How much housing can brownfields sites supply?

Examples of former industrial zoned sites now currently zoned residential. Images in clockwise order: Cardinia, Mornington Peninsula, Maribyrnong and Kingston (graphic from DPCD)

Governments like to point to disused industrial sites as a significant source of land for expanding housing supply within the established suburbs. Only recently, for example, the Victorian Government talked up the potential of Melbourne’s Fishermans Bend as a new “Growth Corridor”.

So-called brownfields sites can make a useful contribution to housing supply but the available evidence suggests their potential is over-stated. One of the risks of taking too-optimistic a view of brownfields is that the formidable obstacles to other sources of supply – like higher density housing in activity centres and infill developments – will tend to be neglected.

The potential of brownfields sites is limited by a number of factors. They might be in locations that are unattractive to the market (e.g. deep within an industrial area) or are expensive to service. Some have been contaminated by industrial processes and it’s possible another use might be preferred over housing.

Challenge Melbourne, the discussion paper prepared to kick-off the Melbourne 2030 process, estimated brownfields sites could contribute 65,000 dwellings over the period 2001 to 2030. While useful, this was well short of the estimated number of new dwellings that need to be constructed – for example, the latest edition of Victoria in Future projects the number of households in Melbourne will grow by 825,000 between 2006 and 2036.

Now the Planning Department has produced a new study which throws further light on the likely contribution brownfields sites could make to housing supply in Melbourne.

The department estimates more than 400 ha of industrial land was rezoned from industrial to residential in Melbourne over the last ten years. The exhibit shows new housing constructed on former industrial sites in Cardinia, Mornington Peninsula, Maribyrnong and Kingston.

That’s an average of 40 hectares each year over the last ten years. If each hectare was developed at a net density (say) of 20 dwellings, that would mean brownfields sites have contributed on average 800 dwellings p.a. to Melbourne’s housing task.

Compared to Victoria in Future’s projection that the number of households in Melbourne will grow by an average of 27,500 p.a. between 2006 and 2036, that 800 dwellings p.a. seems a decidedly modest contribution. In fact, it’s not certain that rezoning always leads to development and, where it does, what proportion of the site is used for housing. Many of the lots identified by the Department are in suburban locations so even my assumed net density of 20 dwellings per ha might be optimistic.

There are of course other non-industrial sites that could potentially be used for housing. For example, a major housing development was proposed for the former Coburg High School site in Bell St (although it appears to have fallen over). The trouble is there are likely to be many fewer such sites available than industrial sites. I’m not in any case aware of an estimate of their likely supply potential and the associated timing.

I applaud DPCD for producing this new study. There are still many questions around the supply potential of brownfields and other major sites, so I would like to see the department continue with this work. As it stands, the existing evidence suggests the Government should be very wary about over-selling the contribution brownfields can make to housing supply in Melbourne.


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Are planning regulations making retailing uncompetitive?

City of Darebin's draft Vision for Northland

I agree with Australia’s retailers and the Productivity Commission that imported internet purchases valued at less than $1,000 should be subject to GST. But I only agree in-principle.

The trouble is, as the Productivity Commission’s report on retailing released last week shows, the administrative effort required to levy the GST would cost more than the tax would raise in revenue.

But the GST is really just a distraction – the underlying malaise of Australia’s retail sector runs far deeper. The Commission says retailers operate under several regulatory regimes that reduce their competitiveness. It nominates three major restrictions which require improvement:

Planning and zoning regulations which are complex, excessively prescriptive and often exclusionary

Trading hours regulations (in some States) which interfere with the industry’s ability to adapt and compete in a more globalised market

Constraints on workplace flexibility such as obstacles to the greater use of enterprise bargaining and the adoption of best practice productivity measures

Retail hasn’t historically been trade-exposed, so it hasn’t had to work hard at being competitive. Up until now, international suppliers have even been able to practice blatant price discrimination. But the internet has changed the game. Consumers can now compare what they’re paying for many products locally with what it costs to import them from overseas markets.

The impact of planning regulations on the viability of domestic retailing is of course of particular interest to The Melbourne Urbanist. The Commission notes that the ability to maintain a competitive and healthy retail sector is vitally dependent on the ability of new retail formats to gain entry to Activity Centres. A number of studies have shown that preventing the development of new retail formats lowers productivity, reduces employment and raises prices to consumers.

The Commission finds a number of barriers to entry, including limits on the size and scope of centres, prescriptive planning requirements and excessive scope for firms to establish local monopolies and maintain them by excluding new entrants, either with the implicit cooperation of planning agencies or through the courts. The Commission recommends that:

Activity Centres should be large enough in terms of total retail floor space and broad enough in terms of allowable uses to facilitate new retail formats locating in existing business zones

Prescriptive planning requirements should be significantly reduced to ensure competition is not needlessly restricted

The impact of new entrants on the viability of existing retail businesses should not be considered at any stage in the rezoning or development assessment process. This issue should only be considered at the strategic planning stage

The focus should shift to “as-of-right” development processes to reduce uncertainty and minimise the scope for gaming of the system by commercial rivals

Courts should be able to award costs against parties who are found to be appealing for non planning reasons

It’s interesting and illuminating to read the Commission’s report and at the same time look at what the City of Darebin is proposing in this report for the future development of Northland, a “hard-top” shopping centre (mall) with nearby “big-box” retail facilities at Preston, about 11 km north of Melbourne’s CBD. The exhibit above shows Council’s proposed vision for the centre and surrounding uses. Read the rest of this entry »

-Are there really limits to what planning can do?

States' and Territories responses to 23 land use planning 'challenges'

There are, but in Victoria those limits appear to be very elastic.

Because it controls the use of land, the whole complex edifice of planning regulation touches to a greater or lesser extent a lot of the things we do.

In a newly released report commissioned by COAG, the Productivity Commission gives us an insight into how the nation’s planning agencies think the land use control system influences our lives.

The report, Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments, examines the regulatory frameworks of each jurisdiction, the processes for supply of land, the bases for assessing developer contributions, compliance costs for business, and competition issues arising from planning decision-making.

As part of its investigations, the Commission asked each State and Territory to answer this question: “To what extent can government use the planning, zoning and DA system to positively influence the following challenges”?

The answers each jurisdiction provided to 23 “challenges”, graded from “no effect” through to “major effect”, are shown in the accompanying chart (copied from the report). The survey was completed between October and November 2010, prior to the Victorian State election.

Bear in mind that the survey relates specifically to the powers of land use planning agencies i.e. not transport or other agencies. Also, the planners were specifically asked about the scope to positively influence each of the challenges. There are some interesting claims here and some equally interesting comparisons between States and Territories.

There’s a consensus that, given (presumably) the right policies, land use planning can have a major positive influence on managing greenfield development, accommodating population growth, managing the transition to higher population densities, providing diverse/appropriate housing, and protecting biodiversity.

By and large I’d agree with that. My only caveat would be the understanding that some of the benefits will come from reducing rather than increasing the degree of planning intervention. A prime example is the many restrictions on constructing higher density housing within established urban areas.

Where the survey gets really interesting is outside these five key areas. Victoria in particular stands out from its peers. Read the rest of this entry »