deliver an integrated land use and transport strategy for Melbourne s changing economy. 20 Plan Melbourne, page 2 21 Plan Melbourne, page HISTORY OF PLANNING FOR CRANBOURNE WEST

27 Direction 1.2. To strengthen the competitiveness of Melbourne s employment land. Direction 1.3. To improve decision making processes for state and regionally significant developments. Direction 1.4 To plan for the expanded central city to become Australia s largest commercial and residential centre by Direction 1.5. To plan for jobs closer to where people live. Direction 1.6. To enable an investment pipeline of transit-oriented development and urban renewal. 22 The jobs and investment focus of Plan Melbourne includes a number of state-significant elements: Expanded central city CBD, Southbank, Docklands and future surrounding areas. National Employment Clusters, e.g. Monash, Parkville, Dandenong South with emerging clusters at La Trobe, Sunshine and East Werribee. Metropolitan Activity Centres, including Dandenong and Fountain Gate/Narre Warren in the southeast. State-significant industrial precincts, including the southern industrial precinct, covering Dandenong South and a future state-significant industrial precinct at Officer/Pakenham. Transport gateways, e.g. ports and airports. Health/Education precincts, e.g. universities and hospitals. Urban renewal precincts, e.g. Fishermans Bend, E-Gate, East Werribee. Supplementing the state-significant elements are the local significant elements, including: Activity centres Neighbourhood centres Other industrial land Neighbourhood health precincts Urban renewal sites. It appears that the proposed Cranbourne West industrial area is not part of the state-significant industrial precinct and is therefore classified as other industrial land. As a result, it appears that the direction in Plan Melbourne is for that land to play a role within the municipality or sub-region, rather than being seen as strategically located land available for major industrial development linked to principle freight network and transport gateways, as the state-significant precincts are designated. The reference to other industrial land strategic direction provided in Plan Melbourne is: to maintain other industrial land that is economically important to a municipality or subregion or to strategically redevelop underutilised industrial land, to intensify industrial uses or generate opportunities for employment and urban renewal Plan Melbourne, page Plan Melbourne, page 32 HISTORY OF PLANNING FOR CRANBOURNE WEST 19

28 On Map 12 of Plan Melbourne, the Cranbourne West precinct is indicated as an investment and employment opportunity MINUTE NEIGHBOURHOODS The other key concept within Plan Melbourne relating to where jobs need to be provided is the concept of 20-minute neighbourhoods. 20-minute neighbourhoods are places where you have access to local shops, schools, parks, jobs and a range of community services within a 20-minute trip from your front door. Creating a city of 20-minute neighbourhoods relies on creating the market size and concentration that can support a broader range of local services and facilities. 24 This concept is of relevance when considering the future role of Cranbourne West. Previous councilbased planning in Melbourne has predominantly been focused on providing an increased range of jobs within a municipality to service the employment needs of residents in that municipality. However, the 20- minute neighbourhood concept removes the focus on municipalities as the area of analysis. The key consideration following the release of Plan Melbourne is the ability of people to access jobs within 20 minutes. In the context of Cranbourne West, and as discussed further later in this report, residents of Cranbourne West and surrounding areas have access to a variety of state-significant employment locations within 20 minutes, including the Dandenong South National Employment Cluster and state-significant industrial precinct, the Dandenong Metropolitan Activity Centre and the Fountain Gate/Narre Warren Metropolitan Activity Centre, the Officer/Pakenham future state-significant industrial precinct, and for many the Port of Hastings is within a 20-minute drive. The ability of these precincts, supplemented by local employment precincts, to serve residents of the southeast growth corridor is considered later in this report. 1.9 PLATFORM 2014 Platform 2014 presented the Victorian Labour government s policy position prior to the recent state elections. The document includes a variety of broad statements relating to policy directions under the new Labor Government, although there is nothing specific nor substantive in relation to the status of Cranbourne West or the development of employment land in the southeast. However, the one key issue flagged by Platform 2014 is Labor s position in relation to the Port of Hastings. Their preference appears to be for the development of a major, expanded port operation on the western side of Port Phillip Bay in preference to the Port of Hastings, as put forward in Plan Melbourne. Based on the advice available so far, studies that have already been undertaken and the views of expert stakeholders, the case for a Bay West site is compelling. It is clear that the Bay West option requires significant further investigation to test the information currently available. Labor believes the Bay West is likely to be the best option for future container port development. 25 While Labor s stance since the election has been to suggest they will investigate all options including Bay West and the Port of Hastings, should Hastings be no longer the preferred location for an expanded port operation, there will be a further impact on the viability of Cranbourne West as providing a major provision of industrial land. MacroPlan, in their analysis detailed earlier in this section that informed the Cranbourne West PSP, indicated the link to the Port as one of only two strengths of Cranbourne West: Location near the strategically important Frankston to Hastings corridor (with medium term opportunities around the future development of the Port of Hastings) Plan Melbourne, page Platform 2014, page MacroPlan Australia, Cranbourne West Urban Growth Plan, Employment Land Sizing, page HISTORY OF PLANNING FOR CRANBOURNE WEST

29 A reduced role of the Port of Hastings reduces the attractiveness of Cranbourne West as an industrial location SECTION SUMMARY This section has highlighted a long history of the planning for industrial and employment land in the Cranbourne West area that has shifted over time. The key points to draw from the analysis in this section are: The original key planning strategy for the City of Casey, C21 (released in 2002), introduced an indicative concept of around 250 hectares of industrial land in a narrow strip along the Western Port Highway in Cranbourne West to increase job opportunities for local residents. This scale of employment land (industrial and commercial) was also supported by the Smart Growth Committee. In 2006, the Casey-Cardinia Growth Area Framework Plan showed an expanded industrial area of 400 hectares. The expansion of this area does not appear to have been supported by any analysis of the future need for industrial land in the area. Based on instructions from the City of Casey Council, technical reports supporting the development of the Cranbourne West Urban Growth Plan indicated the 250 hectares was more than enough to support more than 14,000 jobs, with advanced manufacturing being the target use for that land. The Cranbourne West PSP, finalised in 2010, indicated a land use budget with a further increase in gross employment land of almost 450 hectares. Again, the supporting economic documents prepared by MacroPlan did not include an analysis of the requirement for employment land, rather they indicated the number of jobs that could be generated based on the land budget provided to them. The PSP also shifted the focus of Cranbourne West from originally being solely industrial land to a mixture of industrial, commercial and mixed use employment zones, where industrial land is seen as having a much lower job density than other employment land. The industrial land is envisaged to service mainly large site requirements of transport and storage tenants with a regional focus. The Cranbourne West PSP also presents buffers between industrial and residential land that are significantly reduced from those previously recommended in C21 and by the Smart Growth Committee. The Growth Corridor Plans (2012) designated increased land for industrial and business purposes, although all of Cranbourne West is notated as industrial land, rather than including business and mixed use precincts. A modest increase in employment land was seen as adequate to provide for the employment needs of the southeast growth corridor for the next years as vast tracts of land were also proposed within the pre-2010 urban growth boundary in Officer/Pakenham. Three supporting technical reports to the Growth Corridor Plans assessed the requirement for employment land across Melbourne, including the southeast corridor. These three reports produced vastly different land requirements, although there was general agreement that the southeast region was well served by existing vacant land in Dandenong South and other nearby areas, meaning that only a small proportion of future industrial land would need to be set aside in the southeast. The introduction of Plan Melbourne has shifted the focus of employment generation to regional planning, centred around state-significant elements, such as National Employment Clusters and state-significant industrial precincts, among others. Cranbourne West, while seen as an investment and development opportunity, is classified as a locally significant element, thereby serving more of a municipal or sub-regional role, rather than regional. Plan Melbourne also introduced the concept of 20-minute neighbourhoods where all community services, including jobs, should be readily available within 20 minutes of where people live. Consequently, the focus for employment provision has shifted from being based on municipal boundaries to a more sub-region based approach. Cranbourne West is within 20 minutes of all major employment precincts within the southeast region, including Dandenong South, Thompsons Road and Officer/Pakenham. HISTORY OF PLANNING FOR CRANBOURNE WEST 21

