Euroa Growth Management Plan Economic Assessment May 2018

Prepared by Tim Nott for Hansen Partnership and Strathbogie Shire Council

Report Data

Version Date Approved By Sent to

Draft 13 August 2017 TN Richard Stevenson, Hansen Partnership

Draft 19 March 2018 TN Richard Stevenson, Hansen Partnership

Final Draft 21 March 2018 TN Richard Stevenson, Hansen Partnership

Final 14 May 2018 TN Richard Stevenson, Hansen Partnership

Prepared by:

Tim Nott economic analysis + strategy ABN: 29 590 304 665

20 Scotia Street West Preston 3072 Australia

Tel: 0401 993 451 Email: [email protected] Web: www.timnott.com.au

Disclaimer

The analysis in this report is intended for the specific purposes of Strathbogie Shire Council and no responsibility is taken for its use by other parties. The report has relied on secondary sources and the best estimates of the author. The reader should bear in mind that there is no certainty in future predictions.

The views expressed in this report are those of the author and are not necessarily endorsed by Strathbogie Shire Council.

TABLE OF CONTENTS

1 Introduction ...... 1 1.1 This Report ...... 1 1.2 Context ...... 1 1.3 Method ...... 3 2 Commercial Areas of Euroa ...... 4 2.1 Location ...... 4 2.2 Activity Floorspace ...... 5 3 Retail Analysis ...... 7 3.1 Retail Sales ...... 7 3.2 Retail Trade Area ...... 7 3.3 Retail Spending ...... 10 3.4 Current Balance of Retail Supply and Demand ...... 10 3.5 Factors Affecting Future Retail Demand ...... 11 3.6 Forecast Demand for Retail Floorspace ...... 12 4 Other Commercial Activities ...... 15 5 Commercial Land Requirements ...... 17 5.1 Total Floorspace Required ...... 17 5.2 Land Requirement ...... 17 5.3 Accommodating Growth in Commercial Activities ...... 17 6 Industrial ...... 19 6.1 Industrial Precincts ...... 19 6.2 Existing Activity ...... 20 6.3 Recent Industrial Development ...... 20 6.4 Factors Affecting Future Industrial Land Requirement...... 20 7 References ...... 26

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1 INTRODUCTION 1.1 This Report Euroa is the largest settlement in the Strathbogie Shire in North East Victoria. The Strathbogie Shire Council is refreshing the Growth Management Plan for the town. This renewal is in response to modest but ongoing population growth in the township, continuing change in economic circumstances, and adjustments to the land-use planning framework at a State level. The Growth Management Plan is being prepared for Council by a team led by planners and urban designers Hansen Partnership.

This present report has been prepared as a contribution to the Growth Management Plan by economic geographer and consulting team member Tim Nott. It looks at the retail, commercial and industrial areas of Euroa and their prospects for growth and development, ensuring that the emerging plan takes into account the economic drivers of the town.

1.2 Context Euroa is located on the between Seymour and Benalla and close to the Strathbogie Ranges. The town has a number of economic roles – it is:

• a rural service centre for surrounding farmland, accommodating rural supplies and a livestock saleyard • a small scale industrial centre with timber supplies and animal feed as well as automotive services • a highway service centre for people travelling on the Hume Highway, with services in the town as well as on the freeway • a commercial centre for residents and visitors, providing retail, professional, health and community services • a commuter settlement for people who work in larger towns within an hours’ drive, including Benalla, Seymour, and • a retirement destination for those seeking a small-town lifestyle

Each of these economic roles has shaped the town to some extent through the expansion of housing and the zoning of land for industry and commercial services.

Events over the past 20 years or so that have shaped the economy of the town include:

• the construction of the Hume Freeway Bypass in the mid-1990s which has left an underutilised commercial strip through the town on Euroa Main Road • the closure in 2008 of the town’s largest factory – Teson Trims – which made automotive components

Following these setbacks the town experienced a period of population decline. However, in more recent years, the town is growing once more, and the forecast is for further population growth. This will drive demand for housing, jobs and services.

Maintaining and improving the attractiveness of the town – its setting, housing stock, commercial precincts and services – will be a crucial economic development function of the new growth management plan.

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The main question addressed in this report is: what are the prospects for sustainable economic development in Euroa and what will this mean for the supply of land for economic activities? This comprises principally Commercial and Industrially zoned land. The present supply and location of this land is illustrated in the following diagram.

Figure 1: Euroa Land Use Zoning Plan

Source: Strathbogie Planning Scheme

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1.3 Method Retail supply and demand is considered in detail since this is the largest and most dynamic industry in the commercial centre. The key influences on retail development – population growth and changes in industry organisation and consumer preferences – are described and form the basis of a forecast of future retail demand. The development of other commercial and community activities is also considered to arrive at a likely scenario for growth in the town centre and other commercial land. The prospects for industrial development are also considered, based on the existing activity and the likely demand from investors.

The report also explores policies that may be used to improve the prospects for sustainable growth.

