Change in the zoning of industrial land
Across metropolitan Melbourne 7,075 ha of land was zoned for industrial purposes from July 2001 to June 2020. During this period, 2,536 ha of industrial land was rezoned for non-industrial purposes. This resulted in a net increase of 4,540 ha. The increase was mainly in municipalities with a State Significant Industrial Precinct, such as Cardinia, Casey, Greater Dandenong, Hume, Melton, Whittlesea and Wyndham. Loses of industrial land were mainly in Melbourne’s inner and middle suburbs.
Area of land rezoned to/from industrial, metropolitan Melbourne, 2001 to 2020.
Between 2019 and 2020, there was a net increase of 84 ha of land zoned for industrial purposes. This comprised 155 ha of land zoned for industrial purposes while 71 ha of industrial land was rezoned for non-industrial purposes.
Most of the 71 ha of former industrial land was zoned to a commercial zone Mixed Use/Residential zones. Land rezoned to a commercial zone was primarily zoned Special Use Zone 9 in the Whittlesea Planning Scheme (27 ha) with the remainder made up of 7 ha of Commercial 1 Zone land in Moreland and Yarra.
Area of land by new zoning after being rezoned from industrial, metropolitan Melbourne, 2019 to 2020.
For the 19 and a half years between July 2001 and December 2020, 2,536 hectares of industrial land was rezoned for other uses. Around half of this land was rezoned for residential or mixed use purposes.
Industrial land was also rezoned to provide land for transport infrastructure, particularly in the outer suburbs and growth areas. Industrial land was also rezoned for conservation purposes, drainage reserves and other uses within the State Significant Industrial Precincts.
Change of industrially zoned land by municipality, 2000-01 to 2020
Rezoning of land for industrial purposes is infrequent, however they typically involve large areas of land. Most of the land zoned for industrial purposes between 2000-01 to 2020 was previously identified as future industrial land in strategic plans.
Rezoning of industrial land for other non-industrial uses tend to be more frequent, involving the rezoning of smaller parcels of land. Around 80 per cent of rezonings from industrial to non-industrial are between 100m2 and 5 ha.
Supply of industrial land
Location of vacant, zoned, industrial land by precinct type, 2020
Industrial land supply in metropolitan Melbourne
There are 26,328 ha of industrially zoned land across metropolitan Melbourne with 8,165 ha classified as vacant. Vacant land includes the “underutilised” category.
About 61% of this land (5,009 ha) is located within the State Significant Industrial Precincts. Some 2,812 hectares of vacant land is located within a number of Regionally Significant Industrial Precincts with the largest amounts in the Somerville/Tyabb RSIP (620 ha) in Mornington Peninsula, Cranbourne West RSIP (291 ha) in Casey, and the Toolern Employment Precinct RSIP (269 ha) in Melton. Many of the RSIPs in the middle and inner suburbs have smaller amounts of vacant land as they are more developed with existing uses that contribute to Victoria’s economic output. The remainder of the vacant land (339 ha) is located within a number of Local Industrial Precincts.
Proposed future industrial land supply in metropolitan Melbourne
In addition to zoned industrial land, a gross total of 7,187 hectares of unzoned land has been identified as Proposed Future Industrial Land in the Growth Corridor Plans, previous strategic plans and the Melbourne Industrial and Commercial Land Use Plan (MICLUP).
These pieces of land will undergo further planning processes, such as precinct structure planning, before they can be used for industrial purposes. Precinct structure planning will identify land to be used for infrastructure, conservation uses, etc.
Gross area and estimated net area of proposed future industrial land, by LGA, 2020
|Municipality||Gross Area (ha)|
Growth Area portion of Mitchell
The Victorian Planning Authority (VPA) is currently undertaking the precinct structure planning process for the following PSPs that contain Proposed Future Industrial Land:
- Officer South PSP in the Officer/Pakenham SSIP
- Merrifield North Employment PSP in the Northern SSIP
- Casey Fields South PSP in the Casey Fields South Regionally Significant Industrial Precinct (RSIP)
- Shenstone Park PSP in the Shenstone Park RSIP
- Wallan South PSP in the Wallan South Local Industrial Precinct
Once the Proposed Future Industrial land has undergone rezoning it will be included as zoned industrial land in the Urban Development Program.
Supply in the State Significant Industrial Precincts
Of the 8,159 hectares of vacant industrial land across metropolitan Melbourne, 61% (5,009 hectares) is located within SSIPs. In the future, the amount of vacant land in the SSIPs will increase as the Melbourne Industrial and Commercial Land Use Plan identified an additional gross 7,186 hectares to be added to the SSIPs. This land will be zoned for industrial use through the Precinct Structure Planning process.
Over time, when land identified as ‘Proposed Future Industrial’ is added to the SSIPs, the Western SSIP and the Northern SSIP will remain the largest SSIPs, while the Officer/Pakenham SSIP will become the third largest. The Southern SSIP is the most constrained SSIP as no further land has been identified to be added to this precinct.
