Melbourne residential development outpaces commercial
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 city is fast running out of space to accommodate expected jobs growth.
Central Melbourne residential dwellings.
Employment in the city grew by 40 per cent from 2002 to 2015. It could grow by 60 per cent again in the next 20 years in the CBD, requiring 2.5 million square metres of office space.
A decade ago, residential development and commercial projects were roughly in equal proportions. Five years ago, as the apartment boom was taking hold, residential floor space was growing at 2.5 times the rate as commercial space.
Now the ratio of residential development to commercial is approaching five times.
Tipping point
“We’re really at the tipping point,” Cr Doyle told 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 or years so that that gap is so large we can never recover.”
A similar discrepancy is emerging in Sydney, where a draft strategy has been released that would overturn long-standing 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.
Cr Doyle does not favour such direct intervention in the market, but concedes there may be no option is the situation deteriorates further.
“We are at the point where if the market doesn’t start to self-correct there will have to be an intervention.”
More leverage
The state government has proposed new planning rules for the CBD which allow more development in return for a public benefit, such as a childcare centre, or public space or even office space.
The Lord Mayor said those rules may yet give planners the necessary leverage to shift the pendulum back towards commercial development, including landmark projects, which include components of retail, commercial and residential space.
The latest city figures show almost 645,000 square metres of new office space has been approved but less than half of that is in the CBD.
The hotel boom – much of it incorporated into mixed-use projects – is well advanced, with 1080 rooms under construction, another 5030 approved and a further 3470 have applied.