This report is organised as follows:

• Section 2 describes the Commercial precincts of the town • Section 3 provides a retail analysis, looking at the supply and demand for retail floorspace • Section 4 reviews the growth of other commercial activities • Section 5 assesses the likely demand for Commercially zoned land • Section 6 identifies the prospects for Industrial land • Section 7 identifies policies that may result in higher rates of sustainable development • Section 8 provides a summary and conclusions about how Euroa can accommodate commercial growth over the planning period

Those looking for an executive summary of the report findings should skip to the last section.

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2 COMMERCIAL AREAS OF EUROA 2.1 Location Euroa’s commercial areas comprise the town centre, located at Binney Street and Railway Street; the old Highway services strip on Euroa Main Road (Clifton Street); and the freeway service centre on the Hume Freeway. These are shown in the map below.

Figure 2: Euroa's commercial precincts

Town Centre Highway Services Precinct

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The Euroa town centre is a thriving, old fashioned country town centre characterised by single storey development, except for a number of mainly heritage buildings at key corners (old hotels, banks and the post office). The shopping precinct on Binney Street has wide pavements and deep verandas that provide excellent shade and shopper comfort. To the south of the shopping strip is a civic precinct containing churches, council buildings, the old court-house, museum and clinic. To the north, Binney Street runs into Railway Street which accommodates a secondary commercial precinct (large format stores, offices and secondary retailing) and provides parking and access to the railway station.

The highway services strip on Euroa Main Road is more scattered and accommodates enterprises typically found in a Commercial 2 Zone – auto repairs, light industry, wholesale and showroom sales, motels and other hospitality businesses. This precinct appears less successful than the town centre with several prominent vacant buildings. The precinct continues to struggle following the construction of the Freeway Bypass in the mid-1990s.

2.2 Activity Floorspace The approximate floorspace of the activities in these areas is shown in the table below.

Table 1: Approximate retail, commercial and community floorspace in Euroa's commercial precincts

Activity Euroa Town Centre Highway services Total Euroa Area Share Area Share Area Share Supermarket 2,500 11% 0 0% 2,500 8% Other food, grocery and liquor 400 2% 120 1% 520 2% Non-food retail 4,373 19% 0 0% 4,373 14% Food catering 1,250 5% 2,100 23% 3,350 10% Retail services 632 3% 60 1% 692 2% Total retail 9,155 40% 2,280 25% 11,435 36% Pubs 1,280 6% 1,060 12% 2,340 7% Banks 574 2% 0 0% 574 2% Real estate 786 3% 0 0% 786 2% Other professional services 2,706 12% 120 1% 2,826 9% Automotive sales and service 618 3% 3,240 35% 3,858 12% Other 1,466 6% 1,430 16% 2,896 9% Health services 950 4% 0 0% 950 3% Emergency services 0 0% 1,070 12% 1,070 3% Civic functions 5,450 24% 0 0% 5,450 17% Total occupied space 22,985 100% 9,200 100% 32,185 100% Vacant space 725 1,230 1,955 Total space 23,710 10,430 34,140 Source: Tim Nott. Notes: Figures exclude residential floorspace. The “Euroa Town Centre” includes the civic precinct on Binney Street and Kirkland Avenue. “Highway services” includes activity on Euroa Main Road and in the freeway services centre.

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• Around 9,200 sqm or 40% of the floorspace in the Euroa Town Centre is devoted to retailing (see box for the definition of retailing used in this report) • In total, the town has approximately 11,400 sqm of For the purposes of this report, retail retail floorspace activity comprises the following • The town centre is strongly multi-functional; that is, it categories: has a wide variety of retail, commercial and Food, groceries and liquor– supermarkets, community functions. This adds to the strength of the general stores, liquor outlets, specialty food centre from a commercial viewpoint. outlets (butchers, bakers, greengrocers etc) • The vacant floorspace in the town centre is principally Non-food goods, comprising vacant shops and comprises around 4% of the total • Clothing – clothes, shoes, manchester shop space. This is a healthy level of vacancy and • Household goods – homeware, indicates a broad balance between supply and demand hardware, furniture, floor coverings, currently. Further take-up of vacant shop space would curtains and blinds, electronic goods etc be an indication that demand is beginning to outstrip • Recreational goods - sporting goods, supply. toys, bookshops, newsagents • Vacant floorspace in the highway services precinct on • Other goods –, chemists, florists, jewellers, second hand goods etc the Euroa Main Road, on the other hand, is quite substantial and equates to around 15% of the space in Food catering – cafes, restaurants and take- away food outlets that strip. New uses have yet to be found for several of the redundant highway service functions that this Retail services – hairdressers, beauty area used to provide before the Freeway bypass was parlours, video rental, clothing and household goods repairs constructed. This is unfortunate because the Euroa Main Road is the only experience of Euroa for many visitors who pull off the Freeway. For the purposes of the analysis presented here, retailing excludes selling of motor

vehicles, auto accessories and fuel. It also excludes outlets which are mainly engaged in wholesale sales (that is, sales of goods to other businesses). This includes some hardware outlets.

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3 RETAIL ANALYSIS 3.1 Retail Sales The following table provides a calculation of retail sales in the town using an estimate of sales per square metre that is achieved by the local stores. This estimate is based on industry standards and adjusted for local conditions and the type of stores that are present.

Table 2: Estimate of retail sales in Euroa, 2016

Sales per square Retail Activity Floorspace metre sales sqm $/sqm $m Food, groceries and liquor 3,020 $8,500 $25.7 Non-food 4,370 $4,000 $17.5 Food catering 3,350 $5,400 $18.1 Retail services 690 $3,500 $2.4 Total retail 11,430 $5,569 $63.7 Source: Tim Nott

Total retail sales in the town are estimated at $64 million in 2016.

Euroa serves two main retail functions:

• Providing neighbourhood-level retail goods and services – food, groceries, and a selection of non-food items - to its catchment • Providing visitor services – mainly to people travelling through on the Hume Freeway – but also to people visiting Euroa and the Strathbogie region

The visitors (that is, people who live outside the trade area) support a level of retail provision that is somewhat higher than would otherwise be found in a town of this size. This gives local residents access to, for example, a range of cafes and dining options that they would otherwise have to travel further afield for.

3.2 Retail Trade Area Euroa town centre serves an area that extends well beyond the town boundaries. The prospects for economic activities in the town will be most strongly influenced by change in the population of this trade area. For the purposes of this study, the trade area has been defined as the area for which Euroa provides the closest supermarket service, that is, the closest source of daily supplies. This is illustrated below.

Euroa Growth Management Plan – Economic Assessment 8

Figure 3: Euroa trade area and surrounding supermarket centres

Source: Base map from Google Maps

For the purposes of this analysis, the catchment area is deemed broadly equivalent to the Euroa SA2 – the statistical area defined by the ABS that includes the settlements of Euroa, Longwood, Strathbogie and . The population of the Euroa SA2 is estimated by the ABS at 6,114 in 2016.

The following chart shows how the population of the Euroa SA2 has changed since 2001. The chart also provides three scenarios for future population change in the area.

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Figure 4: Recent population change in Euroa trade area and scenarios for future change to 2036

7,000

6,800

6,600

6,400

6,200

6,000

5,800

5,600

5,400

Estimated resident population Scenario 1 (growth at forecast Shire average) Scenario 2 (growth at 5 year average) Scenario 3 (growth at 10 year average) Source: ABS, Regional Population Growth Australia, 2017; DELWP, Victoria in Future 2016; Tim Nott

Population in the trade area declined in the ten years from 2001 to reach a low of around 6,000 people in 2011 but has since been growing slowly. The decline was a result of factors such as the Freeway bypass, the closure of Teson Trims and ongoing changes in the agriculture sector. The more recent growth has been a result of investment in the rural areas – especially in equine pursuits and viticulture – and the development of the town and district as a visitor and weekend destination.

Several future population scenarios for the area are shown here:

• Scenario 1 provides for growth at the rate that is forecast for the Shire as a whole by the latest State Government population forecasts – 0.6% per year from 2016 to 2036 (DELWP, 2017, extrapolated from 2031 to 2036), resulting in 810 additional people by 2036 compared with 2016 • Recognising that the Euroa part of the Shire has been growing more slowly than the corridor, Scenario 2 provides for growth at the same rate of growth that has occurred in Euroa over the past five years (0.4% per year from 2006 to 2016). This scenario results in 470 extra people by 2036. • Scenario 3 provides for growth at the same rate that has occurred in Euroa over the past 10 years (0.2% from 2006 to 2016). This scenario results in 200 extra people by 2036.

The scenarios are provided in order to illustrate that there could be a range of possible population outcomes for the trade area. For the purposes of this study, the highest scenario is anticipated. This will allow the Growth Management Plan to accommodate a range of population growth scenarios up to 0.6% per year, a rate which is 50% higher than that experienced over the past five years. This will provide some capacity to cater for the improved economic development outcomes that Council and community are seeking.

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3.3 Retail Spending The following table provides an estimate of the total retail spending by trade area residents. Estimates for regional Victoria have been sourced from Market info (a micro simulation model that provides estimates of spending in small areas based on data from the Census of Population and Housing and the Household Expenditure Survey), and adjusted for Euroa based on the difference in household income per person.

Table 3: Estimated annual retail spending, Euroa trade area residents, 2016

Retail spending per person in Euroa trade area Total retail spending $ $m Food, groceries and liquor $5,940 $36.3 Non-food $5,928 $36.2 Food catering $912 $5.6 Retail services $409 $2.5 Total retail spending $13,189 $80.6 Source: Tim Nott

Overall, trade area residents are estimated to have annual retail expenditure of $80.6 million in 2016.

3.4 Current Balance of Retail Supply and Demand Not all of retail spending by trade area residents is spent locally. A substantial share of resident spending is directed to larger centres such as Benalla and Shepparton that provide more comprehensive supermarket shopping and a wider variety of non-food goods. Nevertheless, because of strong visitor spending, Euroa accommodates more shops than it otherwise would and residents are therefore able to spend more money locally (with more dining options, for example). This helps Euroa to capture a higher proportion of the available spending of trade area residents – up to around 50% when 30% might be more normal for a trade area of this size.

The following table provides an estimate of how much of the retail sales at Euroa are attributable to residents and how much to visitors.

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Table 4: Estimated balance of retail spending at Euroa, 2016

Share of Sales to Total resident trade area spending by spending to Sales Sales to visitors residents residents Euroa $m % $m $m $m % Food, groceries and liquor $25.7 15% $3.9 $21.8 $36.3 60% Non-food $17.5 20% $3.5 $14.0 $36.2 39% Food catering $18.1 75% $13.6 $4.5 $5.6 81% Retail services $2.4 15% $0.4 $2.1 $2.5 82% Total retail $63.7 33% $21.3 $42.4 $80.6 53% Source: Tim Nott

3.5 Factors Affecting Future Retail Demand Retailing is a dynamic industry that is experiencing an accelerating level of change. The key influences on the future development of retailing in Euroa will include:

• Population growth in the trade area – the size of the local market • General economic conditions that determine the growth and distribution of incomes • Evolving trends in the retail industry, including the scale of online spending, the introduction of new technology and changing scale of provision in different retail categories • Competition from other centres in the region • Changing preferences of consumers, with time-poor consumers preferring one-stop shopping, but those with fewer time constraints preferring wider choice, competitive prices and/or personalised customer service

The impact of a number of these factors are examined in more detail below.

Issue Implications for Euroa Trend for a growing share of retail spending to Pressures for residents to travel to bigger be captured by large corporate retailers which centres with chain stores will intensify as will have strong marketing reach and can deliver pressures on retailers competing only on price low costs and wide choice – branded supermarkets, department and other chain Euroa retailers partly insulated by distance stores, homemaker outlets and other big box from larger centres but complacency will risk a outlets shrinking trade area as residents at the margins seek better options elsewhere and as residents Some countervailing pressures benefit smaller do more of their shopping when shops in Euroa retailers – demands for personalised service are closed (that is, on Saturday afternoon and and the ability to move quickly in response to Sunday, or in the evening) emerging needs Concentration on personal service, quick response and price will be required to compete, especially as larger retailers begin to use big data to target customers and are able to provide a more personalised service.

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Online spending now caters for 7% of all retail As long as there is real growth in retail spending. Growth of online spending will spending, physical stores will be buffered to reduce the share of retail spending in physical some extent, although there is still potential for shops. This growth is now across most retail a real decline of spending in stores. categories including groceries and fast food as well as clothes, electrical, household and Small independent retailers in Euroa will likely recreational goods. The online growth is so far struggle to have an online offering to match the being captured mainly by a very few large chain stores with order fulfilment and delivery retailers. This may change as online shopping infrastructure hard to make viable locally. technology becomes more ubiquitous and easy There may be potential for a single centre-wide to use by retailers and consumers. online presence and possible delivery service. Improved cooperation between local retailers is While customers still wish to see, touch and likely required in order to deliver better feel products, or take immediate delivery, there targeting of local shoppers. will be a need for physical stores. The most successful retailers will likely have a seamless Potential to target visitors with comprehensive omnichannel approach to meet customer online visitor services offering needs (that is, online as well as bricks and mortar stores). Introduction of new retail technology – In less price-sensitive or more visitor-oriented scanners, automatic checkouts etc – will reduce product categories, there is potential to retain prices but create significant unemployment in staff and trade on the small-town feel of Euroa. the retail workforce in the medium term. Consumers are becoming more and more Potential for expansion of regional product concerned about the provenance of their food offering and for products made on site (arts, and other products. Ethical purchasing will crafts, food etc). drive demand for more locally sourced products, less waste and more information. Population growth will continue to drive retail Competing centres with growing population investment. catchments – Shepparton and Wodonga, in particular - will attract retail investment and will continue to provide strong competition especially in the non-food categories.

3.6 Forecast Demand for Retail Floorspace For the purposes of this report a forecast demand for retail floorspace over the period to 2036 has been made on the basis of a series of conservative assumptions1, as follows:

• The population of the trade area will grow at 0.6% per year on average over the period to 2036 (see section 3.2) • The trade area residents will experience real growth in retail spending over the period but all the net growth will be absorbed by on-line spending • The share of retail spending by trade area residents flowing to Euroa will remain constant at 53%.

1 Conservative in that existing trade shares and established trends are expected to continue without major discontinuities. The real situation will undoubtedly be different in as yet unforeseen ways.

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• The share of sales to visitors remains constant at 33% of the total. This implies that sales to visitors will grow at the same rate as sales to residents. (This is a conservatively low assumption given that Tourism Research Australia is currently forecasting that growth in visitation to regional Victoria will grow by 3.3% per year for the ten-year period until 2024- 25.) • The balance of spending on different retail types will remain the same over the period • The capacity of Euroa to accommodate any growth in building area and the resulting car- parking is more or less unfettered.