30 While we are yet to fully see the influence of the new Labor government, their pre-election policy position showed preference for development of a major port activity on the western side of Port Phillip Bay (Bay West), rather than expansion of the Port of Hastings. Should the Port of Hastings not expand, the importance of Cranbourne West as a regional industrial precinct will be further reduced. 22 HISTORY OF PLANNING FOR CRANBOURNE WEST

31 2 Factors Influencing Melbourne s Employment Land Development This section considers a variety of factors that are shaping where jobs are to be provided in future, and in particular, the effect that this will have on the scale, nature and type of employment in locations such as Cranbourne West. These factors include a variety of policy directions, as detailed in the previous section, as well as the changing nature of industrial employment and the number of jobs in various industries relative to land requirements. 2.1 IMPLICATIONS OF PLAN MELBOURNE S REGIONAL FOCUS Plan Melbourne, and a number of other policy directions detailed in section 1, will likely influence the development of industrial and other employment land across Melbourne, including its distribution and the nature of employment in each location. Firstly, Plan Melbourne includes a strong focus on an expanded Central Business District (CBD) for Melbourne, which includes not only the original CBD grid and Docklands, but also a variety of surrounding urban renewal precincts, including Fishermans Bend. While these urban renewal areas are not likely to be attractive to traditional industrial tenants, some operators who may have in the past maintained a large, suburban office requirement may relocate to more central areas. There are already examples of major multi-national tenants leaving suburban markets for more central locations, as the increased supply makes that option more affordable. This type of relocation creates increased industrial vacancy in middle and outer suburban areas, which effectively increases the supply of industrial land competing with new industrial releases in the outer areas. Secondly, Plan Melbourne provides a strong focus on the benefits of clustering employment into the National Employment Clusters, and also the State-Significant Industrial Precincts. There are clear benefits to this approach, particularly in terms of the advantages it presents to potential tenants able to cluster with a critical mass of other operators. To support the development of these employment precincts, government investment in infrastructure will need to be directed to supporting the nominated areas, further reinforcing them as the preferred locations for major regional employers. The status of the Port of Hastings will also influence the pattern of employment expansion across Melbourne. Although nominated by the previous Coalition Government as the second major port for Melbourne, the Labor Government s apparent preference for Bay West will refocus investment in that area, rather than the southeast. If the Port of Hastings is not expanded, this will reduce the attractiveness of employment land along nearby access routes, at least from the major regional operators. For the industrial and other employment land within Cranbourne West, the influence of these Melbournewide investment decisions is clear. Although the area could potentially be considered part of the southern industrial precinct, in reality the location is sufficiently removed from Dandenong South for it to be considered part of a different market. As a result, it is considered to be a secondary location for large industrial uses, such as transport and storage, at least while there continues to be a significant supply of vacant land within Dandenong South. This, combined with issues relating to a conflict between industrial and residential land (as discussed in subsequent sections), means that demand for large tracts of industrial land in Cranbourne West will be low. The potential change of course for the expansion of the Port of Hastings further reduces the appeal of the location to a range of industrial users, particularly since the potential upgrade of the Western Port Highway to a freeway appears to have been predicated on the expansion of the Port of Hastings. 2.2 TRENDS IN INDUSTRIAL DEVELOPMENT Various studies into Australia s industrial structure highlight a number of strong trends driving change in the nature of activities, and in turn influencing industrial land demand. An analysis of some of these trends is presented in the Jones Lang LaSalle (JLL) report, prepared in July 2010 for the GAA, as background for the development of the Growth Corridor Plans. FACTORS INFLUENCING MELBOURNE S EMPLOYMENT LAND DEVELOPMENT 23

32 The JLL report and others discuss the structural change in the needs of industrial space occupiers, including the following shifts: Technology and inventory management Improvements in mobile communications and other technology have enabled improved data and inventory management in distribution processes. In order to capture the benefits of improved efficiency, industrial uses require purpose-built, large, centralised warehousing facilities on land that is suitable for such uses. Decline in manufacturing Increased competition, both globally and locally, and a need for cost reductions has meant that a large share of Australia s traditional manufacturing activity has been moved offshore. Recent announcements in the car industry are an example. The change from local manufacturing and distribution to outsourced manufacturing has created a subsequent need for greater warehousing and distribution facilities on industrial land, rather than manufacturing. Transport and storage facilities, which require large sites, have driven the demand for industrial land as manufacturing demand has decreased. Centralised operations The change in the strategy for many industrial users has shifted demand for warehousing from smaller, local facilities located near to the end user, to much larger, centralised operations, which are conveniently located to transport hubs and links. As a result of these structural shifts, new industrial land provided in Melbourne s growth areas must meet the needs of large scale warehousing operations. Some of the key specifications for this land include: flat land; land large enough to be capable of accommodating the supersized warehouse facilities; proximity to a sufficiently large and appropriately skilled workforce; an absence of amenity concerns; accessibility to multiple modes of transport, including freeways, rail interchanges, airports and seaports. As discussed further in subsequent sections of this report, Cranbourne West has some attributes of an appropriate industrial location, in particular: it is relatively flat land; can provide some relatively large areas for potential users (albeit only capable of accommodating a small number of very large operations); reasonably easy access along the Western Port Highway; and proximity to the Port of Hastings. However, when considered against alternative locations, Cranbourne West does not compare favourably, and in fact, the future potential for large scale industrial use in Cranbourne West is perhaps not as great as might originally have been envisaged: There is a very large supply of suitable, vacant land in the southeast region, including in Dandenong South, which is the major preferred location at this stage, with a large future provision in Officer/Pakenham. Both have much easier access to the Port of Melbourne and airports with few traffic lights. Expansion of the Western Port Highway to freeway status is now less likely, with the Port of Hastings expansion in question. Significant amenity concerns have emerged with industrial land proposed at Cranbourne West, due to its close proximity to residential area. 24 FACTORS INFLUENCING MELBOURNE S EMPLOYMENT LAND DEVELOPMENT

33 2.3 INDUSTRIAL DEMAND ON A REGIONAL BASIS On a Melbourne-wide basis, superior access to various airports, the Port of Melbourne and potentially a second major port at Bay West, and intended interstate rail terminals, means that the west and north growth areas are likely to capture the majority of industrial land demand over the medium to long term. JLL, in their report commissioned by the GAA, conclude: Based on forecast demand and existing land supply, some 90% of new industrial land will need to be provided in the west and north; principally in Hume and Wyndham LGAs, which are projected to see average land take up rates above 50 hectares per annum. 27 JLL note the significant future land supply in Officer/Pakenham as catering for much of the future demand in the southeast growth corridor, with the Cardinia LGA in particular seen as having an excess supply over the next 20 years or so. Similarly, Essential Economics in their report, prepared to inform the Growth Corridor Plans for the GAA, found that the majority of future employment land needed to be provided in Melbourne s north and west, with the requirement for the southeast being only around 15-16% of the total future supply needed across all growth corridors. 28 Significant industrial precincts in the southeast will still attract a share of industrial demand over the medium to long term. However, it is likely that the majority of the industrial demand will be focused in the State-Significant Industrial Precincts, including Dandenong South, before shifting to where there is a much larger supply of land in Officer/Pakenham. Areas such as Cranbourne West that do not have the strategic advantages of the larger precincts will primarily service local demand. Consequently, the demand will be for smaller lot industrial areas, with large lot industrial users likely to prefer other locations, relative to Cranbourne West. It should be noted that this outcome is consistent with the concept of the 20-minute neighbourhood espoused in Plan Melbourne. Residents of the Cranbourne area will have access to large areas of industrial employment in Dandenong South, Officer/Pakenham and Thompsons Road (Clyde North), with Cranbourne West able to supplement this with jobs servicing demand created more locally. 2.4 CHANGING NATURE OF INDUSTRIAL EMPLOYMENT Structural changes in the industrial sector have resulted in a declining number of jobs per hectare of pure industrial land. This is influenced by: Improved efficiency in operations which reduces the employment requirement. Improved technology which can either identify where and when there is surplus employment, or in some cases replace jobs. The shift away from more intensive manufacturing towards wholesale trade, transport and storage, which have lower job per hectare requirements. Jones Lang LaSalle in their July 2010 report for the GAA suggested that industrial employment yields had fallen from around 20 jobs per hectare in 1996 to 17 jobs per hectare in 2006, and that this trend is likely to continue with total industrial employment yield dropping to around 16 jobs per hectare by For the growing transport and storage sector, jobs per hectare is expected to fall to around 14 jobs per hectare by JLL, A study into the take-up of industrial land and future land requirements in Melbourne, July 2010, page i 28 Essential Economics, Growth Corridor Plans Activity Centre and Employment Planning, November 2011, page JLL, page 52 FACTORS INFLUENCING MELBOURNE S EMPLOYMENT LAND DEVELOPMENT 25

34 An example of the very low employment requirement for modern transport and storage premises it has emerged from Leighton Properties attempts to attract tenants to their Cranbourne West land. We understand the employment yield for a particular distribution centre which was considering locating on Leighton Properties land would be as low as 8 jobs per hectare. This highlights that while it may be a significant parcel of land in Cranbourne West for industrial development, it may only generate relatively low employment numbers. The yield will certainly be lower than the mixed use or business precincts in Cranbourne West and other parts of the southeast corridor, which will accommodate a much larger proportion of the future jobs requirement for the region. The analysis of the impact of conversion of some of the Cranbourne West industrial land to residential uses is considered further in section 6 of this report. While there is no consistent agreement on likely employment yields from industrial land, a number of consultant reports prepared in relation to either Melbourne s Growth Corridor Plans or as background for the Cranbourne West PSP provide various estimates of jobs outcomes for industrial and other employment land. TABLE 2.1 EMPLOYMENT YIELD ESTIMATES CONSULTANT REPORT Essential Economics, November 2011, page 95, report prepared for the GAA in relation to the Growth Corridor Plans EMPLOYMENT YIELD Employment yield for employment/industrial areas combined (i.e. including office space) indicated to range from 3 jobs per hectare in outer Melbourne through to 35 jobs per hectare in inner Melbourne. Adopts an employment intensity target of jobs per hectare of gross industrial land. Jones Lang LaSalle, July 2010, report prepared as input to the Growth Corridor Plans Provides a summary of other industrial land studies with an employment yield range for transport, storage and wholesale trade of between jobs per hectare, with higher figures for manufacturing. For the purposes of analysis, adopts jobs per hectare of gross industrial land. MacroPlan Australia, January 2009, employment land sizing report prepared for the City of Casey in relation to employment yields in Cranbourne West Adopts a base case of 15 jobs per hectare, up to 20 jobs per hectare for an advanced industrial land outcome. It should be noted that these figures are per net hectare and therefore could be around 30% lower in gross terms (i.e jobs per hectare) The employment estimate for industrial land used in the Cranbourne West PSP is based on the MacroPlan analysis, assuming jobs per hectare net. The Metropolitan Planning Authority (MPA) has also recently adopted a relatively low range of jobs per hectare for industrial land uses. The PSP for Thompsons Road provides details of estimated employment yields for various employment land uses. As shown at Table 4 on page 21 of the Thompsons Road PSP, industrial land is assumed to generate employment of jobs per hectare, although 20 jobs per hectare is applied to generate the expected employment numbers in that PSP. Again, it should be noted that the jobs per hectare are in net terms. In gross terms, jobs per hectare would be in the range of 7-14 jobs per hectare, on the basis of the MPA s estimates. 26 FACTORS INFLUENCING MELBOURNE S EMPLOYMENT LAND DEVELOPMENT

35 In summary, while there are a range of employment yield calculations applied by various consultants, there appears to be some consensus that industrial land generates a relatively low employment yield, which has been in decline, and is now somewhere between jobs per hectare gross. Areas with a greater focus on warehousing, transport and storage will have a lower employment yield again, with some uses generating less than 10 jobs per hectare. While they are large land occupiers, sizeable modern industrial operations generate a relatively low proportion of an area s total jobs, with higher yielding mixed use and commercial areas generating a large share of future employment opportunities. 2.5 JOB CONTAINMENT The approach now taken in Plan Melbourne to provide strategic employment nodes for major regional employment uses, along with the concept of 20-minute neighbourhoods, confirms that the concept of 100% job containment within each council area is now no longer applicable. In many ways, this concept is consistent with the original Casey C21 report, where it described the outer southeast area as emerging as a self-sustaining region in its own right. 30 C21 goes on to discuss the concept of the 1 hour commuting shed, referring to the fact that people are generally not willing to travel further than an hour to access goods, services and facilities. This suggested that this commuting shed is what defines a region, resulting in the focus on the southeast region, rather than Casey in isolation from other areas. Furthermore, the report indicated that Casey s residents rely on the southeast region of Melbourne for almost 75% of their employment destinations. This is a very high level of regional containment. 31 Municipal boundaries are now less important, as long as the full range of services and facilities is provided in the broader region. Essential Economics in their report for the GAA in November 2011, used as input to the Growth Corridor Plans, outlined what they saw as GAA aspirations at the time, in relation to activity centre provision and employment generation, with a series of measurable targets: 1. An overall target of 1 new job for each dwelling to be created in the growth corridors. 2. Approximately one third of jobs to be provided at the local level (i.e. in local community neighbourhoods). 3. Approximately 70% of jobs to be located at the sub-regional level (i.e. within approximately 5 km). 4. A target of 100% employment self-sufficiency at the wider regional level (i.e. within approximately 10 km). 5. A target for 80-90% of all households to be within 1 km of neighbourhood level shopping facilities that have a supermarket. 6. A network of neighbourhood and higher order centres planned on the basis of a square mile block (1.6 km x 1.6 km) and supported by a grid system of streets to reflect this pattern of development. 32 These targets again confirm that the concept of 100% employment containment does not apply at the municipal level, rather there is only a consideration of the wider regional level. This is particularly relevant in situations such as Cranbourne West where there is relatively easy access to major employment nodes just outside the municipal boundaries. Dandenong South, Officer/Pakenham, Carrum and even Hastings are within around 20 minutes drive of Cranbourne West. The supply of industrial and other employment land in these areas should be taken into account when considering the future demand/supply and the ability for future land suppliers to accommodate the necessary increase in jobs. As such, we believe that 30 Casey C21, page 5 31 Casey C21, page 5 32 Essential Economics, page 4 FACTORS INFLUENCING MELBOURNE S EMPLOYMENT LAND DEVELOPMENT 27

36 when planning for where jobs are required, it is reasonable that the southeast region is considered as a whole, rather than analysing job targets purely on the basis of small area needs. This appears consistent with the City of Casey maintaining the concept of the jobs corridor in the latest update to Casey C21, which now forms part of the City s planning scheme, which highlights the importance of the corridor between Dandenong South and Officer/Pakenham for jobs growth (both areas outside of the municipality), with employment nodes including a CBD-type role for Narre Warren/Fountain Gate, a revitalised Cranbourne Town Centre and other employment destinations, such as Thompsons Road and the Berwick medical/education precinct. 2.6 SECTION SUMMARY The analysis in this section leads to the following conclusions: The effect of Plan Melbourne s regional approach to jobs will see development and investment primarily directed to key employment nodes, including the CBD, National Employment Clusters and State-Significant Industrial Precincts. Cranbourne West is not part of these major employment precincts and will therefore be a secondary location for industrial development. A number of other nearby locations, in particular the statesignificant industrial precincts of Dandenong South and, in future, Officer/Pakenham, will provide businesses with greater synergies and significant opportunities for large format industrial development, and an environment that avoids amenity issues, with limited interfaces with residential areas. As a result of a large existing supply of employment land and modest demand, the GAA concluded in preparing the Growth Corridor Plans for Melbourne that the south-east would only require a small share of the future allowance for new employment land supply. The north and west regions are seen as the preferred future locations for employment land due to their strategic locations close to airports, the Port of Melbourne, rail links and advanced road network. Employment densities on industrial land, particularly for transport and storage uses, as intended for the industrial land at Cranbourne West, are declining. Greater employment yields can be generated from business parks, mixed use precincts and small lot industrial areas. As these uses make up the majority of the rest of Cranbourne West, outside of the Leighton Properties/Kelly land, other sites will provide the majority of the jobs in Cranbourne West. The concept of 100% job containment within a municipality is no longer applicable. A shift to more regional planning in documents such as Plan Melbourne and the associated Growth Corridor Plans suggests the important area for considering job provision is at the regional level, or 20-minute neighbourhood. Cranbourne West and the surrounding areas are generally well-located to access major employment nodes within 20-minutes drive, including Dandenong South, Officer/Pakenham, Thompsons Road (Clyde North), Carrum and potentially the Port of Hastings. As such, Cranbourne West is likely to serve a supplementary local service role. 28 FACTORS INFLUENCING MELBOURNE S EMPLOYMENT LAND DEVELOPMENT

