Thursday 29 September 2016

Melbourne’s office core hollowed out by high-rise apartments

Nick Lenaghan

Published 08/09/2016 | 02:30

The rate of apartment construction in Melbourne is outstripping commercial development by a factor of five to one
The rate of apartment construction in Melbourne is outstripping commercial development by a factor of five to one

The world’s most liveable city, Melbourne, has become a victim of its own success, as the rush into residential high-rise in the inner city squeezes out options for commercial development.

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There are now 20,000 residential dwellings under construction within the municipality of Melbourne, more than half of them within the CBD itself.

Another 31,000 have been approved and there are development applications lodged for a further 25,000, according to the City of Melbourne’s latest Development Activity Monitor.

Those figures are a worry for Lord Mayor Robert Doyle, because the Australian city is running out of space to accommodate expected jobs growth.

Employment in Melbourne grew by 40pc from 2002 to 2015. It could grow by 60pc again in the next 20 years in the Central Business District (CBD), requiring 2.5 million square metres of office space.

A decade ago, residential development and commercial projects were roughly in equal proportion. Five years ago, as the apartment boom was taking hold, residential floor space was growing at 2.5 times the rate of commercial space. Now the ratio of residential development to commercial is approaching five times.

“We’re really at the tipping point,” Doyle said in an interview with The Australian Financial Review.

“It’s not just the apartments under construction, and not just the ones with permits. We can see the ones in the pipeline. The disparity is growing. It’s no good waiting for five years so that gap is so large we can never recover.”

A similar discrepancy is emerging in Sydney, where a draft strategy has recently been released that would overturn incentives to boost the residential population of the city. Under the Sydney plan, apartment development would be restricted in favour of office or hotel projects.

Doyle doesn’t favour such direct intervention, but concedes there may be no option if the situation deteriorates.

The state government has proposed planning rules for the CBD to allow more development in return for a public benefit, such as a childcare centre, public space or office space.

The city’s latest figures show 645,000 sq m of office space has been approved, but less than half of that is in the CBD.

(Financial Review)

 

Melbourne’s office core hollowed out by high-rise apartments

 

The rate of apartment construction in Melbourne is outstripping commercial development by a factor of five to one

 

Nick Lenaghan

 

The world’s most liveable city, Melbourne, has become a victim of its own success, as the rush into residential high-rise in the inner city squeezes out options for commercial development.

There are now 20,000 residential dwellings under construction within the municipality of Melbourne, more than half of them within the CBD itself.

Another 31,000 have been approved and there are development applications lodged for a further 25,000, according to the City of Melbourne’s latest Development Activity Monitor.

Those figures are a worry for Lord Mayor Robert Doyle, because the Australian city is running out of space to accommodate expected jobs growth.

Employment in Melbourne grew by 40pc from 2002 to 2015. It could grow by 60pc again in the next 20 years in the Central Business District (CBD), requiring 2.5 million square metres of office space.

A decade ago, residential development and commercial projects were roughly in equal proportion. Five years ago, as the apartment boom was taking hold, residential floor space was growing at 2.5 times the rate of commercial space. Now the ratio of residential development to commercial is approaching five times.

“We’re really at the tipping point,” Doyle said in an interview with The Australian Financial Review.

“It’s not just the apartments under construction, and not just the ones with permits. We can see the ones in the pipeline. The disparity is growing. It’s no good waiting for five years so that gap is so large we can never recover.”

A similar discrepancy is emerging in Sydney, where a draft strategy has recently been released that would overturn incentives to boost the residential population of the city. Under the Sydney plan, apartment development would be restricted in favour of office or hotel projects.

Doyle doesn’t favour such direct intervention, but concedes there may be no option if the situation deteriorates.

The state government has proposed planning rules for the CBD to allow more development in return for a public benefit, such as a childcare centre, public space or office space.

The city’s latest figures show 645,000 sq m of office space has been approved, but less than half of that is in the CBD.

(Financial Review)

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