The forecast should be considered a scenario based on the assumptions outlined above. The following charts identify the forecast growth in the floorspace of the various retail categories.

Figure 5: Forecast demand for retail floorspace, Euroa, 2016 to 2036

14,000

12,000

10,000

8,000

6,000 Square Square metres 4,000

2,000

0

Food, groceries and liquor Non-food Food catering Retail services

Figure 6: Forecast growth in demand for retail floorspace, Euroa, 2016 to 2036 (sqm)

92 401

445

580

Food, groceries and liquor Non-food Food catering Retail services Source: Tim Nott

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Under this scenario there is demand for a growth in retail floorspace of 1,520 square metres over the period 2016 to 2036. This comprises:

• 400 sqm of food, groceries and liquor • 580 sqm of non-food • 440 sqm of food catering • 90 sqm of retail services

Most of this additional space should be accommodated in the main Euroa town centre, although there may be potential for additional hospitality functions on the Euroa Main Road. The ultimate demand could support an additional small supermarket, particularly of the type that offers a high proportion of non-food goods such as ALDI. Any such supermarket should be located in the town centre in order to consolidate the core retail functions, maintaining a walkable and financially sustainable centre.

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4 OTHER COMMERCIAL ACTIVITIES Euroa serves its trade area as a centre for wide range of non-retail commercial and community services, most of which are located in the town centre, including:

• Council services and civic institutions such as the library, museum, court and police • Health services (although the recently refurbished hospital is located in Kennedy Street in the south of the town) • Professional services (accounting, legal and design services) • Services to the farm sector including farm monitoring, horse breeding and rural supplies • Banks and other financial businesses • Real estate agents and other property-related businesses • Religious institutions • Pubs, clubs and accommodation

The Euroa town centre has an important role in providing accommodation for businesses of many types.

The prospects for growth in these activities are mixed. It is likely that small scale health, professional and business services will continue to grow, more or less in line with the population growth in the area. In the recent past, new professional service businesses have established in a private business incubator, formerly the Memorial Hall on Railway Street. There may be room for further initiatives of this kind. Health services of all kinds have been growing strongly throughout Australia and this can also be expected in Euroa, especially since the town has an older population even compared with the average for Country Victoria (51 in Euroa; 41 in Country Victoria).

However, it seems unlikely that the population growth in the area will be sufficient to trigger requirements for substantial new civic infrastructure such as a new library or new churches. These kinds of activities are unlikely to grow and may even shrink if there are efficiencies in provision.

Forecasting floorspace for these non-retail activities is difficult because of the disparate nature of the activities which each have different predictors of demand. An approach often taken, and which is taken here, is to assume the growth of non-retail floorspace will be a fixed share of the total growth. In Euroa, the non-retail floorspace currently accounts for 64% of the total in the commercial precincts of the town (60% in the town centre). However, because much of the civic and religious infrastructure is unlikely to grow, the analysis here assumes that non-retail floorspace will account for only 30% of the total growth in commercial floorspace over the next 20 years. The calculation in the following section shows that, if this assumption holds good, the non-retail floorspace in the commercial precincts of the town will fall from 64% to 62%. This is a minor change in the overall mix of activities and well within the bounds of possibility if the experience of other centres is taken into account. The following chart shows the share of non-retail space in the town centres of a variety of small and medium-sized towns in rural Victoria. The chart shows that non-retail space is generally within the band of 30% to 80% of space, with smaller, older, inland town centres tending to have a higher share.

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Figure 7: Share of non-retail space in selected town centres, Victoria

Mirboo North Coleraine Poowong Balmoral Dunkeld Penshurst Healesville Macedon Riddells Creek Korumburra Euroa Port Fairy Woodend Lancefield Romsey St Leonards Drysdale Lara Lorne 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Tim Nott Note: excludes housing; data collected over ten years 2007 to 2017

If the retail floorspace grows by 1,518 square metres as predicted in the scenario in the preceding section, then the non-retail floorspace will grow by 651 square metres. This is likely to be mainly in small offices which could be developed as shop-fronts or as purpose-built offices on vacant land or above shops.

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5 COMMERCIAL LAND REQUIREMENTS 5.1 Total Floorspace Required The following table shows how much new floorspace will be required to accommodate the growth scenario outlined in previous sections. It should be noted that this scenario for growth excludes housing.

Table 5: Forecast growth in commercial floorspace, Euroa, 2016 to 2036

Growth in floorspace, Share of Total floorspace in 2016 2016 to 2036 total growth Floorspace in 2036 sqm % of total sqm % sqm % of total Retail 11,435 36% 1,518 70% 12,953 38% Non-Retail 20,750 64% 651 30% 21,401 62% Total 32,185 100% 2,168 100% 34,353 100% Source: Tim Nott

5.2 Land Requirement As well as the growth in building floorspace, the town will need to accommodate the parking requirement for those buildings. Based on the scenario detailed above, the following table provides a notional estimate of the total land required to accommodate new activity in commercial precincts.

