REAL ESTATE

Director, Employment Policy and Systems The Department of Planning and Environment GPO Box 39 NSW 2001 www.planning.nsw.gov.au/retail

Dear Sir / Madam ,

Re: The Draft Standard Instrument Local Environmental Plan Retail Definitions AMP Capital Real Estate (AMP Capital) thank the Department of Planning and Environment (DPE) for the opportunity to comment on the Draft retail land use amendments to the Standard Instrument Local Environment Plan (SILEP). Whilst AMP Capital is supportive of the agenda for broader retail sector reforms, we believe that the Draft SILEP should not progress in isolation, and ahead of broader community consultation, on the NSW Retail Strategy. This submission highlights and details our concerns and recommendations, in respect of the proposed SILEP definitions.

1. About AMP Capital Real Estate AMP Capital is a leading institutional investment house and is part of the ASX listed AMP Limited. On the behalf of the owners, AMP Capital Real Estate is a long-term asset manager and developer of c. $26 Billion of directly held retail, commercial and industrial property assets throughout the Asia Pacific1. We have over 50 years’ experience in managing and investing in direct real estate and employ over 500 real estate professionals. Within NSW, AMP Capital manages eight shopping centres assets (refer Table 1) that: . directly employ over 6,500 people; . have a combined gross lettable floor area of over 57 professional football fields; . have a combined annual turnover greater than $1.9 billion, that in turn has a multiplier effect on NSW’s economic productivity; . are visited by 48.4 million people annually (or the equivalent of 5,530 people going to these centres every hour of the day, 365 days per year!); and . are valued in excess of $3.1 Billion. Alone, these statistics are significant, but of themselves are a very small portion of the total jobs and economic activity the shopping centre industry has created, in toto, throughout NSW. An example of AMP Capital Real Estate’s approach to the long-term management and investment of its real estate assets is the Macquarie Shopping Centre, located in Macquarie Park (within the Greater Sydney Commission’s North District). First developed by AMP in the 1980’s, the been the subject of significant and extensive re-investment over the ensuing decades becoming one of the nation’s top retail destinations.

1 http://www.ampcapital.com.au/institutional-investors/investing-with-us/property

AMP Capital Investors Limited ABN 59 001 777 591

Almost 40 years later, it is an established place for social interaction, employment, learning and economic activity within Sydney’s Global Arc. It is an essential community ‘building block’ and meeting place in Sydney’s second largest business district. Together with the other significant businesses in area, the Macquarie Centre has helped transform Macquarie Park from an industrial area to a high-tech business, retail and education cluster. In combination, this cluster underpins the sustained economic activity for this region as well as providing long term investment returns for its owners, many of which are superannuation funds representing the interests of ordinary Australians.

Asset GLA* (m2) Valuation A$ MAT inc GST No. of persons Annual 2017 (m) A$ Dec 17 (m) employed** Visitations (m) Macquarie Centre 137,998.0 1,850.0 834.3 3,157 17.8 Northbridge Plaza 7,951.8 114.5 116.9 182 2.6 Royal Randwick 15,135.5 172.0 109.1 523 6.0 Marrickville Metro 21,988.3 227.8 230.6 373 5.4 Casula Mall 20,048.4 201.0 207.0 382 6.1 Crossroads 35,418.5 322.4 59.3 301 1.9 21,570.4 130.7 168.9 600 4.2 Marketown 26,835.8 163.5 189.1 1,080 4.5 Total 286,947 3,182 1,915 6,598 48.4 * Gross Lettable Area ** Approx across the whole centre Table 1 – Shopping Centres managed by AMP Capital in NSW

2. Importance of a centres hierarchy and innovation in shopping centres Due to the diversifying nature of retail sector and it’s planning considerations, it is imperative to note that the terms ‘retail policy’ and ‘centres policy’ can no longer be used interchangeably. A strong policy position for maintaining a centres hierarchy will be vital for placemaking and the economic performance of existing centres. In stark contrast, the introduction of more flexible land use definitions may have unforeseen consequences and holds the potential to dilute the centres hierarchy established in the Greater Sydney Commission’s (GSC) Regional and District Plans. AMP Capital strongly supports the centres-based approach which underpins broader productivity, employment and accessibility outcomes as endorsed under The Greater Sydney Regional Plan, ‘A Metropolis of Three Cities’ and the District Plans. A centres-based approach optimises public transport investment and supports the NSW Government’s objective for a 30-minute city. AMP Capital also recognises that a clear and well-defined centres hierarchy is vital for providing certainty for investors as well as allowing them to respond to the pressures of retail innovation. It is important to recognise that sustained investment, which supports the renewal of shopping centres, has flow-on effects to the local community as this activity creates places and experiences that communities desire as well as encouraging further third-party investment in centres and economic activity through the creation of more jobs and training opportunities. The shopping centre sector has been the subject of disruption for decades. Originally constructed as 4 walled fortress islands of concrete and carparks, shopping centres experienced a renaissance from the 1990’s where they began to ‘tear down’ those walls and integrate the shopping centres more fully with their surrounds, blurring the boundaries between the shopping centres and the community facilities provided within them. Large centres are now integrated into the transport hubs for major centres and are connectors to other community facilities (eg including libraries, child care centres, etc), residential dwellings, places of employment and learning as well as transport interchanges (eg the Macquarie Centre).

