The planning controls introduced last year relating to the permissible size of developments in the CBD and Southbank however, are having a significant impact on Melbourne’s skyline.
The controls were brought in to arrest construction of a wave of towers that display little regard for liveability for their inhabitants or the public on the north and western edges of the city.
The Victorian Government’s intention is to “provide improved public amenity and deliver consistency and certainty that will ensure our city grows in a way that enhances all that make it the world’s most liveable city”.
The aspirations are laudable. Of late, completed developments in the CBD have been up to four times larger than these new controls would allow.
The new provisions state that for every square metre of site area, a maximum of 18 square metres of floor area can be developed. So a 2,000sqm site can deliver a maximum of 36,000sq m of floor area.
More floor area will be granted if additional public or strategic benefit is provided such as public open space or affordable housing.
Our research and recent experience has established that developers and tenants are looking for floorplates sized no less than 1,500sqm NLA in CBD zones. There are several factors driving this area requirement.
Reasonably, developers require a level of pre-commitment from tenants prior to embarking on projects. These tenants seek floorplates that minimise distribution of staff across multiple floors. These floorplates can cater to over 100 people and offer open-plan floor space with good access to natural light and views to assure physical and mental wellbeing of the occupants.
The challenge with the planning controls is that rather than stimulating commercial development in the CBD, it stifles it. A floorplate of 1,500sqm under these controls requires a site area of around 3,000sqm. However, by the time you factor in the setbacks and other height controls, there are very few developable sites remaining.
In recent months, our team has conducted research establishing that there are fewer than six potential sites in the CBD that will support development over 80m in height, with floorplates not less than 1,500sqm in area.
We concur with various industry sources on predictions that the commercial pipeline could be exhausted in the next decade.
Roger Teale, Property Council of Australia, Victorian President agrees with the challenges posed for the future of Melbourne’s commercial sites for developers.
“It’s predicted that demand for commercial office space in the CBD will almost double over the next 30-35 years – this means Melbourne’s city will need an additional 4 million sqm of commercial space to match demand, largely driven by a booming population and forecast jobs growth.
“This is a major challenge for Melbourne and we continue to work with the Victorian Government and the City of Melbourne to ensure that our planning processes not only reflect the needs of the market but can support the needs of our growing city into the future,” says Teale.
In terms of outcomes, landowners will realise many sites simply can’t be developed. This will trigger the amalgamation of adjoining sites to maximise development potential. This however leads to protracted negotiation periods, slower development times and fewer opportunities.
Similarly, we may see more developments relying on the purchase of “air rights” — the underutilised space above a building. An adjacent owner can purchase those “air rights” to enable construction of part of their building into that space.
Another potential corollary is the delivery of more slender residential towers because the controls also dictate that the taller a building, the further it must be set back from its boundaries.
In New York, amalgamated sites or those subject to development resulting from the purchase of air rights brought about a raft of super-slim towers. These are very costly because of additional structural requirements and the effects of wind on their slender forms.
As well, the proportion of structure to floor area cuts the net saleable area. This drives developers to build higher in an attempt to claw back profit forgone from lost floor space.
Matching the high construction costs are the sky-high prices of $US4 million for a two-bedroom apartment on the 10th floor of a midtown apartment block or $US20 million for a two-bedroom apartment on the 50th floor of a midtown tower, for example.
Melbourne has its own example of this new tower form. On the Collins House site at 466 Collins Street, approved under the previous planning scheme, a 57-storey apartment building is under construction that when complete, will be the world’s fourth slimmest tower.
To further support construction of this type of benchmark tower, where design excellence is demonstrated, the new provisions could be relaxed to allow increased floor area in the form of additional levels.
This approach has already been successful in other cities, including Sydney, where a 10% increase in either height or floor area is offered for design excellence.
These planning controls will bring about a reduced flow of capital in Melbourne’s heart. Less opportunity there should lead to the support and promotion of an increase in density on the city edge.
The wedge extending north of Etihad Stadium as far as Arden Street represents the greatest opportunity for urban regeneration in Melbourne since Docklands. It includes the land referred to as E-Gate and the site of the new Arden Station, one of five being built for Melbourne Metro.
Altogether, this 30-hectare site is equal to a quarter of the area within Melbourne’s CBD.
Melbourne’s future and title as a liveable city lies in our ability to plan for the careful expansion of the city. We must find opportunities to relax our planning controls to allow for major urban regeneration projects to flourish and accommodate our future needs.
Learn more about Bates Smart Director, Julian Anderson: