North Sydney Economic Development Strategy

Stage 1 Scoping study

North Sydney Council January 2016

150328-stage 1 report-160623

SGS Economics and Planning Pty Ltd ACN 007 437 729 www.sgsep.com.au Canberra, Hobart, Melbourne, Sydney

© SGS Economics and Planning Pty Ltd 2016

This proposal has been provided on a commercial in confidence basis. The ideas, methods and sources cited in this proposal are copyright and remain the property of SGS Economics & Planning Pty Ltd. They may not be copied or distributed beyond the requirements of the current commercial transaction without the prior written agreement of SGS.

150328-stage 1 report-160623

TABLE OF CONTENTS

1 INTRODUCTION 4 1.1 Background 4 1.2 Study objectives 4

2 LITERATURE AND TRENDS & DRIVERS REVIEW 5 2.1 Review of economic development literature 5 Summary and key findings 6 2.2 Review of economic trends and drivers 7 Agglomeration economies 7 Restructuring of the economy 8 Agglomeration economies in Sydney 11 Professional services 13 Information and Communications Technology 13 Manufacturing 13 Retail 14 Education 16 Health care 16 Summary and key findings 17 2.3 Literature and trends and drivers summary 17 Literature review 17 Trends and Drivers 18

3 STRATEGY CONTEXT 20 3.1 Review of other Local Government EDS’ 20 Summary and key findings 27 3.2 Review of NSW Government initiatives 28 A Plan for Growing Sydney, 2014 28 Draft Inner North Subregion Strategy, 2007 29 Long Term Transport Masterplan 30 State Infrastructure Strategy (2012) and Update (2014) 31 Employment Lands Development Program 31 NSW Economic Development Framework (2014) 31 Summary of State government documents 31 3.3 Review of North Sydney Council documents 32 North Sydney Community Strategic Plan (2013) 32 North Sydney Local Environmental Plan (2013) 32 North Sydney Development Control Plan (2013) 33 North Sydney Local Development Strategy (2009) 33 North Sydney Centre Review 33 North Sydney Commercial Centre Study (2015) 34 North Sydney Centre Economic Study (2013) 35 North Sydney Traffic and Pedestrian Management Study (2014) 35 North Sydney Marketing and Advertising Campaign (2014) 35 St Leonards/Crows Nest Planning Study – Precincts 1, 2 and 3 35 Public Domain Style Manual and Design Codes (2014) 36

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Public Domain Review (2015) 36 Events Strategy (2015) 37 Affordable Housing Strategy (2015) 37 Careening Cove Masterplan (2015) 38 Education Precinct Study (2013) and Education precinct Public Domain Masterplan (2014) 39 North Sydney Childcare Review (2014) 41 State of the Community Sector (2012) 41 Arts and Cultural Strategic Plan (2012) 41 Summary 41 3.4 Strategy context summary 42

4 CURRENT POSITION: DATA ANALYSIS 44 4.1 Economic profile 44 Industry profile 44 Base case forecasts 47 4.2 Input-output analysis 50 4.3 Market analysis 53 Commercial 53 Industrial 62 4.4 Economic specialisation 63 Location quotient analysis 63 Growth Share Analysis 65 Shift-share analysis 66 4.5 Precinct/Centre profiling 68 North Sydney CBD 72 North Sydney Periphery 73 St Leonards 75 Crows Nest 76 Milsons Point 78 Neutral Bay 79 Pacific Highway 81 Cremorne 82 Royal North Shore Hospital (RNSH) 84 Artarmon Industrial Area 85 4.6 Summary 87 Market analysis key findings 87 Economic Profile key findings 88 Implications 90 Potential Directions 91

5 CONSULTATION 92 5.1 Consultation process 92 5.2 Consultation findings 93 Businesses surveyed 93 The role of North Sydney Council 95 Precinct analysis 97 Role of centres in LGA 99 Office sector 100 Retail sector 106

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Tourism 108 Education 108 5.3 Summary 108

6 STAGE 1 – SUMMARY FINDINGS 110 6.1 Literature and trends and drivers 110 Commercial office 110 Retail 110 Education 111 Health 111 6.2 Strategy context summary 111 Role of Council in Economic development 111 Existing strategies and documents 113 6.3 Current position 114 Economic profile 114 Market dynamics 116 6.4 Key issues and next steps 118

7 STAGE 2 – ECONOMIC DEVELOPMENT STRATEGY 121 Vision and goal development 121 Strategies and actions 121 Draft strategy document 122 Incorporation of feedback and final strategy. 122

REFERENCES 123 APPENDIX 1 126 APPENDIX 2 130

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1 INTRODUCTION

1.1 Background

The North Sydney LGA plays an important role in the economic geography of Sydney, forming a part of ‘Global Sydney’ and the ‘Global Economic Corridor’ under the NSW Government’s latest metropolitan strategy A Plan for Growing Sydney.

The primary objective of the Economic Development Strategy (Strategy) is to clearly define the Council’s role in economic development, articulate an economic vision and establish a coordinated plan for economic development in a comprehensive policy document.

The key economic clusters in the North Sydney LGA include North Sydney CBD, St Leonards, Crows Nest and Cremorne. The St Leonards centre straddles the North Sydney, Willoughby and Lane Cove Council areas.

One of the driving factors for the Council to develop an Economic Development Strategy is addressing the decline of commercial floor space in the B4 Mixed Use zone. In a report to Council in 2014, research indicated that there has been a loss of around 80,000 square metres (as approved) of commercial floor space in the B4 Mixed Use zone since 2007. These losses have predominantly occurred in St Leonards/ Crows Nest, Milsons Point and the periphery of North Sydney CBD. The losses are the result of there being little interest in the provision of employment floor space in recent mixed use developments, with developers seeking to maximise the amount of residential floor space. The Economic Development Strategy should develop recommendations to encourage greater commercial floor space within the new developments in the B4 Mixed Use zone.

While the focus of the economic development strategy will be to plan to ensure the vitality and sustainability of local economic activities it will be important to recognise the economic context of the North Sydney LGA. LGAs form an important part of a broader network of economic activity and hence economic development strategies need to account for the economic context and the role the North Sydney LGA plays in the surrounding subregion.

1.2 Study objectives

The primary objective of the Economic Development Strategy is to outline Council’s vision for economic development in a consolidated policy document. The document will also clearly define Council’s role in economic development. The Economic Development Strategy will set a coordinated plan and function as a comprehensive policy document which facilitates the continued economic growth of North Sydney.

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2 LITERATURE AND TRENDS & DRIVERS REVIEW

Overview

This section provides an overview of economic development literature, as well as broader macroeconomic trends and drivers across different industries. The purpose of this task is to ‘set the scene’ and provide a backdrop, against which analysis and future economic development actions can be sense-checked.

2.1 Review of economic development literature

Literature related to agglomeration can generally be traced back to Marshall’s Principles of Economics in 1890. Marshall described the conceptual benefit which firms can gain by locating in a particular location. There have been a number of recent contributions on cities and economic geography which seek to understand the concepts identified by Marshall in a contemporary context and provide some intelligence about the underlying contributors to a successful urban economy. The literature generally argues that density and diversity are the hallmarks of successful urban economies based on knowledge and creative industry jobs.

According to Moretti (2012, p.6), old manufacturing centres are disappearing as ‘new innovation hubs’ become the ‘new engines of prosperity’. Technological advances have reduced the value of physical goods but increased the value of human capital and innovation (Moretti 2012, p. 10), with job growth in developed economies now highest in knowledge-based industries. These include research and development, design, engineering, marketing, advertising, writers, composers as well as more traditional jobs such as lawyers, bankers, financiers, doctors and management consultants (Reich 2003). These jobs are involved in analysing, manipulating and communicating (Reich 2003). The second category of growing employment is personal services such as restaurant workers, taxi drivers, security guards and hospital attendants (Reich 2003). Growth in employment within these jobs are generated by the growth of the knowledge jobs as the knowledge workers are the main consumers of these services. According to Moretti (2012), each knowledge job generates five indirect jobs which comprise these service jobs.

According to Sassen (2005), globalisation has dramatically shifted the flow of economic processes (capital, labour, goods, raw materials, etc.) from being cross-border inter-state flows, whereby the key articulators were nation states, to ones whereby other spatial units, notably cities are the principle actor. As a result cities world over are attracting people in large numbers by offering improved economic (and often social) opportunities when compared to neighbouring or far-flung rural areas.

Filion (2001, p. 66) maintains that unlike ‘mono or less diversified industrial settings’, economically diverse centres have been recognised as offering more opportunities and being more resilient within the broader economy. However, in order for diverse, mixed-use centres to be successful, there needs to be ‘a diversity of activities, with a strong office employment and retail component, and development at a density that is much higher than the suburban norm’ (Filion 2001, p.142). These ideas are similarly reiterated by Florida (2003) who writes that vibrant, diverse, mixed-use centres characterised by high density residential, office employment and retail are attractive to creative workers because they foster interaction and knowledge sharing (p. 249). He notes that ‘economic growth is powered by creative people, who prefer places that are diverse, tolerant and open to new ideas’, and thus cluster in vibrant and active centres. Moretti (2012) also concludes that social interactions among workers increases innovation and productivity and by clustering innovators and the creative class, creativity will be fostered and workers will be more successful.

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Glaeser (1998) highlights that as urban density increases, interaction between people also increases and they develop and learn through their interactions. Desrochers and Leppälä (2011) further develop this idea, highlighting that creative individuals have more opportunity to address problems in economically diverse environments where there are a range of people with different expertise. Therefore, economically diverse environments encourage innovative behaviour, which in turn further attracts skilled workers and facilitates economic growth.

Hutton (2010), like Moretti (2012) also explores the new economy of the inner city, ‘the recombinant economy’, which has been increasingly observed in a number of global cities including Sydney. The resurgence of the inner city has been driven by an increasing preference of new economy workers to live and work in the inner city and gentrification of both housing and employment can be observed. Hutton (2010) identifies eight key trends within the recombinant economy (refer to Table 1). The economy of the inner city comprises both ‘old’ and ‘new’ economy industries which exhibit a range of relationships including collaboration, competition and co-existence (Hutton 2010, p. 279). This is generally observed within former industrial areas which contain some remnants of its industrial past, alongside new knowledge and creative uses.

TABLE 1. THE RECOMBINANT ECONOMY OF THE NEW INNER CITY: SYNERGY, SYNTHESIS, AND INTERDEPENDENCY IN P RODUCTION Category Characteristics

1 ‘Sublation’ of restructuring episodes and  Pre-Fordist production (‘relics’) production regimes  Fordist production (‘residuals’)  Post-Fordist production (office based intermediate services and cultural production and creative industries) 2 Co-presence of ‘old’ and ‘new’ economy  Collaboration (subcontracting) industries  Competition (dislocation and succession)  Co-existence 3 ‘Hybridised’ occupations in specialised  Synthesis of arts, design, and technology (computer graphics and imaging, other ‘new production media’) 4 Synthesis of service-type and manufacturing  Design and fabrication of ‘cultural products’ processes  Industrial design, architecture, fashion 5 Space and industrialisation  ‘Industry-shaping power of space’ and ‘space-shaping power of industrialisation’ 6 Traditional production networks and digital  Localised input-sourcing in the ‘new industrial district’ systems  Increasing use of internet and digital technologies for sourcing 7 Production-consumption interface in the  ‘Amenity seeking’ behaviour of creative firms new industrial district  Role of new industries in stimulating demand 8 Industry and housing linkages  Mixed-use activity in live-work, work-live, loft conversions  Dislocation associated with property market behaviour Source: Adapted from Hutton, 2010 (p. 280)

A critique of this literature is that it tends to generalise the potential of cities – both within and between them. Major structural forces contribute to the success or otherwise of cities and their component areas. However, for inner city areas with robust economic prospects or potential the message is clear. The successful modern urban economies are built around knowledge and creative industries, and attracting firms and workers in these industries, depends on economically diverse, dense and mixed use environments. When consistent with orderly planning that aims for sustainable transport outcomes, this maximises the return on public investment in infrastructure and protects opportunities for vital urban activities.

Summary and key findings In the context of this literature, North Sydney LGA is well-located in close proximity to the ‘New Inner City’ where there is expected to be strong employment and residential growth associated with the resurgence of the inner city. There will be increased demand for mixed-use activity in centres within the inner city of Sydney to accommodate both residential and employment growth. Former industrial areas are likely to be the focus for gentrification, particularly for creative uses, however this may flow through to areas within North Sydney.

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2.2 Review of economic trends and drivers

Agglomeration economies Agglomeration economies are being increasingly observed within Australian cities.

‘Agglomeration economies’ is a term used in spatial economics to describe the benefits that flow to firms from locating in areas that have a high density of economic activity. The benefits that arise from locating in a denser economy include:

 economies of scale and scope: with a larger customer base firms are able to develop efficiencies through operating at a larger scale. This also enables firms to focus the scope of their expertise in a particular field, gaining improved efficiencies through specialisation.  deep and diverse pool of clients/employers/employees: A competitive marketplace presents people and firms with a multitude of potential options. This frees them from reliance on a single (or limited) client or employer base, allowing firms to better align their specific skills, again improving productivity.  technological spillovers: With multiple firms located together there will be a higher level of technological and knowledge spillovers and transfers, which will help bolster innovation. This transfer occurs both directly, through stronger supply chain linkages and connections between local firms, and indirectly, when skilled labour moves between firms and transfers knowledge, as well as through incidental exchanges.