37 3 South East Region Industrial Supply and Demand In assessing the case for rezoning land at Cranbourne West it is important to consider the realistic prospects of industrial development materialising in this location. The analysis in this section is based on information on industrial land supply in 2014 and average annual consumption of industrial land between 2007 and 2014 from the Urban Development Program (UDP). The UDP is a major initiative of the Victorian Government to support strategic planning for Melbourne and is the primary mechanism for advising the Victorian Government about the supply of and demand for residential and industrial land within metropolitan Melbourne and the Geelong Region. This data is also summarised in an Annual Report compiled by the Victorian Department of Transport, Planning and Local Infrastructure. Using this information, this section assesses the adequacy of the current supply of industrial land in the south east region of Melbourne, and in the Casey municipality specifically, to cater for future demand for industrial land. The south east region used for this analysis is shown in Map 3.1 and covers the municipalities of Cardinia, Casey, Greater Dandenong, and Frankston. For the purposes of the UDP, zoned supply includes industrial land zoned to allow development to occur, or land where an Urban Growth Zone has been applied and a Precinct Structure Plan (PSP) approved that allows development of the land for employment and industrial use. SOUTH EAST INDUSTRIAL REGION MAP 3.1 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND 29

38 3.1 INDUSTRIAL LAND SUPPLY The Department of Transport, Planning and Local Infrastructure publishes an annual Urban Development Program (UDP) providing information on the supply and demand for residential and industrial land across Victoria. The UDP defines industrial land as being either occupied or supply land based on aerial photographic assessments. Land with any form of use on it (a structure of any sort, carpark etc.) is defined as occupied. As discussed below, this approach has the potential to under estimate the true supply of available land for industrial development ZONED SUPPLY As shown in Table 3.1, the 2014 UDP suggests that the south east region of Melbourne contains just over 4,300 hectares of land zoned to allow industrial use without a permit (Industrial 1, Industrial 2, Industrial 3 or Commercial 2 zoned land) and 500 hectares recorded in the City of Casey. The land recorded as vacant or available supply in the UDP makes up 1,166 within the defined south east industrial area and 56 hectares in Casey. Map 3.2 clearly shows the distribution of land in the south east of Melbourne is focused around Dandenong South, with existing industrial land at Hallam within the City of Casey, and relatively new land in Pakenham. The map indicates there are large areas of both Dandenong South and Pakenham that have vacant zoned industrial land. It should also be noted, that a substantial amount of port related industrial land, zoned as Special Use in the 2014 UDP, is located just outside the defined south east region around the Port of Hastings, just beyond the southern boundary of the Casey municipality. SOUTH EAST INDUSTRIAL AREA LAND SUPPLY MAP 3.2 Source: Urban Development Program SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND

39 3.1.2 URBAN GROWTH ZONE Within both Casey and Cardinia, the Urban Growth Zone (UGZ) has been applied to growth areas which are covered by Precinct Structure Plans (PSP). The total occupied and vacant area of land for industrial purposes which has been zoned (via the PSPs) is 443 hectares and 300 hectares in those municipalities respectively. This includes the Cranbourne West precinct, an expansion in the Officer-Pakenham area, and a small area along the South Gippsland Highway south east of Cranbourne. However, despite the UGZ areas only being designated in the last few years, the UDP records 224 hectares and 148 hectares of occupied industrial land within the UGZ within Casey and Cardinia respectively. Given the vast amount of supposedly occupied land in the UGZ, it appears the definitions that apply in the UDP have resulted in under estimation of the true vacant space. Map 3.2 illustrates where the occupied land within the UGZ is located. On inspection of these parcels of land, including large parts of the subject site, these areas are still being used as farm land. It appears that the presence of farm houses and other out buildings on the sites have led to them being classified as occupied and therefore unavailable. Maps 3.3 and 3.4 show recent aerial photos of the Cranbourne West and Officer UGZ precincts respectively, with the supply and unavailable areas shown in the UDP indicated. These photos show that virtually all of the areas shown as unavailable have not been developed for industrial purposes, and therefore really should be considered vacant. This is a flaw in the methodology of the UDP that must be kept in mind when considering the absolute volume of vacant land and the level of consumption of land as reported in the UDP. In the analysis to follow in this section, we have assumed all of the unavailable land in the UGZ is vacant and should be included as part of future supply calculations FUTURE PROPOSED SUPPLY In addition to the existing zoned industrial land and the defined UGZ land, the 2014 UDP makes an allowance for land in proposed industrial land precincts. In the south east, these proposed areas include the triangle to the south east of Cranbourne along the South Gippsland Highway, and the further expansion of the Officer-Pakenham precinct. These areas allow for an additional 1,183 hectares of industrial land (making an allowance where there is an overlap of one of those areas with an area already classified as UGZ INDUSTRIAL LAND IN OTHER COMMERCIAL PRECINCTS In preparing the Growth Corridor Plans for Melbourne, the GAA provided estimates of the proportion of other future employment land (commercial and mixed use) that would likely be used for industrial purposes. In the south east, this included a large business precinct along Thompsons Road at Clyde North, and further areas of Officer-Pakenham. In total, there was an allowance for 380 hectares of commercial land and 170 hectares of mixed use land in the south east. The allowance made was for 50% of commercial precincts to be used for industrial purposes, and 25% of mixed use precincts TOTAL FUTURE SUPPLY The total future industrial land supply for the south east region is shown in Table 3.2 below. When all four sources of future industrial land supply are combined (excluding currently occupied land), there is an estimated 3,633 hectares available across the south east region to meet future demand. In the City of Casey, a total of almost 977 hectares will be available, nearly triple the level of currently occupied land, noting that almost half of the land is in the UGZ and is largely still available for future use. The industrial land supply is illustrated in Map GAA, Planning for Employment and Industry in Melbourne s Growth Areas, October 2011 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND 31

40 Industrial Land Supply SOUTH EAST INDUSTRIAL AREA TABLE 3.1 Greater South East Zoned Casey Cardinia Frankston Dandenong Ind. Area 3 Industrial Land 1 (ha) (ha) (ha) (ha) (ha) Unavailable Land ,193 3,150 Supply ,166 Total Ind. Land ,965 4,316 Urban Growth Zone (UGZ) 4 Unavailable Land Supply Total UGZ Additional Future Supply Proposed Areas ,225 less Overlapping UGZ Future Supply ,183 Allowance for Industrial Uses in Other Precincts 5 Commercial Precincts (50%) Mixed Use Precincts (25%) Total Other Industrial Industrial Land includes Industrial 1, Industrial 2, Industrial 3 and Commercial 2 zoned land. 2. Other LGAs include Kingston (C), Bayside (C), Glen Eira (C) and Mornington Peninsula (C). 3. South East Industrial Area includes the Casey, Cardinia, Frankston and Greater Dandenong LGAs. 4. As defined in the 2014 UDP. 5. GAA Report on Industrial Land quoted numbers for Casey, while the remainder of the 1,290 gross ha from the South East Growth Corridor Report is expected to be located in Cardinia (Officer/Pakenham), assumed to be two thirds commercial and one third mixed use. Source : Urban Development Program Report 2014 ; GAA Report on Industrial Land for Growth Areas, October 2011 ; Urbis Industrial Land Supply Summary SOUTH EAST INDUSTRIAL AREA TABLE 3.2 Greater South East Casey Cardinia Frankston Dandenong Ind. Area 2 Industrial Land 1 (ha) (ha) (ha) (ha) (ha) Current Supply ,166 Urban Growth Zone Additional Future Supply ,183 Other Industrial (Business Land) Total Future Supply 977 1, , Industrial Land includes Industrial 1, Industrial 2, Industrial 3 and Commercial 2 zoned land. 2. South East Industrial Area includes the Casey, Cardinia, Frankston and Greater Dandenong LGAs. 3. Urban Growth Zone includes Urban Growth 1 and Urban Growth 2 zoned land. Source : Urban Development Program Report 2014 ; GAA Report on Industrial Land for Growth Areas, October 2011 ; Urbis 32 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND

41 CRANBOURNE WEST URBAN GROWTH ZONED LAND MAP 3.3 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND 33

42 OFFICER URBAN GROWTH ZONED LAND MAP SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND

43 SOUTH EAST INDUSTRIAL LAND SUPPLY MAP 3.5 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND 35

44 3.2 INDUSTRIAL LAND DEMAND AND ADEQUACY OF SUPPLY In areas outside of the Urban Growth Zones in the south east region, average annual consumption of land zoned for industrial purposes between 2007 and 2014 was recorded at around 85 hectares (refer Table 3.3). Within the City of Casey, consumption has been only 13 hectares annually, and just 4.1 hectares annually in the City of Cardinia. However, the consumption levels calculated here overstate the true take up of industrial land, as the 2007 supply excluded the B4 2 zone. Some of the increase in unavailable land between 2007 and 2014 was simply the inclusion of B4 land that may already have been unavailable in 2007 and therefore was not consumed during the relevant period. When we consider the consumption of only Industrial 1, 2 or 3 zoned land in Casey, it was between 1-2 hectares per annum from Given continued strong population growth in both Casey and Cardinia, it is reasonable to assume that annual consumption of land zoned for industrial purposes could increase. As such, we have conservatively allowed for consumption rates with the release of the UGZ industrial land to increase to 15 hectares per annum in both Casey and Cardinia, noting again the 13 hectares consumption recorded in Casey is overstated. This is likely to represent a maximum level of take-up. On the basis of these assumed future consumption rates, the total available supply of land for industrial purposes is anticipated to last 43 years in the south east region as shown in Table 2.4 (i.e. 3,633 hectares at 85 hectares per annum). In the City of Casey, the years of supply is likely to be at least 65 years, potentially even higher should consumption not increase to 15 hectares per annum. The new industrial land that has been set aside in the South Eastern region is more than sufficient to cater for current demand levels over a number of decades. Table 3.4 also shows that removing the hectares from future supply, there would still be around 52 years supply in the City of Casey alone, and 40 years in the south east region. In other words, the rezoning of the Leighton Properties/Kelly land at Cranbourne West will only reduce the available supply serving the future growth in the south east region by just 3 years. It is important to note that occupiers make location decisions based on a wider land market than simply municipal boundaries. This is significant since there is a substantial supply of vacant industrial land in the local and wider market in established and well-connected locations. Furthermore, there is ample future additional land supply to accommodate future industrial demand, as required. Industrial Land Demand SOUTH EAST INDUSTRIAL AREA TABLE 3.3 Greater South East Casey Cardinia Frankston Dandenong Ind. Area 2 Industrial Land 1 (ha) (ha) (ha) (ha) (ha) 2007 Unavailable Land ,740 2, Unavailable Land ,193 3,150 Consumption 2007 to 2014 Total Consumption Avg. Annual Consumption Assumed Future Consumption Industrial Land includes Industrial 1, Industrial 2, Industrial 3 and Commercial 2 (Business 3 & 4 in 2007) zoned land. 2. South East Industrial Area includes the Casey, Cardinia, Frankston and Greater Dandenong LGAs. Source : Urban Development Program Reports 2007 and 2014 ; Urbis 36 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND

45 Provision of Industrial Land SOUTH EAST INDUSTRIAL AREA TABLE 3.4 Greater South East Casey Cardinia Frankston Dandenong Ind. Area 2 Existing Industrial Land Provision 1 (ha) (ha) (ha) (ha) (ha) Future Supply 977 1, ,633 Assumed Future Consumption (ha/yr) Total Available Supply (yr) Industrial Land Provision After Re-zoning Subject Site Future Supply 774 1, ,430 Assumed Future Consumption (ha/yr) Total Available Supply (yr) Industrial Land includes Industrial 1, Industrial 2, Industrial 3 and Commercial 2 zoned land. 2. South East Industrial Area includes the Casey, Cardinia, Frankston and Greater Dandenong LGAs. Source : Urban Development Program Reports 2007 and 2014 ; Urbis 3.3 ADDITIONAL VACANT INDUSTRIAL FLOORSPACE Although the level of vacant floorspace in industrial areas is implicitly considered in the supply/demand analysis above, the level of vacancy in industrial buildings is worth considering. While focussed on large format vacancies, the Urbis Melbourne Industrial Vacancy Study provides an up to date snapshot of the existing vacant industrial stock. This is important since the UDP only considers land that is vacant by virtue of there being no development on a site, rather than considering if developed land lies vacant. In addition to the vast amount of vacant industrial land identified via the UDP, there is estimated to be some 281,500 sq.m. of existing industrial building stock that is lying vacant in the wider South East Melbourne industrial land market. The study s definition of South East Melbourne includes the following local government areas (LGAs); Stonnington, Glen Eira, Bayside, Kingston, Greater Dandenong, Casey and Frankston, as well as part of the Monash LGA south of the Monash Freeway. The Urbis Melbourne Industrial Vacancy Study published in August 2014 analysed almost 700 buildings comprising 13,500,000 sq. m of industrial floorspace across Melbourne. Although the study focuses primarily on buildings in excess of 10,000 sq. m it provides a useful indication of patterns of vacancy across Metropolitan Melbourne. The Urbis study highlights the existing concentration of industrial land in South East Melbourne, accounting for 35% of total industrial floorspace. Particularly significant for this study is the fact that the South East accounts for 41% of existing vacant industrial floor space with 22 buildings (281,500 sq. m) currently vacant in South East Melbourne (compared to 19 in February 2014 and 17 in August 2013). This represents a vacancy rate in the South East sub-market of 5.8%, having increased from 5.1% in February 2014 and 3.8% in February A significant share of this large scale vacant industrial floorspace is good quality stock; with the distribution of vacant floorspace as follows: Prime 49,600 sq.m Modern 68,600 sq.m Secondary 89,600 sq.m Tertiary 73,700 sq.m SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND 37

46 The high quality vacant stock (particularly prime and modern buildings) would be expected to come forward to meet immediate demand, while secondary and tertiary stock present opportunities for more affordable business accommodation. 3.4 SECTION SUMMARY The key findings from this section are as follows: The combination of the availability of existing building stock, abundance of existing vacant land supply in surrounding areas and planned new supply emerging in PSPs indicates there is ample supply to service the needs of the industrial land market for a number of years. There is an estimated 3,633 hectares of land that will be available for future industrial development across the south east industrial region, with 977 hectares of that in the City of Casey. On the basis of industrial land consumption estimates that are significantly higher than what has been observed in recent years, the future industrial land supply will last for 43 years across the municipality, and at least 65 years in the City of Casey. The rezoning of the Leighton Properties/Kelly Land at Cranbourne West will only have a minor impact on the significant level of supply. In addition to future industrial land supply, there is a significant proportion of existing industrial buildings in the south east that lie vacant, providing alternative locations for tenants looking to locate in the region or expand their presence. Many of these vacancies are prime or modern facilities, extending further the years of supply. 38 SOUTH EAST REGION INDUSTRIAL SUPPLY AND DEMAND