Table 6: Total land required to accommodate growth in commercial activities, Euroa, 2016 to 2036

Net growth in Car spaces Land for Total land Activity type floorspace Parking ratio required parking requirement sqm car spaces/100sqm no sqm sqm Retail 1,518 3.5 53 1,859 3,377 Other 651 3 20 683 1,334 Total 2,168 73 2,542 4,711 Source: Tim Nott Note: car parking ratio taken from the planning scheme; land for parking estimated at 35sqm per space

This scenario generates demand for approximately 0.5 hectares of land in the commercial precincts of the town over the period to 2036. It should be noted that this scenario assumes at-grade development.

5.3 Accommodating Growth in Commercial Activities As a policy preference, the type of commercial activities expected to grow in Euroa – retail shops and small offices – should be located in the town centre. This will reinforce the centre as the principal place of business; improve the vibrancy of the centre thereby encouraging more investment; raise the value of town centre property thereby encouraging reinvestment in the

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building fabric; and encouraging the provision of a wider spread of services for residents and for visitors.

Any demand for larger format activities – wholesaling and bulky goods retailing, for example – could be directed to the highway services strip on Euroa Main Road where there is ample land for such activities. In order to encourage larger format activities on Euroa Main Road and discourage smaller shops, the existing Commercial 1 land should be rezoned to Commercial 2. The strategy in support of such a change should note that this precinct is expected to accommodate highway service uses, as well as larger format commercial activities, to protect its visitor services function.

In exception to this, supermarkets and large format grocery stores should be encouraged to locate within the town centre rather than on Euroa Main Road. Provision of supermarket space outside the town centre would split the grocery shopping task, reducing the vibrancy of the town centre, generating additional traffic and adding to the travel costs of shoppers.

Options for accommodating growth in commercial activities in the town centre include:

• Occupation of existing vacant space, although this is relatively limited (and some vacant floorspace should be assumed in 2036 in order to provide room for new investors) • Development of vacant land or redevelopment of existing housing in the centre; the Commercially Zoned land extends between McGuiness St and Kirkland Avenue and covers a number of houses that could be redeveloped • Redevelopment of existing commercial buildings to generate a net increase in floorspace • Improvement in the efficiency of existing car-parking • Displacement of activities that do not require a shop-front in the commercial centre (which could include light industrial activities that may prefer a location in an Industrial or Commercial 2 Zone; or office functions that could relocate to newly developed premises above shops or in side streets • Reducing the requirement for additional car-parking for new developments • Encouraging double storey development to provide room for non-retail activities to locate above shops

The development of a significant new premises such as a supermarket would require redevelopment of an existing building on the Commercially Zoned land in the town centre, with Railway Street being a most likely location because of its relatively large lots and uses that could re-establish in other parts of the town.

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6 INDUSTRIAL 6.1 Industrial Precincts The industrial precincts in Euroa are shown in the following diagram and comprise:

• The Graham Street precinct • The Euroa-Shepparton Road precinct • The Euroa Main Road precinct • The old highway services precinct (that is, the land on Euroa Main Road which is zoned Commercial 1 but which nevertheless accommodates a range of activities including light industry)

Figure 8: Industrial precincts in Euroa

Graham St precinct

Euroa Main Rd precinct

Euroa-Shepparton Rd precinct

Highway services precinct

Source: base map from Google Maps

From this aerial photograph it is clear that a number of the activities on industrial land in Euroa have a very low density; that is, the buildings take up a low proportion of the allotments that they occupy. This could be because owners have spare land in order to expand or to sell at some future date, or it could be that appropriately sized allotments have not been available. It does indicate that there is scope for improved efficiency in the way that industrial land is used.

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6.2 Existing Activity The existing activities on industrial land include:

• Municipal livestock saleyards • Rural supplies (WB Hunter Rural, Ausrural, etc) • Small scale food processing (Euroa Fine Foods) • Passenger transport (Walters Passenger Service) • Freight and livestock transport (Drymarsh, Brady & Kibble) • Recycling (Norstar Steel Recyclers) • Timber production (Euroa Timber) • Textile production (First Edition Fibres and Yarns, Vardhman Threads) • Construction products and services • Storage • Automotive and machinery sales and repairs (Euroa Discount Tyres, Old Hume Truck and Car Repairs, Repco)

Several other light industrial activities can be found in the town centre, especially on Railway Street (including Franz Kloft Mechanical Repairs, Euroa Tyre Service and Thrifty Link Hardware, for example)

These activities can be grouped into:

• Farm service activities, especially livestock services • Small scale manufacturing, such as timber, food and textiles • Regional services (freight and passenger transport, recycling) • Local business and household services (construction, storage and repairs)

It is likely that most future industrial development in Euroa will also fall into these categories – these are the activities in which Euroa has established an advantage.

6.3 Recent Industrial Development The available building permit data provides no clear and direct evidence about the scale of industrial development and the demand for industrial land in recent years. However, in broad terms, there appears to be around one industrial development each year on average over the period since 2011. The average value of industrial building permits points to buildings averaging a little more than 500 square metres and a notional land requirement of 1,500 square metres per year2.