These benefits, while experienced by all firms and residents, have particularly benefitted those in the advanced business services sectors, with macroeconomic conditions and Australia’s position in the world economy allowing these sectors to be competitive in producing services higher up the global value chain.

Urbanisation and localisation are two distinct effects at work in relation to agglomeration.

Literature related to agglomeration can be traced back to the work of Marshall in 1920. Marshall described the conceptual benefit which firms can gain by locating in a particular location. Extensive literature since has attempted to describe and quantify the phenomena. Essentially, this literature suggests there are two distinct effects at work. These are:

 Urbanisation economies involve economic interactions between industries and arise from a large number of different industries located in close proximity to each other; and  Localisation economies involve economic interactions within a particular industry and arise from a large number of firms within the same industry cluster in the same location.

These benefits vary for different types of firms and sectors of the economy. However, three broad characteristics can be used to identify which firm and services benefit greatest. These are broadly defined as: scale, catchment size and specialisation/‘knowledge intensity’. For example, a large finance firm benefits significantly from being centrally located and thus typically locates in large CBDs. However, local tax accountants, while in a similar sector, benefit from being dispersed and servicing a local catchment, while some specialised larger accountancy firms do still benefit from being more central. This is similar for other sectors of the economy such as arts, healthcare, education and retail.

Agglomeration also helps to improve the quality of labour inputs available by increasing the stock of human capital.

The OECD describes human capital as productive wealth embodied in labour, skills and knowledge. If a large range of jobs is on offer, a worker can search through these opportunities and best match their skills to the available job, thus maximising their acquisition of skills and experience. Further to this, they have the opportunity to work in a number of different jobs and hence gain a range of experiences (which can be seen as on-the-job investment in their education), which will also translate into higher productivity. It is important to note however that realising the benefits that agglomeration economies present is dependent on the skills of the available workforce being appropriate to the needs of firms. Therefore education is essential, and in the case of developed cities like Sydney,

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where economic activity is higher up the value chain, competitive advantage is reliant on access to a large, highly skilled, yet diverse labour market.

Restructuring of the economy At the highest level globalisation is having a profound impact on the structure and economies of cities throughout the world.

Populations are increasingly transient, with labour sought by employers the world over, irrespective of geographic boundaries. Globalisation has made personal migration easier than ever before, not only between countries but within them.

Globalisation has also underpinned the continued urbanisation of Australia. The Australian economy has been significantly boosted in recent years by a mining boom, and agriculture has always been an important industry, however the majority of the country’s wealth is generated within its cities. Australian cities are generally considered to have benefited from the process of globalisation that has opened the world up for business and eroded national boundaries in the financing, production, sale and distribution of goods and services. This eroding of boundaries has led to international production, trade and investments increasingly being conceptualised and organised within so-called ‘global value chains'.

Australia’s economic backbone has transitioned from one built on manufacturing to one predominately supplying services.

The decoupling of the value chain and movement of production activities across national borders has had a profound impact on the structure of Australia’s economy. Australia’s economic backbone has transitioned from one built on agriculture and manufacturing to one predominately supplying services, with competitive advantage generally achieved through specialising in activities higher up the value chain, such as in advanced business services in the ‘Finance and insurance’, as well as ‘Professional, scientific and technical service industries’ (Figure 1). The growing significance of these service industries in Sydney is evident in the continued strong demand for office space in the CBD and selected office centres and business parks in accessible suburban locations.

FIGURE 1. INDUSTRY INCOME SHAR E OF SYDNEY’S GDP FO R SELECTED SECTORS

Source: SGS Economics & Planning, 2014.

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In these high value-add sectors, competitive advantage is gained and maintained by offering environments that promote innovation and are able to attract the high levels of skilled labour necessary to enable high productivity firms to flourish (agglomeration economies).

Knowledge intensive jobs have, and are projected to represent an increasing share of the economy in the future.

At a Greater Sydney level, the proportion of jobs in the industrial sector is predicted to decline although the actual number of jobs is still expected to increase through to 2036. Job growth is not expected in traditional industrial sectors but rather in highly specialised and technological manufacturing (advanced manufacturing). As a consequence an increasingly skilled workforce will be required.

Business supply-chains are fragmenting.

Supply-chains have become more fragmented and business components are often scattered across wide areas – sometimes internationally. An example of this change can be seen in the motor industry. Once concentrated in cities, the motor industry has evolved into a process where design, manufacture, and assembly occur in many different locations worldwide. All this has heightened time-based competition and flexibility, with implications for the functional characteristics and spatial disposition of industrial activity.

Productivity is significantly affected by the size and structure of cities, particularly in terms of transport accessibility and connectivity.

The concepts of urbanisation and localisation are important here. In developing economies, greater investment in technology and human capital improvements (skills and education) may be prioritised in generating a greater mass of economic activity. In developed economies, where additional sources of competitive advantage must be secured, the question of localisation becomes paramount, with the way cities are structured and how they function being key to productivity enhancements.

A city which is large but dysfunctional in, for example, a transport sense will not optimise its potential for agglomeration economies. In such an example, ‘city shaping’ transport investments (such as major freeways, metros and commuter railway infrastructure) and interventions to create employment nodes in strategic locations are of vital significance.

The macroeconomic forces that promote specialisation of components of the global value chain are having distinct spatial implications across the cities of the world, and Sydney is no exception. In recent years there has been an acceleration of the centralisation of jobs in Sydney, with agglomeration economies strongly in evidence. Highly connected central Sydney areas have benefitted which includes North Sydney.

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Access to an appropriate labour force is key for business location decisions.

Firms need to locate in an area where there is an available workforce that matches its skill requirements. The services sector needs access to an educated labour pool, while retail does not necessarily require access to highly skilled residents. Greater Sydney is broadly broken up into six self-contained labour markets based on journey-to- work patterns evident in the 2011 ABS Census, as depicted in Figure 2.

FIGURE 2. GREATER SYDNEY LABOUR MARKETS

Source: SGS Economics and Planning, 2015.

The broader Sydney region houses almost 1.86 million jobs. More than half of these jobs are located in the ‘inner’ Sydney self-contained labour catchment, which stretches from Port Botany in the south east, to Bankstown in the south-west, Hornsby in the north-west and the Northern Beaches to Sydney’s north-east. There are 1.2 jobs for every resident who lives within this inner catchment of Sydney, with only 12 per cent of inner residents travelling beyond the catchment for employment. This catchment houses not only the job rich Sydney CBD, but also the employment clusters of North Sydney, St Leonards, Chatswood, and Macquarie Park.

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Agglomeration economies in Sydney

North Sydney is located in a highly agglomerated area of Sydney

Agglomeration benefits can be measured by reference to differences in ‘effective job density’ (EJD). The EJD score of a locality is given by the number of jobs in that location plus all the jobs that can be reached from that location divided by the travel time involved, weighted by mode split. Here, jobs are a proxy for economic or business mass. EJD across the Sydney metropolitan area is shown in Figure 3.

The darker the blue, the more jobs that can be accessed within a given travel time. A worker residing in a dark blue area has access to greater employment opportunities, while a business in one of these areas likely benefits from having access to a greater pool of labour. North Sydney LGA has a high EJD associated with its proximity and strong transport links to the Sydney CBD, St Leonards, Chatswood and Macquarie Park as well as the presence of North Sydney CBD within the LGA. There is also likely to be significant demand for residential development in these areas because of the associated employment opportunities.

FIGURE 3. SYDNEY EFFECTIVE JOB DENSITY

Source: SGS Economics and Planning, 2015

…and also exhibits high levels of labour productivity.

Labour productivity is the amount of income (wages and profits) generated for each hour worked. In 2012-13 the whole of Sydney’s labour productivity was $81, i.e. for every hour worked, $81 in income is generated. The CBD has labour productivity of around $100. The Global Economic Corridor (including North Sydney) and the Parramatta corridor (with concentrations of higher value jobs) and areas with industrial clusters also exhibit high levels of labour productivity (refer to Figure 4).

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FIGURE 4. LABOUR PRODUCTIVITY

Source: SGS Economics and Planning

Analysis has been undertaken at the Statistical Area 2 (SA2) level. Table 2 presents a range of statistics for the ten top SA2 areas contributing to employment growth. These ten SA2s contributed over 40 per cent of all employment growth in Sydney between 2007-08 and 2012-13. In the North Sydney - Lavender Bay SA2, employment grew by almost 6,000 jobs over the period and has the second highest labour productivity ($88) and the highest average weekly hours worked (37). The population growth of this SA2 was also strong with an increase of almost 1,500 new residents over the past five years.

TABLE 2. HIGHEST EMPLOYMENT GROWTH CONTRIBUTING SA2 IN SYDNEY 2012/13 Growth past 5 years

Average Labour Total Total Statistical Area 2 hours Employment Population Productivity employment population /week

Sydney - Haymarket - The Rocks $100 36 329,343 26,497 28,678 3,186 North Sydney - Lavender Bay $88 37 57,408 11,005 5,637 1,471 Pyrmont - Ultimo $77 35 40,992 21,384 4,789 2,080 Macquarie Park - Marsfield $79 35 49,026 20,380 4,240 1,618 St Leonards - Naremburn $69 36 34,136 10,282 3,143 974 Surry Hills $66 34 30,684 17,251 2,850 905 Parramatta - Rosehill $76 33 53,030 26,207 2,662 4,930 Newtown - Camperdown - Darlington $54 32 21,529 23,673 2,533 1,352 Randwick $52 32 18,598 30,483 2,270 1,621 Chatswood (East) - Artarmon $67 33 29,218 26,342 1,947 1,453 Source: SGS Economics and Planning & Regional Population Growth, Australia (Cat. No. 3218.0)

North Sydney benefits from its position within Global Sydney and the Global Economic Corridor. Employment within North Sydney is a significant contributor to the economy from a productivity sense and it is important to keep this in mind when considering the future of the centre.

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Professional services Sydney’s competitive advantage is centred on high value-add services.

In the global economy Sydney’s competitive advantage is centred on its concentration of high value adding finance and insurance, and professional services firms located in the city’s CBD. These firms are well connected to one another, to global markets (through sea and air ports), as well as to a large and diverse skilled labour market. As a result these firms are highly productive and highly profitable.

…and business parks remain an attractive alternative to traditional employment centres.

Across Sydney, several business parks have been developed over the last 10 to 20 years. Successful examples of businesses parks in Sydney are Norwest and Macquarie Park. The success of a business park location is reliant on numerous factors. The site needs to offer ‘good business park fundamentals’ including a high quality external environment, a high quality internal environment, motorway access, multi-modal access and services, proximity to a skilled labour force and executives, proximity to supply chains, high quality digital connectivity and other infrastructure serving the site and a variety of on-site support services and facilities. These centres, particularly Macquarie Park, is a major competitor for North Sydney CBD.

Information and Communications Technology The global adoption of advanced ICT into the operations of business is a significant driver of social and economic change.

The ICT sector has changed the nature of economies in terms of the way in which goods are marketed, the way in which they are delivered and the way in which people access and share information. The ICT sector has impacted the nature and performance of other sectors, resulting in productivity efficiencies.

Recent trends in the ICT sector include:

 Convergence of these sectors into the ‘Digital Economy’  Increasing adoption of advanced information technologies across a variety of sectors and subsectors  Proliferation of small and medium sized enterprises in this sector driving innovation and job creation.

Sydney plays a large role in the ICT sector, benefiting from a relatively high share of the nation’s ICT sector, accommodating 39% of the nation’s ICT businesses and 40% of ICT industry value added output.

Manufacturing Whilst manufacturing jobs growth is slowing, manufacturing can still play a pivotal role in the Australian and Sydney economy.

At a Greater Sydney Metropolitan level the proportion of jobs in the industrial sector is predicted to decline although the actual number of jobs is still expected to increase through to 2036. Job growth is not expected in traditional industrial sectors but rather in highly specialised and technological manufacturing (advanced manufacturing). As a consequence an increasingly skilled workforce will be required.

Manufacturing’s decline has been well documented, and Australian cities have drawn on their competitive advantage and increasingly orientated themselves around high value add service based industries. Compounding the impact of this macroeconomic restricting on the viability of local manufacturing has been a high Australian dollar and globally soft economic conditions that have reduced demand (Adonis, 2013). However the experience of other manufacturing nations has been that manufacturing can still play a relevant role in the economy if production moves up the value chain.

In the global value chain, developing nations (for example China) initially utilise their relatively cheap labour to manufacture less sophisticated, more labour intensive products. Over time, as their manufacturing base expands there is a move towards robotics, intellectual property and other attributes to produce goods and services with a

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greater degree of sophistication (as witnessed in Japan and Korea). This specialisation in industries of comparative advantage is impacting all economies and industries, acting as a catalyst for them to evolve from their historical economic configuration into dynamic, adaptive and internationally competitive industries.

A new technological trend for manufacturing is 3D printing or ‘desktop manufacturing’, allowing for the ‘thinking’ and the ‘making’ to be more closely integrated. The technology is in its formative stages but it could see advances in high-tech and niche manufacturing.

There is the potential for manufacturing in Australian cities to evolve.

