NSW Industrial Land Review Promises Planning Changes

The “long-awaited” Industrial Lands Action Plan for NSW has been revealed, promising new planning controls, pathways and rezoning.

After “years of neglect”, the plan aims to address the low vacancy rates in Sydney and the wider state’s industrial sector, according to the NSW Government.

“Escalating land values and rents, and almost zero vacancy rates indicates that NSW is facing a shortage of immediately developable industrial lands in certain locations,” the report said. 

“This has led to increased operational costs for businesses, which is affecting the price of goods and adding to the cost of construction and living ... jobs are being lost to other states as major freight and logistic operators are leaving Sydney [for] Brisbane or Melbourne, where there is more suitable and less expensive land.”

The plan aims to deliver a state-wide policy for industrial lands, categorising areas and precincts as state, regionally or locally significant, or as other industrial lands.

The report identified the Aerotropolis precincts in Western Sydney, for example, as among the areas that could be classed as significant even if they were not yet fully developed. 

It also aims to categorise industrial lands and assessment criteria for alternative uses, including alternative planning pathway. The report said implementing this categorisation would increase flexibility on land zoned for industrial purposes. These changes are planned to take place this year.

▲ A render of development in the Western Sydney Employment Area.

Policy interventions will also be developed to support the intensification of state and regionally significant industrial lands. 

The department aims to review SEPP provisions for industrial lands to ensure they are “fit for purpose” and provide modern warehouse constriction. 

It is also considering amending planning controls to maximise use of the land, such as changing height and floor space ration controls, which would potentially favour multi-level warehouses. 

It will be undertaking its investigations over the next year with the hopes of guiding infrastructure investments to “unlock the potential of each area”.

According to CBRE’s latest industrial and logistics report, Sydney’s vacancy rate increased slightly in the December quarter to 2.1 per cent. 

The manufacturing sector dominated total floorspace leased in the quarter—50 per cent of the 132,000sq m taken up in the fourth quarter of 2024. 

There is still significant demand from an investor side. Among moves, Charter Hall divested $500-million worth of small-scale industrial real estate during the past 18 months.

In 2024, industrial industries and activities contributed about $174 billion in gross value to the NSW economy, according to the state.