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3. Key Issues and Recommendations

3.1 Setting retail policy framework prior to introducing new and/or amended land uses under the SILEP AMP Capital submit that the introduction of new and/or amended land use definitions may have unforeseen consequences on established centres. In the context of amending or introducing new retail definitions under the SILEP, it is critically important to note that since shopping centres were first established in NSW, they now trade 7 days a week, they contribute to both day and night time economies, they are places of leisure, entertainment and transactions, and that significantly, the number of visitations to them has increased irrespective of the retail formats and trends experienced by them at any particular point in time. We do not anticipate that trend changing in the foreseeable future as long as retail activities are encouraged within the identified hierarchy of centres. This submission argues that the introduction of new and amended land uses may have unforeseen impacts on established centres. The early adoptions of new retail definitions may undermine, or take for granted, the significant investments made in shopping centres over decades, that has made them vibrant community meeting and interaction places they have become, made possible through the former draft Centre’s Policy (the old SEPP 66). AMP Capital recognises that the proposed amendments to the SILEP retail definitions are a response to a ‘point in time’ recommendation on the future planning for retail uses based upon the findings of the Retail Expert Advisory Committee (REAC)2. Whilst the initial proposed SILEP amendments generally limit permissibility to certain zones, there is no state-wide policy to guide the consideration of planning proposals (Council or developer led) that seek to further amend land use tables or permissibility on a site-specific basis. There is a risk that such planning proposals will be considered prior to the release of: . Mandatory considerations for out-of-centre retail, such as the updating of Local Retail Strategies; . The development of strategic narratives for centres (which will inform Strategic Planning Statements); and . The introduction of the yet to be defined ‘Net Community Benefit Test’ originally introduced by the GSC.

Recommendation 1: The Department of Planning and Environment (DPE) and the Minister not progress the draft amendments to the SILEP retail definitions ahead of broader community consultation on the following key retail reforms, including: . NSW Retail Strategy, which is to reinforce the importance of a centres hierarchy as articulated in all NSW Regional Plans, including the Greater Sydney Region Plan – ‘A Metropolis of Three Cities’, and the District Plans in consultation with the retail industry and its representatives; . DPE release clear directions and guidelines for local government for the preparation of Local Retail Strategies and Local Planning Statements, inclusive of retail narratives; and . The introduction of the as yet detailed, or documented, ‘Net Community Benefit Test’.

Consistent with the GSC’s Regional Plan and the District Plans, The Planning for the Future of Retail Discussion Paper (PFRDP) notes that a Net Community Benefit Test is required when considering the need

2 We are disappointed that the activities of the REAC and the submissions made in response to its recommendations have not been made public.

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for a new centre. The PFRDP further notes that Councils will prepare strategic reviews for new centres and they should be endorsed by the GSC. AMP Capital acknowledge that Councils have a significant role to play in this regard, however, it is often investors that have firsthand experience for the demand for these facilities. Accordingly, it is our view that demand studies should be contestable and undertaken by local Councils in conjunction with industry and that the following matters should be considered to inform retail and commercial planning strategies, as follows: . Existing and future supply and demand for retail floor space within the District, based on the GSC’s growth forecasts; . The accessibility of different types of retail and commercial floor space to communities; . Opportunities to allow retail and commercial activities to innovate; . The impacts of new retail and commercial proposals to enhance the viability and vitality of existing and planned centres; . The need for new retail development to reinforce and enhance the public domain; . The net social, economic and environmental implications of new supply within different locations through a Net Community Benefit Test. Whilst AMP Capital Real Estate supports such an approach we also recognise the need to establish: . An agreed template and standard method (between Government and its agencies as well as the business sectors) around which the net social, economic and environmental benefits are consistently reported and measured against; . That the net community benefit test is prepared by an appropriately qualified independent expert; . That the net community benefit tests are contestable; and . That the net community benefit test be applied to all proposals to grow commercial and retail floorspace in all out of centre areas.

Recommendation 2: a) That a standard template for the Net Community Benefit Test is designed by an independent expert with input from all stakeholders including local authorities, landowners and business; b) That Net Community Benefit Tests are analysed and assessed around standard templates to an agreed brief with input from all stakeholders including local authorities, landowners and business; c) That the Net Community Benefit Test applies to all out of centre retail and commercial floorspace proposals; d) That the Net Community Benefit Test is contestable and must respond to current supply and demand studies.

It is within this context that we make the following observations, comments and recommendations with respect to each of the draft SILEP definition amendments.