If the resurgence of so-called ‘urban manufacturing’ in the United States is an indicator, this trend could soon be realised in Australia. Although the research literature is still developing, observed growth in urban manufacturing in U.S. cities is variously attributed to:

 changing global cost structures – rising costs of energy, transport and overseas labour and the risks in these supply chains are making outsourcing less competitive in some circumstances;  fears over protection of intellectual rights;  local linkages to knowledge industries (for example, in the high end garment trade); and  changing consumer preferences, with growing interest in fair trade, sustainability, local origination and customisation. This has been led by high income knowledge sector clients, but may now be spreading to more mainstream markets.

Training and the retention of highly skilled labour is a major challenge for the growth of the manufacturing industry.

With innovation and creativity at the core of manufacturing in developed economies, leading executives from the industry are identifying the training and retention of highly skilled labour as a major challenge. Furthermore, a recent report from the World Economic Forum (2014) noted the importance of superior science and technology research and development, particularly through partnerships with universities and other institutions, as essential to national competiveness and global competitive advantage in the manufacturing sector.

These trends appear to be playing out in the Sydney manufacturing market, with two main drivers and trends apparent. Firstly, there is a continued relocation of big space manufacturers to the outer western region. Secondly, there is strong investor demand for institutional grade assets, particularly from smaller tenants who are demanding floor plates below 2,000 square metres (Colliers, 2014). For such manufacturers, proximity to residential areas is appealing to occupiers looking to attract and retain staff (Colliers, 2014).

From the literature (and to a lesser extent the trends observed in the Sydney manufacturing market), the urban manufacturing sector appears to operate and prosper on many of the same spatial attributes central to the success of advanced business services, namely the benefits gained through agglomeration economies. Notwithstanding, urban manufacturers occupy a lower rung on the value add ladder and are at significant risk of displacement from the inner and central ring locations that nurture them, with the threat of being outbid in the market for productive space and pressure for residential rezoning ever-present.

Retail Perhaps more than any other industry, the retail sector has been experiencing important shifts over the past couple of decades.

These shifts include the expansion and predominance of regional and super-regional centres with entertainment functions, numerous full-line supermarkets and department and discount-department stores. Some of the more discerning trends have included:

 the shift towards longer trading hours, especially weekend trading;  increasing predominance of bulky goods centres located away from traditional centres;

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 increases in online retailing and the need for associated warehousing, including smaller ‘satellite’ distribution centres; and  the changing character and function of centres – ethnic, ‘eat-streets’, cafe precincts, fresh food centres, etc.

The rise in larger big-box shopping centres and the increase in retailing trading hours have fundamentally changed the ‘where’ and ‘when’ of consumer shopping habits. Demand has drifted towards the weekend and the importance of smaller neighbourhood, local and convenience centres around train stations and some main streets has diminished (Wood et al., 2012). This problem has been exacerbated by the difficulty of obtaining car parking in traditional centres relative to enclosed shopping centres; although, in recent years this trend has been arrested and reversed for food retailing. High quality café precincts and eat streets have emerged and continue to emerge across traditional centres, leveraging off the diverse and interesting fine grain pattern of historical centres.

Online shopping in Australia has become and continues to become more prominent.

In line with improvements in ICT and other technologies, an increasing share of goods and services are purchased online. The current growth in online platforms is likely to alter the structure of retail supply chains. For example, online retail businesses are likely to focus on a wholesale and distribution models as opposed to retail premises. Given the fact that retail premises are located near centres of population or activity while wholesale and distribution centres are typically located in regional areas, this trend is likely to alter the spatial distribution of premises involved in retail supply chains.

In 2010, fuelled by strong growth in online sales, it was predicted that online shopping would continue to grow and take over traditional ‘bricks and mortar’ retailing. However part of this change was both structural and cyclical. Online retail sales growth, have been slowing over the past three years (refer to Figure 5) which may be due to changes in the Australian Dollar. It is also expected that domestic suppliers will increase their share of online retailing as they embrace it and a lower Australian dollar decreases the purchasing power from other western countries, such as the US suppliers.

FIGURE 5. GROWTH IN ONLINE RETAIL (% MONTH ON MONTH), SEPTEMBER 2015

Source: NAB 2015

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Education

Education is Australia’s fourth largest export industry and largest non-resources export with a $17.6 billion revenue in 2014

International students comprise one fifth of the student body and the number of international student enrolments has increased by 5.8% between 2013 and 2014 (Department of Education and Training 2015). In 2014, international students in the higher education sector reportedly generated $11.7 billion for the Australian economy (Department of Education and Training 2015).

The International Education Advisory Council estimates Australia will be hosting 520,000 international students by 2020, a 30 per cent increase on today’s numbers. The Council estimates this will contribute $19.1 billion to the local economy, which will bring direct benefits to retailers, accommodation providers and community enterprises (International Education Advisory Council 2013).

Future trends in the university sector will have an impact on demand.

Research by Ernst and Young identifies five key trends driving changes which will offer both opportunities and challenges in the higher education sector (Ernst and Young 2013).

 Democratisation of knowledge and access. The traditional role of Western universities as the guardians of ‘knowledge’ has been challenged by increased access to higher education as information is made widely available online and higher education participation rates increase in developing countries.  Competitive markets and funding. Fierce competition for students and funding will continue to intensify, as universities compete for both domestic and international students, as well as government and new sources of funding. Uncapping of enrolments under the Rudd-Gillard government increased competition for domestic students; however, the current government has raised the possibility of reversing the demand-driven model and returning to a system of capped enrolments.  Digital technologies. While universities will likely remain campus-based, courses will be increasingly taught online, for example via Massive Open Online Courses, and digital technologies will be integrated with campus-based learning.  Global mobility. Emerging markets, and the traditional sources of international students, including South Korea, Malaysia and China, will become Australia’s global-scale competitors in the international student market, as global university brands and international branch campuses emerge and academic staff and students are increasingly sourced from overseas.  Integration with industry. As industry increasingly offers professional certification, it will begin to compete with universities in the certification of students and the delivery of research and course content, and universities will partner more closely with industry in research activity.

Tertiary education facilities with strong research links can form industry partnerships and create demand for office and industrial floorspace, often in the form of integrated business parks. There may be opportunities in North Sydney with the presence of the Australian Catholic University, however this trend will likely create more competition for North Sydney in terms of other centres across Sydney attracting integrated business parks such as Macquarie University and the Australian Technology Park.

Health care The healthcare and social assistance sector is a rapidly growing employment sector in NSW and Australia.

The demand for health infrastructure is driven by trends in population growth and the demography of the region, particularly age. Nationally, the most significant growth in healthcare and social assistance sector has been at the opposite ends of the age spectrum. Residential care and child care services are the two biggest growth industries.

As the healthcare and social assistance sector is driven by population demography, the sector is predominately located around population centres. There is one major existing health and medical precinct near North Sydney (in

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the Willoughby LGA) at St Leonards (Royal North Shore Hospital Precinct) and this is likely to continue to service the North Sydney LGA.

Summary and key findings Key findings and opportunities for North Sydney:

 North Sydney is located in a highly agglomerated area of Sydney with high levels of productivity associated with strong links to Global Sydney and within the Global Economic Corridor. Naturally, North Sydney is also an attractive location for residential development due to its high EJD and therefore the greater access to employment opportunities compared to other areas of Sydney. The centre is of economic importance and the regional context and positioning of North Sydney will be an important consideration in determining the future of the LGA and key employment centres.  North Sydney is well placed to accommodate the continued growth of high-value professional services as well as the growth of new industries.  Business parks remain an attractive alternative to traditional centres and Macquarie Park will likely be a key competitor for North Sydney as a commercial office market (further discussed in Section 4.1 of this report). These centres share the same labour market and this will increase competition.  There will likely be opportunities for North Sydney to take advantage of the growing creative sector including ICT industries.  The impact of the retail trends on North Sydney will depend on the type of retail which is concentrated within the various retail centres (convenience or comparator retail). Comparator retail (such as fashion and specialty retail) is more likely to be vulnerable to shifts rather than convenience retail. Retail will also be susceptible to shifts within the number of workers within commercial centre, but also supported by population growth.  Education is a major export industry for Australia and with the Australian Catholic University located within the LGA there may be opportunities to leverage this and develop research links, however this trend will likely create more competition rather than opportunities for North Sydney with other centres across Sydney attracting integrated business parks such as Macquarie University and the Australian Technology Park.  Health care is a major industry of growth across Australia due to the ageing population and there could be opportunities for North Sydney to leverage off the St Leonards health and education precinct as well as provide local services for the community.

2.3 Literature and trends and drivers summary

Literature review The economic development literature generally argues that density and diversity are the hallmarks of successful urban economies based on knowledge and creative industry jobs. Old manufacturing centres are disappearing as ‘new innovation hubs’ become the ‘new engines of prosperity’. Economic geography literature is generally focused on activity at a city level rather than economic geography within the city, however a number of implications for North Sydney can be drawn from this.

According to Moretti (2012, p.6), job growth in developed economies is now highest in knowledge-based industries. The second category of growing employment is personal services such as restaurant workers, taxi drivers, security guards and hospital attendants (Reich 2003). It will be important for North Sydney to also consider the importance of personal service jobs which support these knowledge jobs. A decline in knowledge jobs would have flow-on effects for these jobs.

Sassen (2005) highlights that cities the world over are attracting people in large numbers by offering improved economic (and often social) opportunities when compared to neighbouring or far-flung rural areas. North Sydney is well placed within Global Sydney and the Global Economic Corridor and can draw on a large labour pool.

Filion (2001, p. 142) believes that diverse, mixed-use centres to be successful, there needs to be ‘a diversity of activities, with a strong office employment and retail component, and development at a density that is much higher

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than the suburban norm’. These ideas are similarly reiterated by Florida (2003) who writes that vibrant, diverse, mixed-use centres characterised by high density residential, office employment and retail are attractive to creative workers because they foster interaction and knowledge sharing (p. 249). In order to attract knowledge and creative workers, North Sydney will need to ensure that the commercial centres are amenity-rich, vibrant and diverse.

According to Hutton (2010), the resurgence of the inner city has been driven by an increasing preference of new economy workers to live and work in the inner city and gentrification of both housing and employment can be observed. The economy of the inner city comprises both ‘old’ and ‘new’ economy industries which exhibit a range of relationships including collaboration, competition and co-existence. This is generally observed within former industrial areas which contain some remnants of its industrial past, alongside new knowledge and creative uses.

North Sydney LGA is well-located in close proximity to the ‘New Inner City’, where there is expected to be strong employment and residential growth associated with the resurgence of the inner city. There will be increased demand for mixed-use activity in centres within the inner city of Sydney to accommodate both residential and employment growth. Former industrial areas are likely to be the focus for gentrification, particularly for creative uses; however this may flow through to areas within North Sydney.

The successful modern urban economies are built around knowledge and creative industries, and attracting firms and workers in these industries, depends on economically diverse and dense environments. When consistent with orderly planning that aims for sustainable transport outcomes, this maximises the return on public investment in infrastructure and protects opportunities for vital urban activities. North Sydney should take this into consideration when developing its economic development strategy.

Trends and Drivers At the highest level globalisation is having a profound impact on the structure and economies of cities throughout the world. Australia’s economic backbone has transitioned from one built on manufacturing to one predominately supplying services. Knowledge intensive jobs have, and are projected to represent an increasing share of the economy in the future. Productivity is significantly affected by the size and structure of cities, particularly in terms of transport accessibility and connectivity. Access to an appropriate labour force is key for business location decisions.

Agglomeration economies are increasingly being observed in Australian cities. Urbanisation and localisation are two distinct effects at work in relation to agglomeration. Agglomeration also helps to improve the quality of labour inputs available by increasing the stock of human capital. North Sydney is located in a highly agglomerated area of Sydney with high levels of productivity and is well placed to accommodate the continued growth of high-value professional services as well as the growth of new industries.

Sydney’s competitive advantage is centred on high value-add services and business parks remain an attractive alternative to traditional employment centres. Macquarie Park will likely be a key competitor for North Sydney as a commercial office market (further discussed in Section 4.2 of this report).

The global adoption of advanced ICT into the operations of business is a significant driver of social and economic change. There will likely be opportunities for North Sydney to take advantage of the growing creative sector including ICT industries.

Whilst manufacturing jobs growth is slowing, manufacturing can still play a pivotal role in the Australian and Sydney economy. There is the potential for manufacturing in Australian cities to evolve. Training and the retention of highly skilled labour is a major challenge for the growth of the manufacturing industry. It is unlikely that North Sydney will have the capacity to accommodate manufacturing employment but there may be opportunities to leverage off industrial precincts in neighbouring LGAs.

Perhaps more than any other industry, the retail sector has been experiencing shifts over the past couple of decades. Some of the more discerning trends have included:

 the shift towards longer trading hours, especially weekend trading;  increasing predominance of bulky goods centres located away from traditional centres;

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 increases in online retailing and the need for associated warehousing, including smaller ‘satellite’ distribution centres; and  the changing character and function of centres – ethnic, ‘eat-streets’, cafe precincts, fresh food centres, etc.

Online shopping in Australia has become and continues to become more prominent. In 2010, fuelled by strong growth in online sales, it was believed that online shopping would continue to grow and take over traditional ‘bricks and mortar’ retailing. However part of this change was both structural and cyclical. Online retail sales growth, have been slowing over the past three years which may be due to changes in the Australian Dollar.

