Results

The zoning of industrial land identifies areas that have been set aside for industrial users. The amount of zoned land changes over time. The Melbourne Industrial and Commercial Land Use Plan (MICLUP) reinforces the importance of industrial land. It puts in place a planning framework to support state and local government to plan more effectively for future employment and industry needs. Zoning is a key tool used by MICLUP to maintain industrial land supply.

Across metropolitan Melbourne 7,075.2 ha of land was zoned for industrial purposes from June 2001 to December 2021. During this period, 2,674.2 ha of industrial land was rezoned for non-industrial purposes. This resulted in a net increase of 4,401 ha. The increase was mainly in municipalities with a State Significant Industrial Precinct (SSIP), such as Cardinia, Casey, Greater Dandenong, Hume, Melton, Whittlesea and Wyndham. Losses of industrial land were mainly in Melbourne’s inner and middle suburbs.

During 2021 no additional land was zoned for industrial purposes.

Some 138.7 ha of former industrial land was zoned to a non-industrial zone. Nearly 50 hectares of this was zoned to Mixed Use/Residential zones mainly in Glen Eira and Monash.

Between June 2001 and December 2021, 2,674.2 ha of industrial land was rezoned for other uses. Nearly half of this land was rezoned for residential or mixed use purposes. Most of this has occurred within the inner and middle suburbs.

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 (SSIP).

Industrial land supply in metropolitan Melbourne

There are 26,164.1 ha of industrially zoned land across metropolitan Melbourne with 7856.2 ha classified as vacant. Vacant land includes the “underutilised” category.

About 58% of this land (4,557.4 ha) is located within SSIPs. Some 2,950.2 hectares of vacant land is located within a number of Regionally Significant Industrial Precincts. The remainder of the vacant land (348.9 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 7,186 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 purposes, etc.

The UDP reports on net consumption as its primary indicator of activity. Net consumption is the amount of land that changes from developed (vacant land to occupied) minus the amount of newly vacant land (land that has changed from occupied to vacant).

Average annual consumption across metropolitan Melbourne

Prior to the Global Financial Crisis (GFC), industrial land consumption across metropolitan Melbourne averaged around 286 ha per year. Following the GFC, consumption declined significantly until 2014 when it started to increase. In 2021 273 ha of industrial land was consumed which is less than the 306 ha in 2020.

Average annual consumption across the State Significant Industrial Precincts

The State Significant Industrial Precincts are where most 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.

The Southern SSIP recorded the second highest level of consumption across metropolitan Melbourne with 41.5 ha of industrial land consumed in 2021. The Northern SSIP recorded 34.4 ha of land consumed in 2021.

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 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 could 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. This will result in a shorter time frame for the overall supply of industrial land in the Western SSIP.

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.

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.

Officer/Pakenham State Significant Industrial Precinct

The Officer/Pakenham SSIP has the second lowest level of consumption, with a recent consumption rate of 15.5 ha per year. Using this relatively low level of consumption, it is estimate zoned land will be exhausted sometime in the mid 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.