47 4 Current Status of Subject Land This section provides an overview of the current status of the Leighton Properties/Kelly Family land in Cranbourne West, including analysis of the market response to the release of industrial land in this location, and the likely reasons for that response. 4.1 SITE CONTEXT The Leighton Properties/Kelly Family land, including 635 Hall Road, and 590, 620 and 690 Dandenong- Hastings Road form the southern part of the Cranbourne West employment precinct. The four sites provide a combined 139 hectares net (203 hectares gross) for industrial purposes, according to the Cranbourne West PSP. The area is shown in Map 4.1 As mentioned in the first section in this report, the City of Casey Amendment C50 is set to introduce broad-ranging changes to the municipal strategic statement, incorporating the updated Casey C21 Strategy. Some of the changes are relevant to Cranbourne West, including in the Objectives for the precinct: The development of a new industry and business park to improve economic development and employment opportunities within Cranbourne West and the wider Cranbourne region that is sustainable, well-landscaped and has high levels of amenity and access. 34 Among its strategies, the revised planning scheme includes the following points: Providing for the development of the western half of the land bound by Thompsons Road, Evans Road, Hall Road and the Western Port Highway for the Cranbourne Industry Park; Providing sensitive and high amenity interface areas between industrial/business precincts and residential areas which reduce off-site amenity impacts whilst maintaining accessibility. 35 Areas to the northeast of the subject land are designated as either commercial or mixed use precincts which implies employment uses requiring smaller lot sizes, potentially ranging from light industrial through to office development. The likely employment density in these areas will be significantly higher than what would be achieved on the industrial land, particularly given that the industrial land has been designated to service transport, logistics and warehousing needs, where lot and building requirements are much larger and employment relative to area is low. While recognising the subject land is soon to be designated for larger-scale industrial development in the City of Casey s Planning Scheme, the remainder of this section considers the suitability of the subject land for such use, and the issues the developer has faced in attracting prospective users to the location. 34 Casey Planning Scheme Amendment C50, Proposed Clause Casey Planning Scheme Amendment C50, Proposed Clause CURRENT STATUS OF SUBJECT LAND 39

48 CRANBOURNE WEST LEIGHTON PROPERTIES/KELLY LAND MAP CURRENT STATUS OF SUBJECT LAND

49 4.2 REQUIREMENTS FOR INDUSTRIAL LAND The table below summarises the typical key location and site requirements for an area to be attractive to industrial land users. These requirements are adapted from research conducted by the Western Australian Department of Planning which surveyed industrial land users to determine their priorities when considering where to locate. The industrial land needs identified here are generally consistent with factors identified in various other documents, including those prepared in relation to the proposed industrial land in Cranbourne West. The table also assesses how well the Leighton Properties/Kelly Land at Cranbourne West scores against those requirements. This rating considers how well the subject land compares to competitive locations in the south east such as Dandenong South and Officer/Pakenham. Requirements for Industrial Land ASSESSMENT OF CRANBOURNE WEST TABLE 4.1 REQUIREMENT DETAIL CRANBOURNE WEST RATING COMMENT Proximity to clients - Ease of accessing client markets - Ease in which client can access/visit the business AVERAGE Access reasonable along Western Port Highway but site on the far edge of the urban area means clients are likely to be further removed than more central locations. Proximity to suppliers or support businesses - Ease of accessing raw materials or input - Access to support businesses - Adjacency to other sites or operations of the business POOR Likely to be removed from most suppliers/other businesses due to location at the edge of Melbourne s south east, and relatively small size of the precinct which cannot accommodate the critical mass of complementary businesses of competitive locations such as Dandenong South or Officer/Pakenham. Proximity to home/workforce or public transport - Ease of staff getting to/from work (major roads, public transport) - Potential to lose staff if move too far away AVERAGE The growing Cranbourne area will provide access to a local workforce, although the subject land is removed from more central areas increasing travel times if a more regional employment base is required. Proximity to transport networks/links & terminals - Access to main roads/routes - Ease of getting in and out of estates - Access to rail or port terminals - Ability to avoid residential streets AVERAGE Access to Western Port Highway provides reasonable access. Area has been touted as appropriate due to proximity to the Port of Hastings, although if this Port is not expanded, this benefit is reduced in importance. Other competitive locations provide better access to airports and central Melbourne. Adequate buffers to - Avoid safety concerns POOR Buffers to residential areas are small, with residential roads linking CURRENT STATUS OF SUBJECT LAND 41

50 REQUIREMENT DETAIL CRANBOURNE WEST RATING COMMENT residential areas - Less restrictions on operations directly with industrial areas. The southern part of the Cranbourne Industry Park owned by Leighton Properties/Kelly family suffers most significantly from this with residential areas (including medium density) and schools directly opposite industrial areas. Separate freight/transport roads - Avoid conflict with residential traffic AVERAGE There is an ability for freight transport to avoid residential areas in some parts of the precinct, although there will be residential and industry traffic sharing a number of roads. Lot size - Needs to be adequate to suit operational and vehicle requirements - Trend towards preferring bigger lots to allow for growth or consolidate AVERAGE The greenfield location allows for some large lots to be provided, however the modest size of the precinct over all means that the number of very large sites that can be provided is restricted compared to other locations such as Officer/Pakenham. Visibility and exposure - Help advertising and raise profile - Can attract clients of competing businesses as drive past AVERAGE Businesses located along the Western Port Highway will have reasonable exposure to some passing traffic, although the PSP allows for limited direct frontage to the highway. Suitable site profile - Flat land - Drainage allowances - Minimal setbacks and other building restrictions GOOD (north) AVERAGE (south) The land is generally flat to allow affordable industrial building construction, although the land is steeper to the south impacting large users. Setbacks and other building restrictions are not obvious at this stage. Other development costs and site requirements - Cost of land - Availability of utilities - Ownership structure N/A These costs and other practical aspects of the subject land are not able to be assessed adequately at this time without more detailed analysis of comparative costs. Source: Painted Dog Research, Industrial Land Development in Western Australia, Stage 2 Report, Qualitative Research Report and Findings, September 2009; Urbis 42 CURRENT STATUS OF SUBJECT LAND

51 As can be seen from the above analysis, the Cranbourne West land meets only a few of the requirements of industrial land users. These include primarily the level of access along major transport routes to other employment nodes and key infrastructure such as ports, multiple transport interchanges and freeways and the fact that the land is flat. However, despite some of these attributes, the Cranbourne West precinct, and more specifically, the Leighton Properties/Kelly land suffers from its proximity to a much larger Dandenong South statesignificant industrial precinct, which provides vast areas of vacant land with better synergies, with a larger range of businesses and closer proximity to major infrastructure and business nodes such as the Port of Melbourne and Melbourne s airports. Cranbourne West s secondary location relative to Dandenong South means that for the foreseeable future, Cranbourne West will serve a local industrial employment role. The Officer/Pakenham precinct will also likely be superior, particularly providing a greater critical mass. Just as critically, the specific plan for the Cranbourne West precinct presents amenity issues for most large industrial uses. In particular, the southern part of the Cranbourne West employment land owned by Leighton Properties has minimal buffers to proposed residential areas. Major industrial uses require significant separation from residential areas. This has been reflected by the response from the market, discussed below. In summary, while there may be some demand for a component of industrial land at Cranbourne West over time, the likely focus of industrial development in the area will be primarily servicing local business needs, with larger industrial users likely to prefer the state-significant precinct in Dandenong South, and potentially over time the further large precinct to be developed in Officer/Pakenham, where the benefits of clustering are maximised and interface issues with a residential development are minimised. 4.3 MARKET RESPONSE As indicated above, apart from the inferior location of Cranbourne West relative to the much larger Dandenong South, the interface of the proposed industrial land with the residential areas has been a major stumbling block for potential industrial tenants. Leighton Properties have been in the market for a significant period of time now and have had dealings with a number of potential tenants. They have indicated that while these tenants have shown some initial interest, once they understand the plans for the area and the interface between industrial and residential, they have quickly decided against Cranbourne West as a potential location. The concept of more significant buffers between industrial and residential land were considered early in the planning process for Cranbourne West, in particular in the original C21. The Smart Growth Committee indicated even more significant buffers in their indicative plan for development of the area. However, the PSP for the area has only minor buffers, and in various locations, particularly further to the south, there is very close proximity of industrial land with residential areas and a school. 4.4 CONFLICTS BETWEEN RESIDENTIAL/INDUSTRIAL LAND Often the conflict between residential and industrial land is viewed from the perspective of residents opposed to the encroachment of industrial uses close to their homes. However, from a business perspective, these concerns are just as relevant and can also occur when residential areas expand too close to existing industrial precincts. The potential for community opposition and subsequent restriction on industrial activity make industrial tenants wary of locating in areas where conflicts may arise over time. Some recent examples of the residential/industrial conflict in the southeast illustrate these potential concerns. In early 2014, a plastics fire at an industrial facility in Mordialloc raised concerns around the potential harm to residents from the toxic smoke emitted from that fire. The area was evacuated at the time of the incident. Although the Moorabbin Industrial Precinct and surrounding residential areas are well established, the potential for a more serious outcome was evident, given that residential areas were within metres of the fire. Locally within the City of Casey, recent concerns by residents have also been raised around the expansion of industrial facilities in the South Gippsland Highway precinct to the southeast of Cranbourne. CURRENT STATUS OF SUBJECT LAND 43