The impact of these trends on North Sydney will depend on the type of retail which is concentrated within the various retail centres (convenience or comparator retail). Comparator retail (such as fashion and specialty retail) is more likely to be vulnerable to shifts rather than convenience retail. Retail will also be susceptible to shifts within the number of workers within commercial centre, but also supported by population growth.

Education is Australia’s fourth largest export industry and largest non-resources export with a $17.6 billion revenue in 2015. With the Australian Catholic University located within the LGA there may be opportunities to leverage off this institution and develop research links. However this trend will likely create more competition rather than opportunities for North Sydney with other centres across Sydney attracting integrated business parks such as Macquarie University and the Australian Technology Park.

The healthcare and social assistance sector is a rapidly growing employment sector in NSW and Australia. There could be opportunities for North Sydney to leverage off the St Leonards health and education precinct as well as provide local services for the community.

The following analysis will draw on these key findings to guide opportunities or identify threats which North Sydney LGA may face in relation to economic development.

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3 STRATEGY CONTEXT

Overview

This section provides a review of other Councils’ economic development strategies, NSW Government strategies and existing local North Sydney Council strategies and documents. This review looks at how these various documents influence local economic development.

3.1 Review of other Local Government EDS’

A review of Economic Development Strategies prepared for other LGAs has been completed to understand the approach that other Council’s take to economic development and whether there are any key findings from these studies that have implications to the way that North Sydney Council would conduct and organise economic development activity. The review include strategies from the City of Sydney, Bankstown, Waverley, Leichhardt and Parramatta. The findings of this review is shown in Table 1.

A particular focus of this review is determining the role that these Councils play in local economic development. There are four basic ‘roles’ or economic development models that Local Government can adopt to encourage local economic development. Council would not necessarily need to ‘choose’ any one of these types of roles and in fact, the best outcomes may be achieved with a mix of activities that cut across all of these broad classifications. The appropriate role depends on a number of factors such as pre-existing organisational relationships, the local industrial structure, the relative level of social and economic prosperity, identified priorities for the future, available funding for economic development initiatives and local personalities. The caveat to all of this is that the limited power and resources of local government can make it difficult to implement these roles. In understanding these roles and functions, we can start to think about appropriate responses to the economic development challenges in the North Sydney area.

 Stimulator/Promoter: This is where Council could take specific action to induce business creation or expansion. This can be undertaken through a branding and marketing role or by direct intervention to protect or support a particular industry sector. An example here could be using an underutilised Council building or land.  Facilitator: This can take the form of providing an ‘enabling’ environment for local development by delivering a streamlined development approval process and by providing a clear policy statement focusing the Council’s development objectives.  Co-ordinator: Here, Council takes the role of co-ordinating the provision of infrastructure or services for which it is not directly responsible but which are required for new business development. This co- ordinating role would generally be undertaken in partnership with other government agencies, private sector representatives and / or community interest groups. For example, Council’s the role in assisting the co-ordination of the proposed light rail expansion to Randwick.  Entrepreneur/Developer: Here, Council would become directly involved in development activities, either as a sole operator or in partnership arrangements with the private or public sector. The joint venture between Woollahra Council and Woolworths for the supermarket development in Double Bay is an example.

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TABLE 3. REVIEW OF OTHER LGAS ECONOMIC DEVELOPMENT STRATEGIES IN SYDNEY Elements of City of Sydney Parramatta Waverley Leichhardt Bankstown EDS

Timeframe for 10 year strategy, with 10 year 5 year strategy, 25 year vision. 5 year strategy. Adopted in 10 year strategy. Adopted in 2013. 4 year strategy. Adopted in 2014. strategy industry action plans to support the Adopted in 2011. 2015 Includes a 10 year strategic plan Two years of development. EDS. Prepared in 2013. and a 4 year service delivery plan. Preparation of Reports and backgrounds studies Reports and background - Draft discussion paper for Reports and background studies Consultation: strategy informing the EDS prepared for the studies prepared for Council community feedback informing the EDS are - Bankstown Business Roundtable City of Sydney include: informing the EDS include: - Eastern Suburbs Economic - Issues, Themes, Strategic - Members of the Bankstown - The City of Sydney economy in 2030: - Parramatta City Centre Lanes Profile, 2013, SGS Economics Direction and Actions, 2012, Hill Business Advisory and Economic A foresighting study, 2012, Deloitte Strategy, 2010 and Planning PDA Development Committee Access Economics - Visitor Strategy, 2011-2016 - Socio Economic Profile, 2013, Hill - Research and consultation prepared - City of Sydney Indicator Framework, - Solving Sydney’s Growth PDA by Business Faculty at the University 2011, Institute of Sustainable Dilemma, 2011, Ernst & - Consultation Strategy and of Western Sydney Futures – University of Technology Young Outcomes, 2013, Hill PDA Documents prepared for Council/ Sydney - Leichhardt LGA High Street region:

- Planning directions for metropolitan Vacancy Study, 2013, Hill PDA - Bankstown City Council, Sydney, 2012, SGS Economics and Employment Lands Development Planning. Study, September 2009 Other studies informing the EDS - NSW Department of State and include: Regional Development/AEC Group, - Estimating urban traffic and Industrial Cluster Analysis for the congestion cost trends for Australian Western Sydney Region, August cities, Working Paper No. 71, 2007, 2009 Bureau of Transport and Regional Economics (BTRE) - A Platform for Growth: The NSW Economic Development Framework, 2012, NSW Department of Trade & Investment - Productive Cities, May 2013, Grattan Institute - Cities of Opportunity, 2012, Pricewaterhouse Coopers - Globalization and World Cities Project, 2008, Loughborough University, United Kingdom

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Elements of City of Sydney Parramatta Waverley Leichhardt Bankstown EDS

Data sources - City of Sydney Floorspace and - Census data 2006 - Geotagged Flickr and Twitter- Bureau of Transport Statistics Macroeconomic trends: Employment Survey, 2012 - Largely unclear (e.g. posts in Waverley and the population and employment - Australia in the Asian Century White - Census data, 2011 and 2006 forecasts, vacancy rates) CBD to establish the forecasts and journey to work Paper (2012) popularity of locations with data (2006 and 2011) - ABS Australian National Accounts: - Industry & Investment NSW, NSW local and international Tourism Satellite Account, 2011- - Census data, 2011 (income, Business Forum – Industry Sector 2012 populations. household structure, education, Working Groups: Summary of - ABS Australian System of National - ABS Labour force survey and ethnic diversity) Outcomes, 2010 gross state product, 2009, Accounts 2011-12 - Survey of shoppers by Balmain - Infrastructure Australia, 2013 State - ABS Labour Force, Australia May 2010, 2011, 2014 Rozelle Chamber of Commerce of Play Report: Australia’s Key 2013 - Australian Business Registry, Economic Infrastructure Sectors, 2015 2013 - Waverley Business Forum - NSW Department of Industry and workshops Investment, NSW Business Sector - Destination NSW Local Growth Plan, 2010 Government Area visitor - Regional Development Australia – profiles, 2012 Sydney, Sydney Metropolitan Region Economic Baseline Assessment - Update, 2013 Local population and economic trends - ABS – regional population trends, change in employment industry (2006-2011), education, ancestry, population projections - Commonwealth Department of Employment, Labour Market Conditions in Canterbury-Bankstown and South Western Sydney, 2013 - Commonwealth Department of Education, Employment and Workplace Relations, Bankstown Local Government Area Community Profile

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Elements of City of Sydney Parramatta Waverley Leichhardt Bankstown EDS

Economic profile - The EDS outlines employment and Details about the existing - Industries driving the local The EDS identifies strengths, Consideration of change between of area businesses in the LGA by industry economic profile is limited. economy using ABS data weaknesses, opportunities and Census periods (2006-2011) to and location The vision for the four centres- Number of businesses using threats for the Leichhardt LGA in highlight economic restructuring - Clustering of industries is mapped. provides a view on the Australian Business Register. terms of people, places and and large scale macroeconomic industries expected to products. factors. The EDS also considers, - Gross Regional Product and concentrate in these industry sector output also General industry trends in the LGA political, technological, socio- locations: economic and environmental considered. are noted, data sources are not included factors. - Parramatta CBD (professional- Highest employment services including industries using ABS data. Spatial structure of the LGA is finance/insurance, Compared to Greater Sydney identified, including locations, key professional/ scientific/ industries, & urban form. A more to determine areas of technical, business services specialization in Waverley detailed analysis of each centre and IT/media) (business, industrial and hospital) is - Westmead (health and then provided biomedical) SWOT analysis prepared for local - Rydalmere (Applied IT economy associated with the manufacturing sector) - Camellia (Advanced construction and energy with a focus on renewables). Council’s role in The City takes on several roles in Council utilises all four roles The EDS identifies Council’s Stimulator/producer – renewal of Stimulator/provider – stems from economic economic development as part of identified: role to ‘lead economic centres through place based regulator role and from development the EDS. The City is a - Stimulator/promoter taking development in collaboration planning, improvements to public improvements to the public domain stimulator/promoter, facilitator of direct action to business with all levels of government, domain and civic spaces, develop Facilitator – majority of actions local business development, co- industry, local business and identity responsive to changing creation or expansion through Coordinator - connecting and ordinator of infrastructure and the community’. Council community, improve parking, the development and collaborating with local businesses advocate for the LGA. strengthening of Parramatta’s therefore has a largely stage and promote events, and stakeholders identity coordinating and facilitating protect employment lands, The EDS identifies actions in three role. Council also has a implement masterplans Advocate – in regional collaboration - Facilitator broad categories stimulator/promoter role in and organisations - Co-ordinator Facilitator – support small - Control – Council can directly destination marketing and business and start-ups, encourage

impact/action the objective - Entrepreneur/developer place management. home based businesses and - Influence – Council has an advocacy through the development of expansion of night time economy. Council owned property lobbying role, action lies with other Coordinator – work with organisations businesses to improve shopfronts, - Concern – Areas of interest that advocate for Bays Precinct Master Council may not be able to directly Plan, increasing and improving influence or control, possibly has an coordination between advocacy role government, businesses and NGOs

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Elements of City of Sydney Parramatta Waverley Leichhardt Bankstown EDS

Key There are three areas of focus for The EDS focuses on four Four key areas of focus in 7 key objectives are outlined in 10 key directions with 71 strategies. recommendation the EDS specialised and inter- EDS: the EDS. The focus is LGA wide: These directions and strategies s/outcomes - Strengthen competitiveness of connected employment - Renew – destination - Make places better – renew generally apply across the LGA with Sydney – achieved through centres: marketing of commercial and centres, public domain and civic some outcomes focusing specifically

improved amenity, simplified - Parramatta CBD village centres, place spaces, work with businesses to on the Bankstown CBD. Key regulation process, appropriate - Westmead management of centres and improve shopfronts and foster directions are:

development controls, maintain a - Rydalmere – potential development of destinations. local identity with changing - enhancing the Bankstown “brand”; diverse calendar of events and strategic centre population promotion of the city - Camellia – potential strategic- Innovate – increasing - building management capabilities; - Improve productivity and capacity – centre competitiveness and diversity - Meet people’s needs – improve - boosting competitiveness through advocate and provide required of businesses through co- parking, expand night time innovation; transport and social infrastructure This remainder of the LGA is working opportunities, economy, support diversification - creating local market opportunities; encouraging collaboration of retail and services (childcare and affordable housing), largely ignored in the EDS. encouraging international business and improved opportunities - development of green infrastructure - Embrace the new economy – linkages; for start-ups support small business and start- - Promote opportunity – encourage Six priorities were identified attracting and facilitating - Collaborate – with industry ups, support and encourage - collaboration between businesses in the EDS: investment; through partnerships, assist in the - Establishing a competitive partners with business, creative industries and home strengthening our workforce; development and economic identity that differentiates tourism and related based businesses - sustainability of small business Parramatta from other associations and with - Protect and leverage economic - improving eco-efficiency; Industry action plans are being locations and influences the government partners to assets – protect employment - planning for growth; and developed for key industries supply of infrastructure and advocate for local economic lands, develop and implement - leveraging business tourism identified by the City. These actions investment issues, sharing research and masterplans, improve access to opportunities. plans provide greater detail on the - Developing the capacity of increased funding from cultural assets actions and outcomes of the EDS. local firms and industry to appropriate agencies - Make business and employment The industries identified for action grow, specialise and employ - Enable – reducing barriers to easier plans are: - Educating, retaining and setting up businesses and - Communicate and connect with

- Retail attracting quality labour with provide support for partners - Tourism skills aligned to the needs of businesses online and Tell the world – develop and - Creative and digital industries local industry encourage business to - promote events, market the LGA - Education services - Developing land and property business communication and its offerings. - Finance and insurance services assets to promote and The EDS focuses across the - Night time economy accommodate jobs growth LGA, with specific actions for - Green economy and house the workforce of some centre So far, the retail and tourism action the future plans have been prepared - Facilitating vibrant, safe and attractive street life capable of attracting people and business - Securing infrastructure to bring the various parts of Parramatta together and connect it to Greater Sydney and the world

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Elements of City of Sydney Parramatta Waverley Leichhardt Bankstown EDS