6.4 Factors Affecting Future Industrial Land Requirement Future industrial land requirements in a town such as Euroa are fundamentally uncertain. Too much depends on the willingness and capacity of individual investors, on the skills of local workers and on the changing nature of global markets, technology and techniques. Nevertheless, some estimate of future demand must be made in order to allow for the orderly development of land. A common approach, taken here, is to look back at recent demand, review any likely changes and project

2 A typical plot ratio for new industrial development in greenfields areas is 33%; that is, the building takes up one third of the site, with the remainder allowed for parking, freight movement, external storage, landscaping and some room to expand.

Euroa Growth Management Plan – Economic Assessment 21

forward accordingly, allowing some leeway for unexpected or larger-scale investments which might be unlikely but which should ideally be accommodated if possible to improve local employment prospects.

The future economic prospects, and the demand for industrial land in Euroa, are likely to be influenced by the following factors:

• The farm sector in the district will continue to evolve and changes will require new suppliers and services. Growth in the equine industry, for example, which is one of the Priority Areas identified by Council in its Economic Development Master Plan (Strathbogie Shire, 2013) will create demand for horse float sales and repairs, horse fencing, saddlery, stock feed, veterinary services and so on. Similarly, any growth in viticulture and wine production in the district will increase demand for specialist viticultural supplies. • There may be potential for further investment in small scale food producers, using local produce and/or specialist experience of local people. (Larger scale food producers are more likely to locate in towns with a larger labourforce, large parcels of industrial land and substantial waste water treatment infrastructure.) • Euroa is connected to the NBN. This provides advantages for firms that make extensive use of large digital files such as CAD drawings or video including, for example, engineers, precision equipment manufacturers or high end furniture makers. Attracting such investors would also depend on having skilled workers amongst other factors. • The rise of internet retailing has created demand for warehouse spaces of all sizes to cater for order fulfilment and logistics. Some growth in demand for industrial land could be expected as a result, even in relatively small settlements such as Euroa. • Private indoor sports halls and gyms have been a significant occupier of industrial land in general over recent years. There may be some demand for this kind of facility in Euroa. • Some of the remaining small manufacturers in Euroa are in sectors where employment has been declining. This may affect the future of those firms, especially when the original owner ceases to be involved. • Increasing capital intensity in manufacturing, construction and logistics is reducing the need for land – fewer workers means less car-parking and smaller building footprints. However, whether or not there are employees, it is likely that industrial activities will still require dedicated land. • Driverless vehicles will reduce the need for vehicle parking, and the need to work the vehicle fleet more efficiently will likely lead to centralisation of administration and servicing. • Competition for industrial investment from other towns in the region is strong. Benalla, Wangaratta, -Wodonga, Shepparton and Seymour all have substantial areas of vacant industrial land and larger local populations.

Substantial changes in the broader industrial economy are underway or in the pipeline, although there are few indications that Euroa will be affected more or less than other places. The town does have some advantages – NBN and a strong local farm and tourism economy; but it also has disadvantages – a relatively small local labourforce and strong competition from neighbouring towns. For the purposes of this report, the uptake of industrial land is assumed to continue at the levels experienced recently.

If the average annual land requirement continues at 1,500 square metres per year over the 20 years to 2036, a total of 3 hectares of industrial land will be required.

Euroa Growth Management Plan – Economic Assessment 22

This property requirement could be found in several existing parcels of Industrially Zoned land:

• Existing vacant land such as the parcel at 9 Charles Street of around 1 hectare • Existing vacant industrial buildings in the industrial precinct (the former Teson Trims site at 22-24 Frost Street, for example, which is 2.2 hectares) and in the highway services precinct (15 Tarcombe Street, for example – 0.3 hectares) • Formal or informal subdivision of under-utilised lots such as those at 34-40 Graham Street, for example, where the buildings cover less than 15% of the allotments

These various sites could provide industrial land in a range of sizes and locations around the town and would be sufficient to meet the currently anticipated demand.

It may be prudent for the Growth Management Plan to identify, at least in a notional way, a location for a larger industry that may require a site in Euroa or an expansion area should industrial demand unexpectedly take off in the district. Work completed for Council in 2008 by Urban Enterprise identifies 20+ hectares of land on the eastern side of the Hume Freeway around the existing freeway service station as being suitable for industrial expansion. This parcel meets most of the criteria outlined above, although it is not contiguous with existing industrial land and would represent a new industrial development area.

Figure 9: Area recommended for future industrial land, Industrial Land Study, 2008

Source: Urban Enterprise, 2008

It should be stressed, that there may well be no need for further industrial land in Euroa given the existing vacant and available land. Nevertheless, should land be needed, the site identified above should be suitable but would require extensive servicing.

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Although this site is identified in Council’s existing industrial strategy it does not imply automatic Council support for a rezoning application. In order for Council to appropriately consider any rezoning proposal for a large industrial use, any such rezoning would be accompanied with a combined Planning Application to allow Council to fully assess the scope and impacts of the proposed activity. Accordingly, the onus would remain with the project proponent to undertake detailed site specific investigations and broader strategic analysis in order to support and justify the scope of the rezoning and association land-use and development proposal.