Consumption of industrial land
Annual consumption of industrial land, 2004 to 2020
Average annual consumption across metropolitan Melbourne
Prior to the Global Financial Crisis (GFC), industrial land consumption across metropolitan Melbourne averaged around 300 hectares (ha) per year. Following the GFC, consumption declined significantly until 2014 when it started to increase. In 2020, 307 ha of industrial land was consumed in 2020, which is slightly less than the 324 ha reached in 2019. Over the last five years, the consumption of industrial land has increased to levels approaching those prior to the GFC at around 293 ha per year.
Average annual consumption across the State Significant Industrial Precincts
The State Significant Industrial Precincts (SSIP) are where the vast majority of industrial land consumption occurs.
Consumption of land within the SSIPs can be volatile and often occurs in cycles. Following the GFC, consumption of industrial land declined within all of the SSIPs.
The Western SSIP has consistently maintained the highest average levels of land consumption and is the largest and most active industrial land market in Victoria. This precinct exhibits a pronounced cyclic pattern of consumption with regular peaks and declines. Additionally, when the cycle reaches its trough, annual consumption in the Western precinct is still higher than peak years in other SSIPs. Consumption in the Western SSIP recorded a new peak of 165 ha in 2020.
The Southern SSIP recorded the second highest level of consumption across metropolitan Melbourne with 48 ha of industrial land consumed in 2020. The Northern SSIP recorded 46 ha of land consumed in 2020, this comes off its highest level of consumption in 2019 when 73 ha were consumed.
Modelling exhaustion rates for vacant industrial land
Measuring the supply of industrial land in relation to the consumption of land provides a basis to estimate the time at which vacant land within a State Significant Industrial Precinct (SSIP) becomes exhausted.
Exhaustion rate models for the most active and established SSIPs (Western, Northern, Southern and Officer/Pakenham) have been developed to provide an estimate of when vacant land is likely to be totally consumed.
The estimates of when vacant industrial land will become exhausted are calculated by subtracting a consumption rate (based on historic data) from the current amount of vacant land.
Western State Significant Industrial Precinct
The Western SSIP is the largest SSIP and is also the most active in terms of consumption. Based on currently zoned supply, vacant land would potentially be exhausted in the early 2030s. There are significant supplies of industrial land that have been identified as proposed industrial land that will substantially extend land supply to between the mid-2030s to 2040. However, a portion of this land will be required to accommodate the proposed Western Interstate Freight Terminal (WIFT) and its ancillary uses which will result in a shorter time frame for the overall supply of industrial land in the Western SSIP.
Modelled exhaustion of industrial land, Western SSIP, 2020
Northern State Significant Industrial Precinct
The Northern SSIP is the second largest SSIP and has both zoned land supply and proposed industrial land.
Consumption in the Northern SSIP has been volatile with an average rate lower than the Western and Southern SSIPs. As a result of relatively low levels of consumption, zoned vacant land in the Northern SSIP is anticipated be exhausted in the mid-2040s. However as other SSIPs start to become exhausted (Western and Southern), demand may increase in the Northern SSIP and, consequently, vacant land would be consumed more rapidly.
The Northern SSIP also contains a large amount of proposed industrial land. A portion of this land will be required to accommodate the proposed Beveridge Interstate Freight Terminal (BIFT) and its ancillary uses which will result in a shorter time frame for the overall supply of industrial land in the Northern SSIP.
Modelled exhaustion of industrial land, Northern SSIP, 2020
Southern State Significant Industrial Precinct
The Southern SSIP has the second highest consumption rate of all SSIPs and is most constrained in terms of vacant supply.
Unlike the Northern and Western SSIPs, there is no proposed industrial land that will be added to the Southern. On current zoned land, vacant land would start to become constrained in the mid 2020s. As the cost of land and rents increase, users would be expected to start to search for other locations, such as the Officer/Pakenham SSIP and Cranbourne West Regionally Significant Industrial Precinct.
Modelled exhaustion of industrial land, SSIP, 2020
Officer/Pakenham State Significant Industrial Precinct
The Officer/Pakenham SSIP has the second lowest level of consumption, with a recent consumption rate of 14 ha per year. Using this relatively low level of consumption, it is estimate zoned land will be exhausted sometime in the late 2040s and sometime beyond 2050 when including Proposed Industrial Land. However, it is anticipated that consumption in the Officer/Pakenham SSIP will increase over time from the:
- redistribution of all or some of the existing demand from the Southern SSIP as vacant land within this precinct is exhausted
- creation of local industrial firms and businesses to serve the increased population growth in the Southern Growth Area
- completion of the North East Link. This will provide direct freeway linkage from the Hume Highway in the north to the Princes Freeway in the south east providing freight and logistics users another option in metropolitan Melbourne to locate their operations.
The exhaustion chart for Officer/Pakenham is based on current rates of consumption. The influence of the potential sources of increased consumption have not been included as the magnitude of their impact is unknown. The UDP will continue to monitor consumption rates and these will be incorporated in the model as they become available.