Responsibilities Not included in EDS Council has an Economic Council has an Economic Council has an Economic The vast majority of strategies are for Development Team. Development Team. Development Officer, however the the responsibility of the Community implementation Place management have been service delivery plan identifies and Business Liaison business unit in of strategy identified as the council staff several areas of Council Council. Many of the actions within council responsible for the responsible for the proposed under this Economic background studies and implementation of plan. Other Development Strategy involve masterplanning of Westmead, areas of Council responsible for Council acting as a facilitator, Rydalmere and Camellia implementation include: providing in-kind support rather - Environmental and urban than funding. Other areas of Council planning involved in the implementation of - Community and cultural services the EDS include: - Urban design and project - Strategy, Policy and Governance management (regional governance and collaboration) - Property and commercial services - Community & Cultural Services (arts Infrastructure and delivery - programs) Libraries - - Works & Projects (Town Improvement Program and Industrial Improvement Program) - Corporate & Financial Services (feasibility of a start-up Bankstown Community Hub) - Sustainable Development (improvement of business eco- efficiency, delivery of strategic planning policies and statutory planning outcomes)

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Elements of City of Sydney Parramatta Waverley Leichhardt Bankstown EDS

Role of external - Many of the actions relating to - MoU with WSU to recognise Partnerships with local Chambers of commerce to assist Generally a collaborative role with stakeholders infrastructure involve lobbying State the university’s role in driving industry groups (Chambers of in audit of shopfronts in LGA and Council. 14 stakeholders were Government innovation, upskilling the Commerce, business working with shop owners for identified in addition to Council to - Collaborations between Council and local labour force and associations etc.) improvements. Chambers of contribute to the success of the EDS. the State government for some developing professional Partnership and lobbying commerce, along with the These include (but are not limited infrastructure actions e.g. light rail networks. State Government economic development officer, to): and pedestrian boulevard along - Lobby State government are to assist in the identification - Local workforce George Street regarding transport and facilitation of creative uses in - Collaboration with private - Local business infrastructure vacant shopfronts, develop a businesses and property owners to - Education providers Targeted Tenancy Program for use underutilised spaces - Lobby Federal government - Industry organisations regarding communications centres to actively pursue - Collaboration with Destination NSW desirable tenancies. - Other councils and Tourism Australia to promote infrastructure, in particular - Non-government organisations Sydney the NBN. State authorities such as TfNSW - State government and DPE and local government associations such as SSROC are identifying as organisation to partner with and lobby to. Measurement The City of Sydney has developed an Measures of success and the The Economic Development Provided in the service delivery Indicators are outlined in this and indicators Indicator Framework to monitor the sources of data have been Strategy will be reviewed in plan. These are largely indicators document for each identified progress of the EDS. These identified for each of the six detail in 2020 to evaluate all used to monitor progress over strategy. These are largely used to indicators are expressed in the priority themes. projects and initiatives. There time (e.g. number of businesses in monitor progress over time (e.g. industry actions plans and are is also annual reporting on the LGA) number of businesses in the LGA) catered to each industry. indicators established in the Economic Development A second Bankstown Business Strategy for each of the four Roundtable will be held at the end themes. of the Strategy’s term to assess its success. Source: SGS Economic and Planning, 2015

Discussions were held with council staff to determine the success of these economic development strategies. Areas of success identified include:  Strong advocacy and lobbying of state departments and agencies for infrastructure funding  Improvement to amenity and the public domain, including the activation of public spaces  Networking and professional development of the workforce in the LGA due to strong relationships with Chambers of Commerce and Business Chambers  Building and marketing an identity for centres to attract businesses   The preparation of an economic development strategy was identified as an important step to gaining support for economic development activities and to explain the role and function of other areas in Council in the economic development of centres.

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Summary and key findings Strategies also vary on how they approach the spatial configuration of economic development in their LGA, choosing either to focus on specific, significant centres or the whole LGA. The economic development strategies reviewed contained similar areas of opportunities and focuses for the future directions of economic development in the local government areas. These themes could be relevant to the economic development of North Sydney as they relate to wider economic trends underway in Sydney and across Australia and relate to areas which local government can influence. Common themes and opportunities raised include:  Branding the local government area and or centres to highlight the character and advantages of the area  Assisting in building local business capacity and facilitating collaboration between businesses  Making it easier for businesses to establish and operate by explaining or modifying regulations  Supporting start-up businesses, in particular technology based start-ups, through the possible provision of office space and providing information on resources available  Advocating for improved infrastructure for transport, telecommunications and social needs such as childcare.

Councils take on several roles in the economic development strategies reviewed, including promoter/stimulator, facilitator, coordinator, and entrepreneur/developer. The majority of actions included in these economic development strategies relate to the facilitator and stimulator/promoter role of council. The facilitator role providing an ‘enabling’ environment for local development through Council processes, such as streamlined development approvals, and Council actions, such as improvements of the public domain and place management initiatives to improve the vibrancy and amenity of local centres. The facilitator role of Council is wide ranging and involves several business units of Council beyond the economic development team, such as public works and environmental regulation. Stimulator/promotor roles in the economic development strategies reviewed have generally aimed to induce business creation or expansion through branding local centres and building upon their individual character. In the economic development strategies reviewed, this role was largely managed by the economic development team. The coordinator role involves working with local businesses and business groups as well as other organisations including regional organisations of councils and state agencies and departments to promote business creation. Local business and community groups were most commonly identified in the economic development strategies reviewed. This role was largely performed by economic development teams in the strategies reviewed. Under this coordinator role, Councils advocate and to lobby other levels of Government and State agencies to act in the interest of local, subregional and regional economic development. This advocacy is common across all economic development strategies reviewed, with the economic develop team and senior management identified as the main advocate members of Council. The entrepreneur/developer role is less common in the economic development strategies reviewed. In economic development strategies where an entrepreneur/developer role is present, it is largely managed by the team responsible for Council assets.

The types of recommendations are generally broad and apply to all businesses within centres, rather than provide industry specific recommendations. The exception is creative industries and start-ups. Some councils, such as Parramatta, focus solely on a few key centres and do not provide recommendations for the economic development of other areas in the LGA. Alternatively, Waverley Council incorporates broad recommendations that apply to centres of economic activity, with a few place specific recommendations. Specific targets are not utilised.

External stakeholders are largely not incorporated into the recommendations of the economic development strategies apart from lobbying activities to state agencies and departments. These organisations can significantly impact on the economic development of a place or a local government area and local government can advocate to influence their actions and priorities.

The data sources utilised are similar, with ABS Census data the most commonly utilised data for local population and economic profile information. Each LGA also benefits from having and Economic Development Officer or team to facilitate the implementation of the majority of actions included in the economic development strategy. All of the economic development strategies reviewed include a range of measurements and indicators to determine the success of the strategy. These indicators largely rely on data collected from sources other than council and are used

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to track progress over time. The economic development strategies reviewed generally do not contain specific targets or deliverables as part of the proposed actions.

Areas of success identified in discussions with council staff include:  Strong advocacy and lobbying of state departments and agencies for infrastructure funding  Improvement to amenity and the public domain, including the activation of public spaces  Networking and professional development of the workforce in the LGA due to strong relationships with Chambers of Commerce and Business Chambers  Building and marketing an identity for centres to attract businesses

3.2 Review of NSW Government initiatives

A Plan for Growing Sydney, 2014 The North Sydney LGA is located in a strategic position in the context of the Sydney metropolitan area, falling within the Global Economic Corridor and the Sydney CBD and containing an additional significant strategic centre – St Leonards.

The Global Economic Corridor is identified by the Department of Planning and Environment (DP&E) as the powerhouse of Australia’s economy. The corridor contains a concentration of jobs and activities in strategic centres, transport gateways and industrial lands extending from Port Botany and Sydney Airport, through Global Sydney, Chatswood to Parramatta and Norwest.

Under A Plan for Growing Sydney, North Sydney CBD is identified as part of the Sydney CBD. The Sydney CBD is defined in the Plan as the main commercial district in Metropolitan Sydney. St Leonards is identified as a strategic centre. Strategic centres are locations that currently or are planned to have at least 10,000 jobs. These are considered to be the priority locations for employment, retail, housing, services and mixed-uses.

North Sydney CBD is wholly located in North Sydney LGA, however St Leonards is split between the North Sydney, Willoughby and Lane Cove LGAs.

FIGURE 6. A PLAN FOR GROWING SYDNEY MAP

Source: Department of Planning and Environment, 2014.

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North Sydney LGA is located in the north subregion. The north subregion also includes a number of strategic centres; including Chatswood, Macquarie Park, Northern Beaches Hospital Precinct, Brookvale-Dee Why and Hornsby (refer to Figure 7). The Plan contains specific directions for each strategic centre. The directions for the North Sydney CBD are as follows:  Retain a commercial core in North Sydney CBD for long-term employment growth.  Investigate potential future employment and housing opportunities associated with a Sydney Rapid Transit train station at Victoria Cross (North Sydney).

The directions for the St Leonards strategic centre are:  Work with council to retain a commercial core in St Leonards for long-term employment growth.  Work with council to provide capacity for additional mixed-use development in St Leonards including offices, health, retail, services and housing.  Support health-related land uses and infrastructure around Royal North Shore Hospital.  Work with council to investigate potential future employment and housing opportunities associated with a Sydney Rapid Transit train station at St Leonards/Crows Nest.

FIGURE 7. NORTH SUBREGION

Source: Department of Planning and Environment, 2014

Draft Inner North Subregion Strategy, 2007 Until the North Subregion plan is developed, the draft Inner North Subregion Strategy continues to apply. In this subregional strategy, North Sydney LGA is part of the Inner North subregion, including Ryde, Hunters Hills, Lane Cove, Willoughby and Mosman LGAs. According to the strategy, the subregion has an important economic role in the city, with a highly skilled population, research and development based industries in centre such as Macquarie Park and St Leonards, including clusters of ICT and biomedical businesses. It is also the home of advanced education and healthcare in the north of Sydney.

North Sydney is identified in the draft strategy as a Global City and the strategy as the second largest office market in Sydney, providing 800,000 square metres of office space. The strategy notes that North Sydney CBD has specialisations in the communications, finance and insurance and engineering services sectors. It contains A– grade offices yet offers comparatively lower rents than Sydney CBD. However, the strategy indicates that new office construction in Sydney CBD, such as Barangaroo, and increasing competition of lower cost, large scale office development at Macquarie Park, has impacted in recent years on the uptake of the centre’s office market. Despite this, the North Sydney CBD is expected to consolidate its role as part of Global Sydney by supporting high value economic activities.

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The strategy describes St Leonards role as a specialised centre. According to the strategy, St Leonards is the third ranked suburban office market in Sydney, a function which is complemented by the major health and education assets of the Royal North Shore Hospital and North Sydney College. The centre has experienced an increase in high rise and mixed use development, driven by the benefits of public transport and the amenity of nearby areas, including the Willoughby Road restaurant strip and night time economy at Crows Nest. The strategy identifies an employment capacity target of 8,200 for St Leonards.

Key directions from the strategy for the North Subregion include:  Strengthening the Global Economic Corridor from North Sydney to Macquarie Park, including protecting and strengthening the commercial areas of North Sydney, St Leonards, Chatswood and Macquarie Park  Reinforce the subregion’s knowledge assets, both its highly skilled population and knowledge infrastructure including Macquarie University and Royal North Shore Hospital, including promoting St Leonards as a “knowledge city”  Protect strategic employment lands, which have come under increasing pressure for conversion to higher order employment or residential uses, with significant rezoning over the past two decades  Improve housing choice and create liveable and sustainable communities to accommodate a diverse workforce and residential population, while ensuring that residential growth supports and revitalises the centres’ commercial and retail role.  Encourage use of public transport  Protect and promote the harbour setting.

Long Term Transport Masterplan The Long Term Transport Masterplan was released in 2012 to establish the framework for transport planning in NSW. The Long Term Transport Masterplan identifies the importance of the North Sydney CBD as home to the telecommunications, and the finance and insurance sectors, both engines of growth in the modern services economy. The plan notes that while North Sydney has good access to public transport, the CBD faces the following challenges over the next 20 years:

 Rail and bus service capacity must meet the needs of the Sydney CBD and North Sydney in the peak periods. This can mean that the maximum load on southbound services occurs immediately prior to North Sydney in the morning peak period.  North Sydney interchange will help maintain the attractiveness of public transport as a travel option. Ensuring the interchange has sufficient capacity to meet future transport needs will include pedestrian paths, bus stop capacity and facilities.  Roads passing through North Sydney can be heavily trafficked. Congestion impacts bus services passing through the centre and impacts on pedestrian amenity. Balancing the needs of local development, car parking and through-traffic will support the growth of North Sydney.  High quality, frequent transport connections throughout the day are required to support business-to-business travel, recognising North Sydney’s role within the Global Economic Corridor.

The accompanying document Sydney’s Rail Future identifies a plan to modernise the rail network across Sydney, including the introduction of a rapid transit network of frequent, single-tier trains to complement the existing rail network, now termed Sydney Metro. The North West Rail Link currently under construction will form part of this network, connecting the North Sydney LGA to the residents of Sydney’s North West via Macquarie Park and Chatswood.

The second stage of Sydney Metro involves extending the North West Rail Link through the North Sydney LGA to connect to the Bankstown Line via a second harbour rail crossing. The Sydney Metro extension involves the construction of a new train station at Victoria Cross in the North Sydney CBD and a new station at St Leonards/Crows Nest, potentially connecting these two centres to other employment rich centres in the North Subregion such as Chatswood and Macquarie Park as well as educated white collar workforce of Sydney’s North West. The location of a new station at St Leonards/Crows Nest is not yet known.