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7 SUMMARY AND CONCLUSIONS

1. Euroa has commercial and industrial precincts that serve the town and the wider district as well as visitors to the area. The Euroa town centre is a thriving multi-functional activity centre with a low level of vacancy. The highway services precinct on the Euroa Main Road also provides a variety of commercial, light industrial and hospitality functions. However, this area has a relatively high vacancy rate and has, in parts, struggled to adapt to a new role following the opening the Freeway bypass of the town in the mid 1990s. The loss of trade has been partially offset with the opening of a freeway service centre adjacent to the town. The industrial precincts of the town contain a variety of farm service activities; small scale manufacturing, such as timber, food and textiles; regional services (freight and passenger transport, recycling); and local business and household services (construction, storage and repairs).

2. The town services a retail trade area of approximately 6,100 people and has annual retail sales of around $64 million (in 2016). The key retail attractor is the IGA supermarket but the town also supports a significant non-retail and hospitality sector. Visitors are estimated in this report to contribute 33% ($21 million) of retail sales.

3. After a period of decline following shocks to the local economy – construction of the freeway bypass and the closure of large local employer, Teson Trims – the population of the town and the trade area is rising once again. Several scenarios for population change are provided in this report but the assessment here has adopted a moderately expansionist rate of growth (growth at the rate of 0.6% per year resulting in 810 extra people by 2036) in order that planning strategy can accommodate the range of likely outcomes.

4. The retail and commercial landscape is changing rapidly as a result of wider economic pressures and technological change. Forecasts of future demand for commercial space are therefore becoming more uncertain. Nevertheless, based on assumptions that recent trends and industry standards will continue, this report predicts that the growth in the trade area population will create demands for new shops and other services in Euroa. These are forecast to amount to growth of approximately 1,520 square metres of new retail space and 650 square metres of other commercial space in the period to 2036. This scale of floorspace may support a further small supermarket in the town towards the end of the period.

5. If developed at ground level with the requisite car-parking, this level of additional floorspace would have a land requirement of approximately 0.5 hectares. Space for these new activities could be found in several ways:

• Occupation of existing vacant space • Development of vacant land or redevelopment of existing housing in the town centre; the Commercially Zoned land extends between McGuiness St and Kirkland Avenue and covers a number of houses that could be redeveloped • Redevelopment of existing commercial buildings to generate a net increase in floorspace • Displacement of activities that do not require a shop-front in the town centre to Industrial precincts or the Euroa Main Road • Reducing the requirement for additional car-parking for new developments

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• Encouraging double storey development to provide room for non-retail activities to locate above shops

Whilst there is scope for some large format retail/wholesale and hospitality activities to locate on the Euroa Main Road, the planning strategy should insist that any new supermarkets should be within the town centre. This stipulation is needed to maintain the integrity and vibrancy of the town centre; to prevent its functions being split, thereby inconveniencing customers and reducing the benefits to business that arise from the increase in foot-traffic and the ability to share costs.

To reinforce the primacy of the town centre and to make clear that Euroa Main Road is intended to be a location for larger format activities, this strip should be rezoned from Commercial 1 to Commercial 2.

6. Recent industrial development activity has resulted in demand for industrial land of, notionally, around 1,500 square metres per year. This is equivalent to perhaps one small industrial lot. If this demand is to continue, notwithstanding the many changes to the industrial economy that are occurring or in prospect, then space for approximately three hectares of industrial land will be required over the period to 2036. Given the existing vacant industrially zoned land and buildings, as well as the potential to sub-divide under- used industrial allotments, there is no need for additional land to be zoned. However, some initiative may be required to create small industrial allotments that could be ready for new occupants.

7. Should a larger industrial investor require a site in Euroa, or should demand be significantly larger than expected, a previous industrial land study has identified a parcel of 20+ hectares on the eastern side of the Hume Freeway adjacent to the existing freeway service station. Alternatively, demand could be directed to nearby towns that have substantial existing industrial land available and which could still provide accessible jobs for Euroa residents.

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8 REFERENCES ABS, 2012, Census of Population and Housing, 2011, Canberra

ABS, 2017, Regional Population Growth Australia, Canberra

Burg, Gerald, 2013, NAB Business Research and Insights, online resource

CEDA, 2015, The Future of Work,

Department of Employment (DoE), 2016, Regional Employment Projections, Canberra

DELWP, 2016, Victoria in Future, Melbourne

DTPLI, 2014, Plan Melbourne, Melbourne

Durrant-Whyte et al, 2015, “The impact of computerisation and automation on future employment”, in CEDA, 2015, The Future of Work, Melbourne

NAB, 2017, NAB Online Retail Sales Index, Melbourne

Strathbogie Shire Council, 2013, Strathbogie Economic Development Master Plan, Euroa

The Economist, 18th January 2014, The Onrushing Wave: the future of employment, London

Urban Enterprise, 2008, Industrial Land Study, for Strathbogie Shire Council

Euroa Growth Management Plan – Economic Assessment