3.2 Key issues and recommendations on the draft SILEP definitions

3.2.1 New definition for “artisan premises” The introduction of the new definition is unnecessary, as these retailers already operate and have been approved under the current SILEP. It is clear that the planning system has already adapted to such innovations, evident in approvals for premises such as Messina in the Rosebery Industrial Precinct and microbreweries located in Marrickville’s industrial areas. Approvals for these premises would have been subject to a merit-based assessment to determine the appropriateness of the use and their operational parameters.

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However, if the DPE and the Minister choose to proceed with the draft definition for “artisan premises” ahead of community consultation of the full NSW retail package (as outlined in Recommendation 1), the definition should be amended to establish that the public offering (such as restaurant or sales) is ancillary to the primary purpose (i.e. production/processing). This will ensure that the new land use remains consistent with the SILEP industrial zone objectives.

Recommendation 3: The definition be amended to explicitly reference the ‘principle purpose’ of the land use for production and processing, and the ‘ancillary’ public offerings: A building or place where the principle purpose is to produce and/or process foods and beverages on site, without being fully automated. It can also include the following offerings, which are to remain ancillary to the principle purpose: a) a restaurant or cafe; b) tastings; c) tours; d) sales; and e) workshops

3.2.2 Amended definition for “garden centre” The DPE and the Minister should not progress the draft SILEP definitions prior to broader community consultation on the full NSW retail package, as outlined in Recommendation 1. However, if the DPE and the Minister choose to progress with the draft definition for “garden centre”, the definition should be amended to establish that the sale of products secondary to principle purpose (plants or landscaping and garden supplies and equipment), are to be ‘ancillary’ to that purpose. This will provide clarity and distinction between the “garden centre” land use and the “hardware and building supplies” land use.

Recommendation 4: The definition be amended to explicitly reference the offerings and product types which are ‘ancillary’ to the principle purpose: A buildings or place where the principle purpose is the sale of: a) Plants; and/or b) Landscaping and gardening supplies or equipment

A garden centre may also include an ancillary restaurant or café and the sale of the following products which are to remain ancillary to the principle purpose: a) Outdoor furniture and furnishings; b) Barbeques; c) Shading and awnings; d) Pools, spas and associated supplies; e) Items associated with constructions, maintenance and improvements of outdoor areas; f) Pets and pet supplies; g) Fresh produce

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3.2.3 New definition for “local distribution premises” As highlighted in the PFRDP, hybrid models are blurring the lines between retail premises and warehouses. A firm position on the prohibition of sales in a “local distribution centre” is important to ensure that the use remains consistent with the SILEP industrial zone objectives and that the use does not challenge the primacy of established centres. There is concern over the potential cumulative impacts of “local distribution centre” and “neighbourhood supermarkets”, in detracting from the vital role that centres play in place making and facilitating social connections, as well as supporting strong public transport connections. as outlined in Section 2 of this submission. The DPE and the Minister should not progress the draft SILEP definitions prior to broader community consultation on the full NSW retail package, as outlined in Recommendation 1. If DPE and the Minister choose to progress with the draft definition for “local distribution centre” the following recommendations are made.

Recommendation 5: a) The definition should clearly preclude on site retail sales, as per the proposed wording; b) That “Local distribution centres” should only be permissible in zones where “warehouse and distribution centres” are permissible; and c) That the definition is not to preclude innovation in shopping centres, such as click and collect services or future retail models where sales may not originate in the store.

3.2.5 New definition for “neighbourhood supermarket” The introduction of a new land use to facilitate supermarkets in local centres may have unintended consequences, specifically the ad-hoc overgrowth of neighbourhood and local centres through flow-on investment in complementary retail/business premises permitted in the zone. Floor space caps should be established for “neighbourhood supermarkets” and co-located complementary “retail premises” within an individual neighbourhood centre to ensure that ad-hoc overgrowth of neighbourhood centres does not challenge the established centres hierarchy. “Neighbourhood supermarkets” and other complementary “retail premises” are to service localised demand only. The DPE and the Minister should not progress the draft SILEP definitions prior to broader community consultation on the full NSW retail package, as outlined in Recommendation 1. However, if, DPE and the Minister choose to progress with the draft definition for “neighbourhood supermarket” the following recommendations are made.

Recommendation 6: a) The yet to be defined and contestable Net Community Benefit Test is to apply to all out of centre retail and commercial floorspace proposals and must respond to current supply and demand studies; b) The maximum floor space cap of 1,500sqm for “neighbourhood supermarkets” is to be legislated as a local provision in LEPs to ensure that supermarkets serve localised neighbourhood demands only and do not pose threat to established centres hierarchy; and c) An appropriate maximum floor space cap for co-located complementary “retail premises” floor space for individual neighbourhood centres should apply. The appropriate cap should be considered in Council’s Retail Strategies to prevent the ad-hoc growth of neighbourhood centres.

3.2.6 New definition for “specialised retail premises” incorporating bulky goods premises The primary purpose test relating to the ‘handling, display and storage of bulky items’ should remain to ensure that large format retail is only carried out in appropriate locations and does not undermine existing shopping centres.

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