Sydney’s Ferry Future contains the future directions of ferry services and infrastructure across Sydney. The document states that the all stops service between North Sydney, Neutral Bay, Kurraba Point, Kirribilli and Circular Quay will have easier to understand timetables with regular service times. Neutral Bay terminal benefited

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from an upgrade in 2011. McMahons Point and Cremorne Point are among the wharves identified for future upgrades.

State Infrastructure Strategy (2012) and Update (2014) The State Infrastructure Strategy identifies a number of initiatives that impact on the North Sydney, including:  Northern Beaches Bus Rapid Transit, including either permanently dedicated bus lanes or a tunnel for buses under Military Road  Increased capacity of North Sydney train station  Sydney Rapid Transit (see Long Term Transport Masterplan above)  Potential long term expansion of rail from North Sydney to Mosman and the Northern Beaches

These projects are reiterated in the State Infrastructure Strategy Update. Additional projects discussed in this document include:  Additions to the motorway network  Western Harbour Crossing for private transport  Beaches Link connecting North Sydney to the Northern Beaches via The Spit  A stop at Neutral Bay on the Northern Beaches Bus Rapid Transit

Employment Lands Development Program The Employment Lands Development Program (2015) report notes that North Sydney LGA contains 5.4 hectares of developed employment lands. Employment lands include industrial and business park zoned land. In North Sydney LGA, these areas are primarily located along waterfronts at existing naval bases to enable the continuation of traditional waterfront uses as well as the operation of businesses that may not fit easily into existing centres, such as warehouses and industrial training facilities. This has remained constant in recent years.

NSW Economic Development Framework (2014) The NSW Economic Development Framework was developed to support industry growth across the state. The document contains five principles for economic development in NSW:  Demonstrating leadership through new solutions and advocacy  Make it easier to do business through strategic planning and removing regulations  Collaborate with businesses to drive innovation and competitiveness by industry capacity and capabilities  Invest in critical infrastructure to improve the productivity and competitiveness of industry  Raise the global profile of Sydney and NSW

Summary of State government documents The NSW Government has placed significance on North Sydney CBD and to a lesser extent St Leonards CBD as important strategic commercial office centres in metropolitan Sydney, forming a key part of Sydney’s economic engine - the Global Economic Corridor. The NSW Government documents also identify public transport upgrades (Sydney Metro) for North Sydney and St Leonards CBDs as well as a reduction in traffic congestion and improvements in pedestrian amenity.

The latest metropolitan plan A Plan for Growing Sydney emphasises the role of the North Sydney CBD as an extension of Global Sydney. Retaining a commercial core is a key direction for the North Sydney CBD and St Leonards. Other key directions impacting on these centres include strengthening the Global Economic Corridor and investigating further employment opportunities in these centres with the advent of the Sydney Metro.

Although the latest metropolitan plan does not outline clear directions for the North Sydney LGA, it is expected that these will come out of the new district plans (superseding the subregional plans) once these are released.

The draft subregional strategy, while over eight years old now, identified the importance of the North Sydney and St Leonards CBDs as important metropolitan centres. St Leonards was the third ranked suburban office market in Sydney.

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Strengthening the Global Economic Corridor including protecting and strengthening the commercial areas of North Sydney and St Leonards. St Leonards was seen a “knowledge city”. In particular the subregional strategy highlights the importance of protecting strategic employment lands, at the same time ensuring that residential growth supports and revitalises the centres’ commercial and retail role.

LTTMP Roads passing through North Sydney can be heavily trafficked. Congestion impacts bus services passing through the centre and impacts on pedestrian amenity. Balancing the needs of local development, car parking and through- traffic will support the growth of North Sydney.

SIS The construction of the new Sydney Metro line has the potential to benefit the North Sydney and St Leonards centre by providing high frequency connections between these centres, the Sydney CBD, other employment rich centres including Chatswood, Macquarie Park and Norwest, and the educated white collar workforce of Sydney’s north west. The construction of new stations in North Sydney and St Leonards also has the potential to alleviate congestion in existing train stations. Potential new connections to workforces in the Northern Beaches and Inner West are also identified in the State Infrastructure Strategy, benefitting the North Sydney LGA and the centres of North Sydney CBD and St Leonards in particular.

ELDP The Employment Lands Development Program indicates that land zoned for industrial purposes in North Sydney LGA has remained constant since the introduction of the Standard Instrument LEP.

NSW EDF The NSW Economic Development Framework provides an outline on the economic development strategies of the NSW Government. The focus is on making it easier for industries to do business across the state by reducing regulations and improving productivity through the provision of infrastructure

3.3 Review of North Sydney Council documents

North Sydney Community Strategic Plan (2013) The North Sydney Community Strategic Plan is guided by the vision of ‘shaping a progressive, diverse and vibrant North Sydney community’. One of the five key directions in the Community Strategic Plan relates specifically to the economic prosperity of the LGA. The outcomes contained under this direction include:  Diverse, strong, sustainable and vibrant local economy  North Sydney CBD is one of Australia’s largest commercial centres  North Sydney is a place that attracts events

Other objectives relating to economic development contained in the Community Strategic Plan include:  Enhanced arts and cultural programs and facilities  Improved traffic management  Improved parking options and supply  North Sydney’s heritage is preserved and valued  Vibrant, connected and well maintained streetscapes and villages that build a sense of community  Improved mix of land use and quality development through design excellence

North Sydney Local Environmental Plan (2013) The North Sydney Local Environmental Plan (LEP) 2013 is the primary legal planning document for North Sydney LGA, containing the land use zones and controls applicable to land across the LGA.

The majority of economic activity is planned to occur in the business and industrial zones, with some small scale, home based activities permissible in residential zones, such as home-based childcare, home businesses, and neighbourhood shops in high density residential areas.

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The North Sydney CBD, St Leonards and the commercial centre of Crows Nest are zoned B3 Commercial Core, which permits a range of commercial uses and prohibits industrial and residential uses. The North Sydney LEP 2013 also contains specific development controls relating to the North Sydney CBD, including setbacks, building massing, and building height. The B4 Mixed Use zone is utilised to the north of the North Sydney CBD and in local centres such as Crows Nest, Milsons Point, Neutral Bay and Cremorne to provide for a range of uses, including commercial, retail and residential uses.

A small precinct along Blues Point Road between Union Street and Mitchell Street is zoned IN2 Light Industrial, permitting some small scale industrial uses along with residential and office uses. IN4 Working Waterfront has been utilised for industrial and businesses uses along the waterfront.

North Sydney Development Control Plan (2013) The North Sydney Development Control Plan (DCP) 2013 complements the North Sydney LEP 2013 by providing detailed guidelines to inform development across the LGA. The DCP provides controls for different forms of development and place-specific development guidelines. The LGA is divided into nine planning areas, which are in turn divided into smaller precincts for more detailed planning guidelines.

The North Sydney DCP also contains controls relating to the regulation and management of late night trading for local businesses, including details for trial periods. These controls aim to balance the needs and demands for late night trading facilities and the needs of local residents.

North Sydney Local Development Strategy (2009) The North Sydney Local Development Strategy identifies a hierarchy of centres in the North Sydney LGA. The hierarchy is as follows:  CBD –North Sydney  Specialised centre –St Leonards  Town Centre –Neutral Bay  Village –Crows Nest  Local Centre –Cammeray, Cremorne and Kirribilli  Neighbourhood centre – Blues Point Road (North Sydney), McMahons Point, Waverton and Wollstonecraft

The main centres for business are North Sydney and St Leonards. The vision for the North Sydney CBD is for ‘a thriving business community, provide diverse social and cultural activities and work in harmony with surrounding residential areas and other commercial centres’. The capacity and marketability of the North Sydney CBD are the areas of focus for growth in this centre. Only commercial development is permissible in the CBD.

Employment growth in St Leonards is largely expected to be achieved through the redevelopment of the Royal North Shore Hospital in the Willoughby LGA. To accommodate jobs growth in the portion of St Leonards which falls in North Sydney, key sites are identified for rezoning from mixed use to commercial uses in the Local Development Strategy. Sites in St Leonards were zoned to B3 Commercial Core, however these sites have been identified to be rezoned back to B4 Mixed Use under the St Leonards Precinct Plan 2 and 3.

Neutral Bay, Crows Nest and Cremorne are identified as mixed use centres which have some potential for employment, primarily through local retail and services. These centres, along with the local and neighbourhood centres, are identified as the retail centres of the LGA.

It is expected that this strategy will need to be updated under the new District Plans.

North Sydney Centre Review The overall aim of the North Sydney Centre Review is to identify and implement policies and strategies to ensure that the North Sydney Centre retains and strengthens its role as a key component Sydney’s global economic corridor,

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remains the principle economic engine of Sydney’s North Subregion, and becomes a more attractive, sustainable and vibrant place for residents, workers and businesses.

The Review comprises a number of disciplines and facets that impact on the function of the North Sydney CBD, including:  A review of existing public domain strategies;  A comprehensive urban design and environmental sustainability study;  Capacity analyses;  Opportunities to revitalise and activate the Centre;  Identifying opportunities and constraints for future growth; and  The drafting of new controls to realise desired future direction.

A number of studies relating to the North Sydney Centre Review have been prepared for Council. The reports which are publically accessible have been analysed as part of this report.

North Sydney Commercial Centre Study (2015) The purpose of this study was to examine the office space available in the North Sydney CBD to determine its capacity, adequacy and attractiveness to businesses. The study found that there is an overall trend towards larger scale tenants requiring larger floorplates, which only make up a small proportion of the North Sydney office market. The current mix of office space skewed towards B grade coupled with the highest office rents outside of the Sydney CBD have seen decreasing stock levels and withdrawals of businesses and corporations to other locations, such as Macquarie Park. The development of Barangaroo was identified as potential threat to the North Sydney CBD office market as A-grade office space becomes available in this precinct.

The North Sydney Commercial Centre Study includes the following recommendations related to economic development:  Creating a dedicated Council resource to actively support key revitalisation and investment projects – responsible for economic development strategies and providing advice on the use of the public domain.  Key elements of the role include:  Establishment of a North Sydney CBD Retailers Forum to discuss marketing and other initiatives to maximise business opportunities and improve the quality of retailing for the benefit of workers, residents and visitors;  Investigate and implement opportunities to increase activation levels within the North Sydney CBD both within core trading hours and after hours / on weekends;  Working with key building owners and managers to identify and implement marketing strategies to attract and retain key office tenants; and  Work with property owners to assist in fostering relationships with Council to identify and investigate development opportunities such as site amalgamation and redevelopment.  Develop the public domain by maximising activity in public spaces, improving corner amenity, running activities and events, and preparing an urban design study. There are currently various public domain upgrades occurring such as Brett Whitley Place, Waler Street and Miller Street.  Prepare a strategic review of older office buildings within the North Sydney CBD and prepare a strategy to identify key potential redevelopment and/or amalgamation sites and consider the range of appropriate uses that should be considered. This will inform part of the capacity study.  Develop a marketing approach for the North Sydney CBD, incorporating the location of the CBD in the Global Economic Corridor, current and future transport accessibility, and access to a highly skilled white collar workforce. As part of a marketing approach, Council launched the ‘NTH SYD’ campaign mid-2015.

The study informed the direction of the North Sydney Centre review. The study is currently not a dedicated Council resource.

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North Sydney Centre Economic Study (2013) The study informed the direction of the North Sydney Centre review. This study forecasted an additional 51,599 workers in the North Sydney CBD by 2031, requiring an additional 30,000 square metres of office floorspace. The study also noted that there is mounting pressure for residential development to enter the North Sydney CBD. Ten actions were recommended in this study to revitalise the North Sydney CBD:  Greater leadership, cooperation and coordination. This is an ongoing action for Council.  Reinvent the public domain. Currently, there are upgrades to Brett Whitely Place, Walker Street and Miller Street.  Elevate the role of culture. Council has facilitated this through public art trail and events.  Attract an additional full line supermarket. As a result of this action, Coles has recently opened on Walker Street.  Improve the convenience of public parking. Council has advised that this has not occurred at this stage.  Embrace the education economy.  Change the Centre’s planning controls. This may change as a result of the capacity study.  Reduce barriers to business entry and adaptability. Council has advised that this is an ongoing action.  Enhance the night time economy. As a result, Council has completed a late night trading review.  Create and market a compelling identity.

North Sydney Traffic and Pedestrian Management Study (2014) This study focuses on the vehicle and pedestrian networks through the North Sydney CBD. The study found that a high portion of workers utilise public transport on their commute into North Sydney, however 30% of workers are vehicle drivers. Large volumes of bus traffic during peak periods was also noted, contributing to congestion in the North Sydney CBD. Cycling was found to be a well utilised form of transport in the CBD, with a high volume of cyclists using main roads with or without cycling infrastructure for their commute.

The study used traffic modelling of different scenarios to determine the best approach to reducing congestion in the North Sydney CBD and improve the amenity of the centre. Specific traffic calming, pedestrian infrastructure and improvements to public spaces such as Brett Whitely Place were recommended by the study.

North Sydney Marketing and Advertising Campaign (2014) The North Sydney Marketing and Advertising Campaign aims to highlight the competitive edge of the North Sydney LGA and the North Sydney CBD. The campaign was launched in 2015 as the ‘NTH SYD’ campaign.

