Policy

Industrial land in context

The Victorian economy produces around $468 billion worth of economic activity in 2020/21. This is the result of the productive activity of 3.4 million workers in over half a million businesses and the consumption of over two and a half million households. This activity takes place in offices, factories, shops, warehouses and homes. Victoria’s competitive advantage in attracting economic investment and employment relies, in part, on the availability of sufficient industrial land supply across metropolitan Melbourne to meet future demand.

The economy has transformed over the past two decades by influences such as globalisation, reduced trade barriers and technological change. While Melbourne still maintains a significant manufacturing sector, its contribution as a share of the Victorian economy has declined. There has been strong growth in knowledge and service-based industries, construction and freight and logistics to serve population growth.

Industrial land continues to be an important component in the evolving economy with uses such as:

• warehousing space for freight, logistics and retail businesses
• large and affordable spaces for creative industries
• business services firms such as testing laboratories, labour or equipment hire businesses.

Sufficient land is necessary to support Victoria’s competitive advantage in attracting economic investment. This will help meet future demand for a range of existing and emerging business and employment purposes.

While it is too early to identify the impacts of the coronavirus (COVID-19) pandemic on industrial land use, there are some early insights that may lead to further consumption of industrial land for warehousing, manufacturing or other uses:

• increased online sales
• shortening supply chains through greater storage capacity or local manufacturing
• higher levels of automation in storage and logistics land uses
• greater demand for cloud-based services which leads to buildings that need to accommodate digital storage with some of these located on industrial land.

The Melbourne Industrial and Commercial Land Use Plan

The Melbourne Industrial and Commercial Land Use Plan (MICLUP) reinforces the importance of industrial land supply.

The Melbourne Industrial and Commercial Land Use Plan builds on policies, strategies and actions in Plan Melbourne and its associated Plan Melbourne 2017-2050 Five-Year Implementation Plan (Plan Melbourne Implementation Plan). It provides an overview of current and future needs for industrial and commercial land across metropolitan Melbourne and puts in place a planning framework to support state and local government to plan more effectively for future employment and industry needs.

To support industrial land use planning, a classification system has been put in place to assist how specific types of areas are planned. Zoned and Proposed Future Industrial Land across metropolitan Melbourne has been categorised as being a state, regional or local significance precinct. These precincts identify which land that should be retained primarily for industrial, considered for other business or employment focussed purposes, and land that could be considered for alternative uses.

Population growth prospects

Population growth is a key factor in the establishment of new industrial uses and the expansion of existing operations. Before the coronavirus (COVID-19) pandemic, Victoria was the fastest growing state in Australia, reflecting its attractiveness as a place to live, work and study.

The population grew at an average of more than 2.0 per cent per annum for most of the previous decade. Victoria’s population decreased during the coronavirus (COVID-19) pandemic period. This was the first decrease in many years.

Victoria’s population peaked at almost 6.694 million people in June 2020. Growth was below 100,000 for the year, compared with an average growth of 140,00 for the five previous years. During the year 2020-21 Victoria’s population decreased by 44,700 people to finish at 6.649 million in June 2021.

There is considerable uncertainty around the post-COVID future. It is unknown when Victoria will re-open for a return to ‘normal’ levels of overseas migration. There is a common assumption driving some published projections. It is assumed migration will return over two-to-three years. Recent projections produced by the Commonwealth and Victorian Governments contain similar assumptions and short-term results.

The 2022-23 State Budget projections show Victoria’s population growing by 0.1 per cent in 2021-2022 before growth increases to 1.1 per cent in 2022-2023 and 1.6 per cent over the following year as borders reopen.

The Commonwealth Budget projects that Victoria's population is projected to increase by 0.5 per cent in 2021-2022 before growth increases to 1.4 per cent in 2022-2023 and 1.8 per cent over the following year.