52 Existing residential and community uses, including schools, have generated petitions against the expansion of that land for additional industrial purposes, given that parts of it are immediately abutting residential and community areas. Similar issues are likely in Cranbourne West. 4.5 SECTION SUMMARY The key findings from this section are: Despite strategic designation, there has been little interest shown from industrial users in the land set aside for that use along the Western Port Highway in Cranbourne West. None of the land has been taken up by potential tenants, and is unlikely to be in the foreseeable future. Cranbourne West cannot compete effectively with larger, established precincts where available supply is still significant, making development of the land for industrial purposes is a very long-term proposition. Alternative locations such as Dandenong South have superior locational and amenity attributes, while large users seek the synergies of clustering in the state-significant employment nodes. The greatest inherent disadvantage of the Cranbourne West land is its proximity to residential areas. Significant issues still exist where large industrial uses interface with the residential uses. This concern has been reflected in the market response to Cranbourne West, with numerous larger industrial uses dismissing the location as they require more significant buffers from residential areas. The Leighton Properties/Kelly land to the south of the industrial precinct in particular has not been favoured as it is closest to the edge of the metropolitan area, and faces the greatest amenity issues. Given the lack of interest from large users, it could potentially be argued that the land may be better for smaller format industrial use. However, with a more than adequate supply of land already set aside for local employment needs (e.g. Thompsons Base and Evans Park Business Parks), there is a prospect that the subject land could lie vacant until better located supply is exhausted in other more established locations. Restricting use at the subject land to industrial use could serve to sterilise the site and run contrary to the intended objectives of delivering a range of employment opportunities to local people. Provision of an alternative use could deliver other economic benefits to local communities in the meantime. The subject land is readily serviceable urban land and can provide enhanced choice and affordable housing in the short term. Avoiding subdivision into smaller industrial lots will also avoid unnecessary negative visual impacts on the local area, considering the likely long timeframe within which demand would be expected to eventuate. 44 CURRENT STATUS OF SUBJECT LAND

53 5 Highest and Best Use of Subject Land Analysis in previous sections of this Report has established that the subject land in Cranbourne West is unlikely to be developed for its currently intended purpose as large-format industrial facilities. Consequently, in this section we present a high level summary of the suitability of the land for other uses, taking into account factors such as market demand, competition, amenity and interface issues. This analysis provides a helpful basis informing the highest and best use of the land. The summary shown in the table below has been prepared in consultation with Leighton Properties reflecting its experience in recent years marketing the subject land for industrial uses and also taking into account fundamental development principles.. The conclusions that become clear from the analysis set out in the Table below are as follows: On the basis of market response over the last five years, it is unlikely that large industrial uses will locate in Cranbourne West given the ready supply of superior strategic locations within the south-east corridor and amenity issues associated with the subject land s close proximity to residential areas. The subject land could be developed for smaller warehousing facilities, however, there is already a sufficient supply of land within the Cranbourne West PSP to service this potential demand. The subject land is inappropriate for office development given it is removed from more major activity areas and lacks access to a large, skilled workforce. Community facilities such as health, education and neighbourhood retail uses are appropriate, however, these uses are delivered on an integrated basis as part of Casey s residential communities funded by developer contributions. If the subject land remains zoned Commercial 2, bulky goods facilities are a likely development outcome over time as they are an as-of-right use and improved exposure along Western Port Highway makes the land a relatively attractive option for restricted retail premises. The location of such uses on the subject land is likely to be contrary to Casey s retail strategy. Although there will be a lack of demand for high density residential development in the area, medium density and conventional housing appears to be the highest and best use. Given the amount of employment land already in the region, it will be important that there is sufficient supply and diversity of housing to accommodate workers. The subject land could contribute to accommodating the south-east region s workforce if rezoned for residential use. With residential demand high, the subject land can deliver housing in the short term. New residential development will generate immediate economic activity, employment and the delivery of important services. Development of housing on the land will also provide significant additional developer contributions to fund much needed community facilities in the Cranbourne area. Job creation goals are not met if the land remains vacant. In the next section of the report, we consider the effects of rezoning the land to allow residential development. HIGHEST AND BEST USE OF SUBJECT LAND 45

54 Development Matrix CRANBOURNE WEST PSP FIGURE 5.1 Use Interface Issues Impact on Operation of Use Competition Appropriate Infrastructure and Amenity Market Demand Impact on Residents 1 Now 10+ yrs Now 10+ yrs Now 10+ yrs Commencement of Development Consistent with Current Zone Comment Factories (5 ha) High High High High Limited Access Access Improved None Low 10+ yrs Yes Inappropriate - Dirty use, no demand Distribution Centres (10 ha) Warehouses(8k- 30k sq.m) High High High High Limited Access Access Improved None Low 10+ yrs Yes Modest Modest High High Limited Access Access Improved None Low 5+ yrs Yes Not viable - no demand with high competition (e.g. Dandenong South) and interface issues Not viable medium term - some interface issues with large number of current and future alternative locations Warehouses (2k-8k sq.m) Modest Modest High Modest Limited Access Access Improved Low Modest 2-5 yrs Yes Low demand but improving over time for modest provision Warehouses (1k-2k sq.m, incl. small office) Office (1k-2k sq.m, incl. small warehouse) Modest Modest Modest Low Neutral Neutral Low Modest 1-2 years Yes Modest Low Low Modest Office (3-4 storey) Modest Low High High Bulky Goods Modest Modest High Modest Retail Low Modest Modest High Health Modest Modest High High Few White Collar Workers, No Amenity Few White Collar Workers, No Amenity Limited Access & Exposure Edge of Urban Area Limited Access, Not Proximate to Other Facilities Worker Profile & Amenity Improved Worker Profile & Amenity Improved Access Improved, Exposure Modest Some demand although initial competition from other local business parks. Demand insufficient to develop whole of subject land even if current zone remains. Low Modest 2-5 yrs Yes Other locations preferred, small offer only None None 10+ yrs Yes Not viable - no demand with better located competition Modest High 2-5 yrs Yes Local Centre Only Low Modest 2-5 yrs Access improved, but edge of urban area Up to a certain size None Low 5+ yrs No Potentially viable in short-medium term. Likely use if current zoning remains, although inconsistent with Council's retail strategy. Edge of urban area location would support local centre only, although competition with existing neighbourhood centre at Cranbourne West. Increased local population would support greater offer. Not viable - Lacks necessary synergies with other major health precincts (e.g Berwick), with competition in future at Clyde North Education Low Modest Modest Modest Edge of Urban Area Improved access to/for students Low Modest 2-5 yrs No Limited short term potential with lack of population, increased local population could support use Retirement Low None Modest Modest Lacks appropriate amenity Improved service provision Low Increasing 2-5 yrs No Modest demand given current demographic profile, although ageing population will enhance demand in time High Density Residential N/A N/A Modest Modest Lacks appropriate amenity Improved service provision None Modest 5+ yrs No Limited demand - lacks necessary amenity to trade off space, other locations preferred Medium Density Residential Low Density Residential 1. Includes noise, safety, traffic etc. Source: Urbis N/A N/A Low Modest Modest Amenity N/A N/A Modest Low Appropriate Infrastructure and Amenity Improved service provision Appropriate Infrastructure and Amenity Modest High 1-2 years No High High Now No Increasing demand for some medium density development as amenity improves, although local competition near station. Subject to rezoning. High demand exists to support immediate development with local supply diminishing over time. Subject to rezoning. 46 HIGHEST AND BEST USE OF SUBJECT LAND