The competitive edge of the North Sydney CBD was found to be its role as a key commercial centre with similar attributes to the Sydney CBD, but with a less ‘hectic’ and ‘chaotic’ atmosphere. The campaign focuses on events and activities to enable greater flexibility in Council’s approach and to link the marketing initiatives to existing Council events. This has included the development of a new events team and an events officer for the ‘NTH SYD’ campaign. The marketing campaign also includes a strong social media presence as well as a dedicated website housing a directory of events in North Sydney.

St Leonards/Crows Nest Planning Study – Precincts 1, 2 and 3 The St Leonards/Crows Nest Planning Study is currently being prepared to assess opportunities for increased employment and residential development in the centre. The study area is shown in Figure 8. The study has been divided into four precincts, with planning for Precinct 1 completed in 2012 and Precincts 2 and 3 completed in 2015. Planning for Precinct 4 is deferred until there is greater certainty regarding the location of the new train station as part of Sydney Metro.

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FIGURE 8. ST LEONARDS/CROWS NEST PLANNING STUDY AREA

Source: North Sydney Council, 2015

The study aims to develop new strategies and initiatives that will provide for the following:  New open space in St Leonards/Crows Nest.  Increased investment in St Leonards and decreased commercial vacancy rates, with particular focus on the rejuvenation of the Pacific Highway between St Leonards train station and the intersection of Pacific Highway and Willoughby Road  Improved connectivity, particularly between St Leonards / Pacific Highway and Willoughby Road  Improved urban design and street level amenity particularly in St Leonards and along the Pacific Highway  Improved building design and residential amenity in St Leonards.

The studies completed have noted that the presence of existing strata titles is impeding the redevelopment of aging commercial stock in St Leonards. Other issues noted in St Leonards include low pedestrian amenity and a lack of night time activity. The studies for the completed precincts propose increases to building heights and floor space ratios and permitting shop top housing in the B3 Commercial Core zone to increase the number of dwellings in the centre. The introduction of a new community arts centre and commercial space for start-ups were also suggested to improve the functioning and vibrancy of the centre.

The most recent progress report for the St Leonards/Crows Nest Planning Study notes that planning proposals and Voluntary Planning Agreements have been developed for Precinct 1 and are anticipated for Precincts 2 and 3 in the short to medium term. Council initiatives and capital works, including the redevelopment for Hume Street Park, are currently underway.

Public Domain Style Manual and Design Codes (2014) This document provides specific design details for the public domain across the North Sydney LGA. The design guidelines vary depending on the development form of the area. The manual provides details on the design of public domain infrastructure, such as paving, street furniture, bus shelters and bicycle parking.

Public Domain Review (2015) The Public Domain Review has been prepared to evaluate the public domain of the North Sydney CBD. The key finding was a lack of a comprehensive public domain strategy for the centre has limited the development of a cohesive and attractive public domain. The CBD was found to be dominated by roads and vehicles, which adversely

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impacts on the pedestrian experience. The public domain was considered to be a functional, utilitarian space. Opportunities identified for the centre include building upon the public art network of the centre, developing inviting and attractive public spaces for people to dwell in, improve the pedestrian connectivity of the centre, and incorporate diversity in the public domain.

Events Strategy (2015) The events strategy establishes the principles for the operation and management of events in the North Sydney LGA. There are four main principles outlined in the strategy:  Develop a strategic approach to event management, including the development of an events teams  Initiate and deliver new local and regional community events, including more in North Sydney CBD and at North Sydney Oval  Support events organised by external organisations, including the management of popular foreshore locations for events and ensure events are appropriately managed.  Manage the impact of events on local residents

Affordable Housing Strategy (2015) The Affordable Housing Strategy found there is a significant housing affordability in the North Sydney LGA. The study found that purchasing a property in the lowest quartile would result in housing stress for 65% of North Sydney residents. The Strategy notes that more affordable housing is required and identified the following targets to be met between by 2031:  An additional 150 social housing dwellings (1.8% of projected additional dwellings)  An additional 3,300 affordable rental and purchase dwellings (41.3% of projected additional dwellings)  An additional 90 beds in boarding houses.

Strategies that were recommended by this document include:  Continue to seek mitigation for the loss of affordable housing through Part 3 of State Environmental Planning Policy (Affordable Rental Housing) 2009 and Council’s existing methods of negotiating with developers, particularly for the remaining stock of boarding houses and low cost flats and units, and to develop a program of works for the expenditure of affordable housing funds in a timely way.  Participate in affordable housing partnerships to leverage existing and future Council resources dedicated to affordable housing through commercial arrangements with public or community sector organisations, which may incorporate State and Federal Government funding opportunities.  Reconfiguring existing affordable housing stock where feasible to ensure the most appropriate and efficient use of resources including the development of comprehensive Asset Management Strategy.  Support a regional approach where it will lead to more effective ways of meeting local affordable housing needs.  Implement social impact assessment processes to assess the impact of the loss of low cost residential flats, units and boarding houses.  Utilise a range of complementary strategies to capture a reasonable proportion of additional private benefit (profit) created through Council’s planning processes for use as a public benefit of affordable housing.

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Careening Cove Masterplan (2015) A draft masterplan has been prepared for Careening Cove and was on exhibition for October. The precinct is shown below.

FIGURE 9. CAREENING COVE

Source: North Sydney Council, 2015.

The masterplan aims to develop a vision for the area and to identify future projects that may enhance people’s enjoyment of Careening Cove in preparation for increased visitation to the area with the redevelopment of the HMAS Platypus site. The majority of the precinct is included in the Careening Cove Heritage Conservation Area. The draft masterplan aims to maintain the fine grain and heritage character of the precinct.

There is an existing base of creative industries around Careening Cove, as are traditional waterfront uses such as a marina, the Sydney Flying Squadron, and Pattons Slipway. The precinct also includes Kirribilli village. The draft masterplan notes that Kirribilli village is a popular location on weekends for food and boutique retailing however wayfinding from Kirribilli village to other points of interest is difficult.

Key recommendations of the draft masterplan include:  Make sure it is easy for people to explore the precinct by upgrading footpaths and stairs and installing wayfinding signage  Improve public access and enjoyment of the Sydney Harbour foreshore by upgrading the Milsons Park boat ramp & seawall and work on long-term opportunities to install a public boardwalk along the Cove  Improve the amenity of existing public open spaces by installing well located BBQ facilities at Milsons Park and Kesterton Park and minor landscaping at Gladys Carey Reserve  Encourage a diverse mix of activity throughout the precinct, particularly along the waterfront with more outdoor dining and creative industries, whilst supporting the traditional working waterfront industries  Continue to support working waterfront activities as well as recreational and school-related boating uses in Careening Cove; and

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 Work with Sydney Water to explore the possibility of transforming the stormwater canal along Milsons Park into a more natural creek line and incorporating suitable crossing points.

Education Precinct Study (2013) and Education precinct Public Domain Masterplan (2014) The Education Precinct is from North Sydney Demonstration School to SHORE and is adjacent to the North Sydney CBD west of the Pacific Highway. The Education Precinct is shown in the figure below.

FIGURE 10. EDUCATION PRECINCT

Source: North Sydney Council, 2013

The study proposes to enhance the area’s character, identity and function as an education precinct and outlines strategies that:  improve pedestrian connectivity between the centre and the education campuses  enable more efficient traffic circulation  protect the amenity of surrounding residential properties and heritage value of the precinct  improve urban design and street level amenity to reinforce the activity and character of the precinct  identify any future public benefits that can be delivered with new development.

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Key recommendations include transforming the streets into valuable, civic spaces through a new ‘Living Campus Program’, reducing school-related traffic through a combination of demand management and traffic upgrades, and developing a new area character statement in our development control plan to enhance the precinct’s form and function as an urban campus.

The masterplan for the Education Precinct outlines the key issues for pedestrian activity (shown in Figure 11) and provides recommendations to improve the environment. The masterplan recommends the widening of footpaths, paving and shared zones on some streets such as Wheeler Lane, improved lighting and the installation of public art to activate the education precinct and improve the pedestrian environment for students, workers and residents.

FIGURE 11. EDUCATION PRECINCT I SSUES

Source: North Sydney Council, 2014

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North Sydney Childcare Review (2014) The childcare review found there is a need for more preschool childcare places in the North Sydney LGA to meet local residential demand. There is also significant demand for childcare spaces from workers in the LGA who live outside of the council area.

State of the Community Sector (2012) This report provides an overview of the community sector operating in the North Sydney LGA. Key trends noted in the area include the increase in parent population, increasingly culturally and linguistically diverse backgrounds, and a change in demand for services to more complex and high level needs. The report found that there are gaps in the provision of Aboriginal specific services, after business hours services, emergency housing and crisis support, and unmet demand for services operating at capacity. The report recommends that the most efficient use of Council’s resources to support the community sector is to target the most frequently experienced issues experienced by community sector providers, namely funding and staffing resources.

Arts and Cultural Strategic Plan (2012) The Arts and Cultural Strategic Plan is a five year plan to guide the arts and cultural planning of Council across the North Sydney LGA. The plan contains three directions to further develop arts and culture in North Sydney. These are:  Provide creative space and opportunities - several temporary spaces were noted in the plan, including the provision of a creative precinct in St Leonards as a multipurpose studio/creative space and establishing more accessible and affordable long term exhibition and creative spaces  Support diversity and inclusiveness – through the Creative Wellbeing program and community engagement programs for youth, Aboriginal and Torres Strait Islander people, and seniors.  Enable cultural expression and experiences – this is proposed to be achieved through expanding the existing public art trail in North Sydney to Milsons Point, Brett Whitely Place and the Education Precinct as well as maintaining the local North Sydney Art Prize

Summary Current Council policies and documents focus primarily on the economic development of the North Sydney CBD and immediate surrounds, such as the Education Precinct and Careening Cove. St Leonards is also subject to extensive planning. Other smaller centres, such as Crows Nest, Neutral bay and Cremorne have limited plans and policies directed towards their development. This is a reflection of the importance played by North Sydney CBD and St Leonards in the local economy, however the role of these centres in the local economy should not be overlooked.

In relation to the North Sydney CBD, improvements to the public domain have been repeatedly identified as a key initiative to improve the functioning and attractiveness of the centre. This includes public open space such as Brett Whiteley Place as well as other spaces such as footpaths and accessways. Improvements to the public domain are considered vital to improving the attractiveness and amenity of the North Sydney CBD to residents, students and workers. Public art is also identified as way of improving the public domain and interest in the North Sydney CBD.

Traffic and congestion are also raised in multiple documents as adversely impacting on the amenity and vibrancy of the North Sydney CBD. Traffic and congestion can negatively impact on the perception and attractiveness of the North Sydney CBD to businesses and limit the economic development potential of the centre. The focus of several documents on improving the pedestrian experience in the North Sydney CBD are positive ways to improve the attractiveness of the centre and contribute to the image of North Sydney as a less ‘hectic’ version of the Sydney CBD. The North Sydney Commercial Centre Study includes the following recommendations related to economic development:  Creating a dedicated Council resource to actively support key revitalisation and investment projects  Attract an additional full line supermarket  Change the Centre’s planning controls  Enhance the night time economy

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 Develop the public domain by maximising activity in public spaces, improving corner amenity, running activities and events, and preparing an urban design study  Create and market a compelling identity

Issues with the St Leonards centre raised include aging commercial stock, low pedestrian amenity and a lack of night time activity. The precinct planning process for the St Leonard/Crows Nest area is addressing these issues through the introduction of some residential development and temporary creative spaces to generate additional activity and interest in the centre. A potential conflict may arise from the introduction of shop top housing in the B3 Commercial Core zone recommended in the St Leonards/Crows Nest Planning Study. This may result in the erosion of the commercial core of the St Leonards centre and decrease the floorspace for employment uses, working against the objectives of the B3 Commercial Core zone and the directions of A Plan for Growing Sydney.

Compared with the economic development strategies prepared by other councils, the documents prepared for North Sydney Council contain limited actions and strategies for developing the capacity of businesses and business networks. Current council documents do not provide recommendations or actions for supporting technology-based start-ups; an area of focus in economic development strategies for other local government areas. The facilitating role of local government is largely absent in current documents. The actions are largely on the stimulator/promoter role, focusing on the public domain and marketing North Sydney. These are areas which Council can directly influence and relate primarily to public land.

3.4 Strategy context summary

The economic development strategies reviewed contained similar areas of opportunities and focuses for the future directions of economic development in the local government areas, including:  Branding the local government area and or centres to highlight the character and advantages of the area  Assisting in building local business capacity and facilitating collaboration between businesses  Making it easier for businesses to establish and operate by explaining or modifying regulations  Supporting start-up businesses, in particular technology based start-ups, through the possible provision of office space and providing information on resources available  Advocating for improved infrastructure for transport, telecommunications and social needs such as childcare.

Recommendations and actions are generally not specific to industries or locations and focus instead on broader economic development outcomes for businesses of all forms in the local government area. The exception is creative industries and start-ups and central business districts, such as Parramatta.

Relying on external stakeholders to complete actions and recommendations of the economic development strategies in other local government areas is limited as their actions cannot be controlled by Council. External stakeholder largely are identified for advocacy/lobbying purposes.

Other councils have focused on stimulator/promoter and facilitator roles in their economic development strategies, with a strong advocacy role to lobby state agencies and departments. Elements of the stimulator/promoter role are evident in current North Sydney documents in the focus on improving the public domain and traffic management. There are limited actions and recommendations that relate to the facilitator role of local government and capacity building of local businesses.

