Industrial and urban services land is planned, retained and managed

Much of Greater Sydney’s manufacturing wealth is created on industrial and urban services land and 74 per cent of these lands are in the Central City and Western City Districts. Across Greater Sydney, 15 per cent of all jobs are on industrial and urban services land⁴¹, yet only eight per cent of developable land in Greater Sydney does not permit residential uses.

Industrial and urban services land refers to land identified in the NSW Department of Planning and Environment’s Employment Lands Development Monitor⁴², and includes industrial zoned land and some business zoned land which permits a number of industrial uses.

This land can include a range of activities from major freight and logistics and heavy manufacturing to light industry, urban services and new economy or creative uses. The role, location and infrastructure requirements of each activity type are described in Table 5. The demand for industrial and urban services land across Greater Sydney is driven by these different locational needs and infrastructure requirements.

Table 5: Industrial and urban services activity types

The NSW Department of Planning and Environment monitors changes in industrial land supply and annually publishes its findings in the Employment Lands Development Monitor. A summary of the existing supply of developed and undeveloped industrial land across Greater Sydney showing the main activities in each district is outlined in Table 6.

While the table shows 3,033 hectares as being undeveloped, not all this land is currently serviced with water and lead-in sewer infrastructure, which creates a risk in delivering and maintaining a competitive industrial market. The servicing of existing and new land zoned for industrial and urban services is therefore a priority to support the continued growth of the economy and local jobs.

The range of activities in industrial precincts varies considerably. As Greater Sydney grows and the demand for land increases, improving the understanding of the type of activities occurring in industrial and business zones is important to enable the most effective land use policies. Objective 40 includes an action to respond to this issue which involves more detailed monitoring and reporting of the demand for and delivery of industrial and urban services land across Greater Sydney.

Urban services land

The term ‘urban services’ is used to describe a wide range of industries that locate in cities. Urban services include a collection of industries that enable the city to develop and its businesses and residents to operate. While they are not always high employers, on a square kilometre basis, their value is not held in how many jobs they directly provide, but in the operational role and function they play throughout the city.

Urban services tend to have particular land use, floor space, operational or accessibility characteristics that require them to locate in non-residential areas. Industrial zoned land and certain commercial zones (for example, B5 – Business Development or B7 – Business Parks) provide for these uses.

The property economics behind these zones are also a core attribute which allow urban services to locate close to markets in line with their operational needs and therefore supply the higher order economic activities of the city. If uncertainty is created, in terms of rezoning potential, speculation will impact on the property economics of the industrial zones resulting, potentially, in the loss of these important services.

They also safeguard against land use conflict with non-compatible uses, such as residential use.

Table 6: Zoned employment land stocks by district at January 2017

Source: NSW Department of Planning and Environment, Employment Lands Development Monitor, includes industrial zones and some B5, B6 and B7 zones as per the Employment Lands Development Monitor definition.

Industrial and urban services land supply

The approach for managing industrial and urban services land is based on the various differing needs of industries across Greater Sydney’s three cities and technology changes. These issues and trends are summarised below:

• The nature of industrial activities and their locational needs including (refer to Table 5):
  • Manufacturing, freight and logistics businesses are often flexible regarding their preferred location, and are influenced by the availability of large, lower-priced sites with very good access to transport networks, specifically motorways, major arterial roads, the freight rail network, intermodal terminals, ports and airports. Therefore, they are often located on the fringe of cities and around trade gateways.
  • Urban services often serve local communities and businesses, therefore they locate close to their markets, including residential areas and commercial centres.
• The provision of services and jobs close to business and where people live are considered critical to Greater Sydney’s productivity. In the past, substantial tracts of industrial land in the Eastern Harbour City were converted to mixed-use residential zones, in response to unprecedented demand for residential supply. There is now considered to be a shortage of industrial and urban services land in the Eastern Harbour City.
• Safeguarding industries from encroachment from sensitive uses. Approaches, including buffers, can protect the operations of various industries (including concrete batching plants, waste handling facilities, freight activities) and should not be compromised by encroachment from sensitive land uses like residential, which are impacted by noise, light and odours. These tensions between uses have the potential to restrict the operation of existing industrial and urban services activities and thus have a negative impact on the productivity of Greater Sydney (refer to Objective 16). 
• Maintaining a sufficient supply of land. High land values have been found to negatively impact on the amount of land per capita occupied by urban services. Therefore, there is a need to provide a sufficient supply of industrial and urban services land and have a consistent policy position to keep downward pressure on land values.
• A review of industrial land adjacent to train stations, which would normally be considered a preferred location for conversion to residential development, reveals there are only a few sites remaining across Greater Sydney. Further, this industrial land adjacent to train stations is, in the main, part of large intact industrial precincts or directly linked to the freight rail network and therefore highly valuable industrial land – it is not suitable for conversion to residential.
• In the Eastern Harbour City, there are many smaller industrial precincts which have a higher than average proportion of urban services activities. Therefore, while they may appear to be only a small part of the industrial land supply, they are important for providing urban services and, in some cases, creative industries.
• In land release areas, there is a need to consider the likely long-term population of the area and future wider employment activities, and therefore the need to develop land for local industrial and urban services. In these locations, it is often the lack of trunk infrastructure supporting industrial and urban services sites that limits timely development and land supply.
• The Western Sydney Employment Area, in the Western Parkland City, is a Greater Sydney resource providing land for economic activities and employment for the region as a whole. Strategic plans have identified over 6,000 hectares of additional land for future industrial activity yet to be zoned or serviced, which will support the investment and business opportunities created by the Western Sydney Airport and the potential transport infrastructure identified for the Western Parkland City. This significant long-term metropolitan resource, while substantial, may not serve the local urban services needs of the Western Parkland City which stretches across a 54 kilometre corridor from Wilton to Marsden Park.
• The adaptation of buildings to accommodate high-bay automation requires building heights greater than existing buildings and current planning limits. Increased building heights are needed for the evolution of buildings in areas such as the Central River City, that have logistics functions linked to freight infrastructure networks.
• Manufacturing techniques are changing rapidly in response to technological and digital improvements creating new business models and advanced manufacturing. These changes may require a review of planning regulations which may be placing unnecessary barriers to the growth of advanced manufacturing⁴³.
• Changes are occurring in the freight and logistics sector, in part driven by technology changes and related changes to some retail business models. While there is significant long-term growth in the freight and logistics sector in the Western Parkland City, the nature of different supplies such as local produce, will require opportunities in the Central River City and Eastern Harbour City to be retained.
• The currency and comprehensiveness of council studies and strategies that inform industrial and urban services land policy and planning controls varies by council.

Research prepared for the Greater Sydney Commission, informed by an analysis of industrial lands in the Australian Capital Territory, identified a benchmark requirement of three square metres of industrial land per capita for urban services activities⁴⁴. The current and projected per capita levels for each Greater Sydney district are shown in the graph on Figure 41. The per capita level of provision in the Eastern Harbour City is already well below three square metres per capita. While the Western Parkland City will benefit from the Western Sydney Employment Area, there may be a need to provide additional industrial and urban services areas across the extensive footprint of the Western City to accommodate significant population growth beyond 2036. While the Central River City currently exceeds this minimum benchmark, it too will experience significant population growth and these lands represent notable opportunities to transition to higher order employment, technology and advanced manufacturing uses.