NSW Government Releases Industrial Lands Action Plan

The Industrial Lands Action Plan signals a shift in how NSW plans for industrial land, recognising its role in economic growth and housing affordability.

The NSW Government had released its Industrial Lands Action Plan which will be a new approach to planning, securing and managing the supply of industrial land.

Key Initiatives of the Industrial Lands Action Plan

1. Deliver a statewide policy for industrial lands based on the categorisation of areas and precincts as state significant, regionally significant, locally significant and other industrial lands
2. Investigate planning and policy interventions to support intensification of state and regionally significant industrial lands
3. Finalise and release a statewide approach for an industrial lands supply pipeline
4. Create an Employment Land Development Program to manage supply and coordinate infrastructure investment

Addressing Sydney’s Industrial Land Shortage

The initiatives are proposed to be rolled out over the next 12-24 months and as yet there is little detail. Notwithstanding this, it is encouraging to see the NSW Government acknowledge the key role industrial land and the logistics chain plays in the efficiency of the economy, particularly the housing construction industry. Too often in recent times, planning for industrial land in Sydney has been a case of the functional needs of industry being subservient to untested and often unfeasible utopian aspirations. Hopefully, the acknowledgement of the vital role industrial precincts play in the economy will lead to a more flexible and balanced approach to the planning frameworks that apply to them.

In particular, the Employment Lands Development Program (ELDP) is a long overdue initiative. A critical lack of industrial land supply in Sydney in recent years has led to some of the lowest vacancy rates in the world, with a corresponding increase in land values and rents which are now well above Melbourne and Brisbane levels. This is not only affecting Sydney’s competitiveness to attract logistics related investment and employment but is also a key catalyst for the housing crisis as higher rents are passed on through the development chain to feed into higher housing prices. While this is acknowledged in the announcement, the NSW Government has been very slow to understand and act on this dynamic.

The ELDP will bring Sydney more into line with Melbourne’s planning framework which focuses on a longer-term supply of zoned and serviced industrial land to meet industry needs. Both Melbourne and Brisbane have long established policies and planning frameworks to secure adequate supplies of employment land. Something that has been lacking in Sydney. To date, the NSW Government simply hasn’t had reliable data to be able to plan for industrial lands and facilitate the provision of timely infrastructure.

Challenges in Infrastructure Coordination

Recent industrial land releases have highlighted the risks of inadequate infrastructure planning. This has been best illustrated by the Mamre Road Precinct. Zoned in June 2020, the MRP was the first major release of industrial land in Western Sydney since the Western Sydney Employment Area in 2005. The rapid take-up of the land in the precinct, coupled with a lack of any detailed planning for infrastructure and its provision and funding, has culminated in unacceptable delays in the planning approval process at both State and local level. To get sites to market, industry has been forced to step in and provide interim solutions for road and stormwater infrastructure, often through constructing redundant infrastructure, further adding to the cost of development and ultimately the cost of housing. This situation cannot become the default situation moving forward.

The Need for Flexible Planning Controls

The Government, particularly the Department of Planning, Housing and Infrastructure (DPHI), needs to consult with industry meaningfully and early through the Action Plan process. Industrial development is usually highly specialised and functional, requiring flexibility in the planning approval process to deliver the needs of industry and, by extension, the economy. This includes simplified and efficient planning approval pathways to encourage the private sector to step in to deliver public infrastructure on behalf of Government where development gets ahead of infrastructure provision.

Equally in need of review through the Action Plan process are the planning controls that apply across the established brownfield industrial areas. The controls in these precincts are generally tailored to traditional industrial development typologies and are not fit for purpose to facilitate innovations in warehouse and distribution development, in particular the introduction of multi-level warehousing. Greater flexibility needs to be introduced into these areas, particularly building height and FSR controls which can ultimately require planning proposals to be prepared thereby delaying or deterring new investment in these areas. A comprehensive review of the planning controls and State-led changes to modernise local controls is required in these areas is required.

What comes next?

While the Industrial Lands Action Plan is a step in the right direction, its success will hinge on effective implementation and industry consultation. Ensuring flexibility in planning controls, streamlining approval pathways, and aligning infrastructure delivery with demand, will be critical.

The Ethos Urban Industrial Team has significant experience with State significant development across Sydney’s industrial precincts, in particular the Western Sydney Employment Area and Aerotropolis. Please feel free to reach out to one of our industry experts if you require any assistance.