55 6 Impact of Rezoning on Local and Regional Employment The Cranbourne West PSP indicates that the four sites covering the Leighton Properties/Kelly land combined could provide around 139 hectares for industrial purposes. Indicative land use budgets prepared by Leighton Properties suggest as residential land, the subject land would yield a net developable area of 151 hectares. This section considers the ability of the Cranbourne West PSP area to provide sufficient jobs for future residents given the proposed rezoning involves converting previously designated employment land to residential land. The ability of the remaining employment land to provide sufficient employment is considered in the context of jobs available to Cranbourne West residents, and considering the availability of jobs in the broader region within 20-minutes drive. 6.1 CHANGE FROM INDUSTRIAL TO RESIDENTIAL LAND In summary, the amount of residential and industrial land and total dwellings across the Cranbourne West PSP is shown in the table below, firstly based on the current zoning, and secondly assuming parcels are rezoned from industrial to residential. Industrial/Residential Land Net Developable Area CRANBOURNE WEST PSP TABLE 6.1 Unit Current Zoning With Rezoning Industrial Land Ha Residential Land Ha Dwelling Yield No. 4,478 6,758 Source: Cranbourne West PSP; Leighton Properties According to the PSP, the net developable area of the land if used for industrial purposes is 139 ha. While the amount of industrial land will be reduced by this amount through rezoning, the PSP area will still contain around 55 hectares of industrial land, or just under 10% of the net developable land within the PSP, with the northern industrial parcels near the corner of Thompsons Road and the Western Port Highway maintained. The new residential land that would be created could increase the number of dwellings in the PSP area by around 2,280 based on an indicative land budget prepared by Leighton Properties, equivalent to an average of 15 dwellings per hectare. 6.2 CRANBOURNE WEST EMPLOYMENT YIELD It should be kept in mind that the Cranbourne West PSP contains a broad range of employment lands other than industrial. The table below presents an indicative analysis of the employment yield within the PSP with and without the subject land being used for industrial purposes. The amount of land for each use is derived from the PSP document. The employment densities are generally consistent with those targeted by MacroPlan Australia under the dynamic scenario in their Employment Land Sizing report prepared for the GAA as background to the Cranbourne West PSP in The final employment density may vary depending on the intensity of the final use. We have verified the MacroPlan figures are generally appropriate through reviewing a variety of sources including land use census data collected in various states, industry benchmarks and survey data for certain uses (e.g. retail, office space) and other proprietary information relating to the rate of employment per hectare for individual businesses/uses. The estimates used are also broadly consistent with a number of other consultant reports reviewed in section 1 of this report, including those prepared by Essential Economics and JLL. IMPACT OF REZONING ON LOCAL AND REGIONAL EMPLOYMENT 47

56 The one land use where Urbis has applied a different employment yield to MacroPlan is industrial, where 15 jobs per hectare has been used compared to their 20 jobs under the dynamic scenario. MacroPlan used 15 jobs per hectare in their base case. As discussed earlier in this report, employment densities can vary significantly, even between areas that have the same zoning. For example, industrial land can see a range from jobs per hectare for smaller, more intensive uses, right down to less than 10 jobs per hectare for uses such as large warehousing facilities. For the purposes of this analysis, I have applied the lower 15 jobs per hectare (net) reflecting the nature of the intended uses for the land which are focussed on transport and storage facilities and other lower density industrial uses which have very low employment densities which have been further declining in recent times. Employment Yield CRANBOURNE WEST PSP TABLE 6.2 Net Employment Total Area per ha Employment (ha) (no./ha) (no.) Industrial Land ,912 Business Park ,502 Mixed Use ,336 Employment Interface Business Activity Centre Neighbourhood Activity Centres Total ,244 less Subject Land ,085 Total less Subject Land ,159 Source : Cranbourne West PSP ; MacroPlan Australia, Employment Land Sizing 2009; Urbis In total, the Cranbourne West PSP could provide just over 11,200 jobs in the area assuming the subject land were to remain for industrial purposes. If the land were to be rezoned as proposed, the total number of jobs provided would fall by just over 2,000 to a total of around 9,200. This is a reduction of around 18%. When considering the impact of the reduction of industrial land, it must be recognised that industrial land is a low intensity employment use. Even the 15 employees per hectare used in the analysis above is considered a best case scenario for industrial land in this area which would be more likely to be storage/distribution rather than manufacturing that might generate higher employment density. While the quantum of industrial land to be rezoned is large, it only provides a modest proportion of the total jobs. With a large supply of industrial land available elsewhere in the municipality, the take up of industrial land and hence employment is likely to be slow. Also, there is no distinction between the Leighton/Kelly land which was envisaged to accommodate users looking for larger lot sizes and therefore potentially less intensive than other areas of industrial land within the PSP. The 90 hectares of business park use is by far the largest contributor to the employment yield given the expected higher employment densities from that type of use relative to the traditional industrial zoning on the subject site. 48 IMPACT OF REZONING ON LOCAL AND REGIONAL EMPLOYMENT

57 6.3 JOB CONTAINMENT LOCAL JOBS FOR CRANBOURNE WEST RESIDENTS The MPA indicate that within Melbourne s PSP areas, it is their goal to provide one job per dwelling and one further home based job per 20 dwellings. In the Cranbourne West PSP this translates into a need for the number of jobs shown in the table below, with the subject land either remaining as an industrial use or being converted to residential. JOB REQUIREMENT WITH SUBJECT LAND REMAINING INDUSTRIAL JOB REQUIREMENT WITH SUBJECT LAND REZONED RESIDENTIAL 1 job per dwelling 4,478 6,758 1 home based job per 20 dwellings Total Jobs 4,702 7,096 On the basis of this calculation, it is clear that the number of jobs required to meet the needs of the residents of Cranbourne West is well exceeded by the number of jobs that could be accommodated on the employment land. This remains the case if the subject land is rezoned for residential use, even though this increases the number of jobs required by a larger resident base and reduces the employment capacity of the local area (i.e. 7,096 jobs required by residents vs. 9,159 jobs available). The analysis above highlights that Cranbourne West will remain a net importer of employees: there will be more than 2,000 more jobs than required by residents. This fact is magnified when you consider that no area ever provides for 100% containment of residents in local jobs. Even with a large number of jobs provided locally, most residents will travel beyond the precinct for work depending on the nature of their work and the scale of employment opportunities nearby. For example, Dandenong and Dandenong South, designated as one of only three established National Employment Clusters within Plan Melbourne, are located a relatively short distance to the north west. The number of jobs to be provided within Cranbourne West, even with the rezoning of the subject land, is more than sufficient to meet the needs of residents REGIONAL JOBS PROVISION With recent policy direction and a move to regional planning concepts such as the 20 minute neighbourhood, the more relevant consideration is whether or not this rezoning would mean there is insufficient employment land within 20 minutes drive of Cranbourne West. As illustrated in Map 6.1, Cranbourne West is within or close to 20 minutes drive of all of the major employment nodes in the south east including Dandenong South, Narre Warren/Fountain Gate, Berwick Health/Education precinct, Officer, Clyde North (Thompsons Road), Cranbourne Town Centre, Carrum and the Port of Hastings. The map shows for each area how many of these major employment nodes can be reached within a 20 minute drive. As such, Cranbourne West residents and those nearby will have adequate access to employment opportunities if there are sufficient jobs to provide for the population of the south east region generally. IMPACT OF REZONING ON LOCAL AND REGIONAL EMPLOYMENT 49

58 20-MINUTE DRIVE TIME MAP 6.1 For the purposes of this analysis, we have considered the amount of industrial land currently available and set aside in the municipalities of Casey, Cardinia, Greater Dandenong and Frankston relative to the population in that area and their employment need. The analysis, detailed in Table 6.3, can be described as follows: 50 IMPACT OF REZONING ON LOCAL AND REGIONAL EMPLOYMENT