The state and local documents reviewed focus primarily on two centres in North Sydney LGA – North Sydney CBD and St Leonards. These two centres contain the greatest amount of employment in the LGA and are the current focus on economic activity. North Sydney CBD and St Leonards are set to benefit from State government initiatives, in particular the new Sydney Metro, and both centres are subject to extensive local government planning. The focus of local government planning has been on the revitalisation of North Sydney CBD and St Leonards with a particular focus on improving the public domain, pedestrian amenity and traffic congestion. The importance of maintaining a commercial core in both centres has been noted in state and local government planning documents.

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The documents reviewed contain some actions which relate to the economic development of the local government area. The plans prepared as part of the North Sydney Centre Review are complementary and work together to enhance the attractiveness and functionality of the centre for workers and businesses by fulfilling a stimulator/provider role. The challenge remains for a comprehensive, cohesive vision of St Leonards as the centre falls within three LGAs and is currently being addressed in the St Leonards/Crows Nest Planning Study. The challenge of maintaining a commercial core in the centre may be exacerbated by the introduction of shop top housing into the B3 Commercial Core zone for St Leonards flagged in the St Leonards/Crows Nest Planning Study.

Areas of economic activity outside of North Sydney CBD and St Leonards are a gap in existing state and local government documents. This is a reflection on the scale and importance of these two centres in the economy of the LGA. Other smaller centres, such as Crows Nest, Neutral Bay and Cremorne have limited plans and policies directed towards their development. The role of these centres in generating local economic activity should not necessarily be overlooked. Economic development strategies reviewed from other LGAs contain strategies and recommendations for centres across the LGA and tend to focus on business capacity and development across the local government area. Neglecting these areas may impact on their vibrancy and viability in the long term.

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4 CURRENT POSITION: DATA ANALYSIS

Overview

This task examines the economic profile and specialisation of the North Sydney LGA to determine significant industries in the LGA and recent patterns of change. The existing and emerging concentration, industry size, growth and gaps are considered. In turn, this will assist in identifying target industries for growth. An assessment of market dynamics and a precinct / centre level analysis has been completed to ascertain the extent of market and local influences on development.

4.1 Economic profile

Industry profile The composition of industries within the North Sydney LGA provides clear indication to the nature of current business activity, along with which industries have been experiencing growth or decline within the LGA. This data also demonstrates which industries are dominant employers within the area.

Data has been obtained from the 2011 Census pertaining to the industry of employment of persons who indicated they work within the LGA. Data has also been obtained for the North Subregion and the Sydney Greater Capital Cities Statistical Area (Sydney GCCSA) to provide benchmarks for comparison. The number of persons employed by industry is displayed below in Table 4. The North Subregion is comprised of the following LGAs:  Hornsby  Hunters Hill  Ku-ring-gai  Lane Cove  Manly  Mosman  North Sydney  Pittwater  Ryde  Warringah; and  Willoughby

The dominant industries within the LGA are definitively Professional, Scientific and Technical Services and Financial and Insurance Services (at 30.2% and 12.5%, respectively). Despite the prominence of the Professional, Scientific and Technical Services classification across the board within both the North Subregion and the Sydney GCCSA as the highest employer within all three of these areas, the industry comprises approximately twice the proportion compared to the Subregion and approximately three times the proportion when compared the whole of Sydney. The proportional split between industries within the LGA is displayed below in Figure 12.

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FIGURE 12: EMPLOYMENT BY INDUSTRY, NORTH SYDNEY (A)1

Source: ABS, 2011.

TABLE 4: EMPLOYMENT BY INDU STRY

ANZSIC Industry North Sydney North Subregion Sydney GCCSA Proportion 2001- Proportion 2001- Proportion 2001- 2011 of jobs 2011 2011 of jobs 2011 2011 of jobs 2011 Agriculture, Forestry and Fishing (A) 71 0.1% -19.3% 837 0.2% -41.3% 6,429 0.4% -34.0% Mining (B) 244 0.4% 132.4% 536 0.2% 88.1% 4,076 0.2% 53.0% Manufacturing (C) 2,065 3.1% 0.8% 23,287 6.5% -13.3% 160,853 8.8% -18.5% Electricity, Gas, Water and Waste Services (D) 386 0.6% -26.1% 1,917 0.5% -26.2% 16,962 0.9% 18.2% Construction (E) 2,595 3.9% 38.5% 20,114 5.6% 20.0% 96,184 5.2% 18.6% Wholesale Trade (F) 2,344 3.6% -6.3% 27,055 7.6% 17.9% 102,496 5.6% 1.1% Retail Trade (G) 2,982 4.5% -5.8% 35,163 9.8% -5.5% 185,708 10.1% 4.0% Accommodation and Food Services (H) 3,128 4.7% 0.8% 19,667 5.5% 6.9% 114,019 6.2% 7.9% Transport, Postal and Warehousing (I) 1,183 1.8% -26.4% 6,917 1.9% -15.1% 94,127 5.1% 6.9% Information Media and Telecommunications (J) 3,961 6.0% -45.9% 19,105 5.3% -21.1% 58,528 3.2% -11.7% Financial and Insurance Services (K) 8,213 12.5% 27.2% 16,378 4.6% 2.5% 130,306 7.1% 18.7% Rental, Hiring and Real Estate Services (L) 1,468 2.2% -1.7% 7,315 2.0% -0.4% 34,606 1.9% 1.3% Professional, Scientific and Technical Services (M) 19,893 30.2% 7.5% 55,419 15.5% 10.1% 188,167 10.3% 17.2% Administrative and Support Services (N) 3,502 5.3% -6.0% 11,640 3.3% -6.5% 58,578 3.2% 3.2% Public Administration and Safety (O) 2,707 4.1% 52.2% 12,043 3.4% 23.7% 109,894 6.0% 28.1% Education and Training (P) 3,640 5.5% 31.8% 31,232 8.7% 28.5% 148,456 8.1% 25.7% Health Care and Social Assistance (Q) 3,901 5.9% 46.2% 45,382 12.7% 33.3% 207,774 11.3% 35.0% Arts and Recreation Services (R) 824 1.2% 59.7% 4,866 1.4% 29.6% 29,426 1.6% 24.1% Other Services (S) 1,789 2.7% 13.9% 13,365 3.7% -12.8% 67,588 3.7% -3.0% Inadequately described/Not stated (X) 1,048 1.6% 97.0% 4,982 1.4% 55.3% 21,182 1.2% 33.1% TOTAL 65,944 - 5.8% 357,220 - 6.5% 1,835,359 - 9.7% Source: ABS, 2011

1 (‘Other’ industries include: Retail Trade, 4.5%; Public Administration and Safety, 4.1%; Construction, 3.9%; Wholesale Trade, 3.6%; Manufacturing, 3.1%; Other Services, 2.7%; Rental, Hiring and Real Estate Services, 2.2%; Transport, Postal and Warehousing, 1.8%; Inadequately Described or Not Stated, 1.6%; Arts and Recreation Services, 1.2%; Electricity, Gas, Water and Waste Services, 0.6%; Mining, 0.4%; Agriculture, Forestry and Fishing, 0.1%).

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Other noteworthy disparities between the North Sydney LGA and the benchmark regions are lower proportions of employment within the Manufacturing, and Transport, Postal and Warehousing, along with a similarly lower prominence of the Retail Trade and Health Care and Social Assistance in the North Sydney LGA. At the same time, the Royal North Shore Hospital and the Artarmon industrial area would contain these industries and are just to the north of St Leonards in the North Sydney LGA, while Chatswood to the north functions as a subregional retail destination.

Within the North Sydney LGA, the rate of growth in the Professional, Scientific and Technical Services industry has been marginally lower than the rate of growth in the Subregion and to a greater extent when compared to the Sydney GCCSA in the decade to 2011. A substantial decline in the Information Media and Telecommunications industry has been observed, decreasing by 45.9% in the years between the 2001 and 2011 Censuses. The Financial and Insurance Services industry has experienced higher growth than the benchmark areas, to position itself as the second greatest industry by employment within the North Sydney LGA. The Public Administration and Safety industry has also experienced growth at a faster rate (52.2%) than the two benchmark areas to position itself as a substantial employer within the LGA. Overall however, the North Sydney LGA has experienced a lower employment growth rate than the benchmark areas.

Analysis at the ANZSIC 4-digit level provides further insight into the specific industries within the North Sydney LGA. The top ten industries of employment are displayed below in Table 5 for the North Sydney LGA and the two benchmark areas. The Computer System Design and Related Services industry holds a proportion of 13.5% of the employment within the North Sydney LGA, compared to 6% and 2.5% when compared to the benchmarking areas, demonstrating the importance of this industry within North Sydney. A similar value of importance can be applied to the following industries displayed below, albeit to a lesser extent as progress is made down the hierarchy.

TABLE 5: TOP TEN ANZSIC IND USTRIES BY EMPLOYMEN T Total Total Total North Sydney Count Proportion North Subregion Count Proportion Sydney GSCCA Count Proportion Computer System Computer System Hospitals (except Design and Related Design and Related Psychiatric Services 8,910 13.5% Services 19,889 6.0% Hospitals) 63,827 3.4% Engineering Design Computer System and Engineering Hospitals (except Design and Related Consulting Services 3,047 4.6% Psychiatric Hospitals) 10,157 3.1% Services 45,976 2.5% Other Auxiliary Finance and Investment Cafes and Services 2,518 3.8% Restaurants 6,261 1.9% Banking 45,869 2.4% Management Engineering Design and Advice and Related Engineering Consulting Supermarket and Consulting Services 1,923 2.9% Services 6,068 1.8% Grocery Stores 36,970 2.0% Other Advertising Telecommunications Takeaway Food Services 1,708 2.6% Network Operation 5,686 1.7% Services 35,865 1.9% Aged Care Residential Cafes and General Insurance 1,654 2.5% Services 5,657 1.7% Restaurants 34,657 1.8% Hospitals (except Psychiatric Takeaway Food Hospitals) 1,346 2.0% Services 5,330 1.6% Primary Education 34,154 1.8% Other Auxiliary Supermarket and Finance and Banking 1,258 1.9% Grocery Stores 5,305 1.6% Investment Services 30,181 1.6% Management Advice Cafes and and Related Consulting Restaurants 1,250 1.9% Services 5,251 1.6% Secondary Education 28,708 1.5% State Government Administration 1,112 1.7% Primary Education 4,974 1.5% Legal Services 28,222 1.5% Source: ABS, 2011

The prominence of employment within the industry classifications of Professional, Scientific and Technical Services and Financial and Insurance services are particularly significant in the implication that the area is dominated by knowledge economy industries, however the rates of growth within these industries hold their own, more specific implications for the North Sydney LGA.

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The higher rate of growth in Financial and Insurance services is promising for the North Sydney LGA; however the lower rate of growth than in the benchmark areas in Professional, Scientific and Technical Services could suggest that North Sydney has been missing out on adequately capturing the overall uplift in performance of this industry. Similarly substantial decline in the Information Media and Telecommunications classification has seen the North Sydney LGA lose a substantial proportion of its specialised advantage within this industry as it contracted both in the wider benchmark areas, and more dramatically within the North Sydney LGA.

It can be inferred from this data that the growth and decline within these industries have contributed substantially to the decreased performance in employment growth at the LGA-wide level between 2001 and 2011, being at a growth rate of 5.8% within the North Sydney LGA, as compared to the 6.5% growth in the North Subregion and the 9.7% growth in the Sydney GCCSA over the same period.

Overall, over the decade of the 2000s the employment performance in the North Sydney LGA fared similarly to the surrounding subregion. At the same time, employment growth was significantly lower than witnessed in Greater Sydney.

Base case forecasts The NSW Bureau of Transport Statistics (BTS) provides small area geography employment forecasts for employment at five year intervals from each Census over a thirty year period. These figures are based off the Journey to Work data obtained in each Census, and present the data at the ANZSIC 1-digit level, with projections made at five yearly intervals over a thirty year period. Establishing a base case forecast for growth of employment in the North Sydney LGA serves to provide indications of how a base case or ‘no change’ scenario for the area may take shape, as well as presenting a point of reference for future targets and ambitions for growth by industry.

The data has been obtained at the LGA-level from the Bureau’s 2014 update to the data, with the base year for the purposes of this study being considered as 2016 (due to the five yearly intervals used by the BTS) to derive percentage increase on the base year through to 20412.

The forecasts for the North Sydney LGA are displayed below in Table 6, with Figure 13 displaying the seven industries with the highest rate of growth by total number of jobs (in excess of 1000 additional jobs by 2041).

FIGURE 13: PERCENTAGE CHANGE IN MAJOR GROWTH INDUSTRIES

Source: BTS, 2014.

2 A discrepancy in the total amount of persons employed between the Census data obtained directly from the ABS and the employment forecasts obtained from the BTS is noticeable, with the BTS figures being increased by approximately 12% to compensate for the undercount observed in the Census figures.

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TABLE 6: NORTH SYDNEY EMPLOYMENT FORECASTS Increase Proportion Total Counts (2016 – 2041) of Forecast 2016 2021 2026 2031 2036 2041 2041 2041 Growth

Agriculture, Forestry and Fishing 87 94 102 109 116 123 36 42% 0.2% Mining 310 353 387 426 468 510 200 64% 1.0% Manufacturing 2,297 2,431 2,553 2,671 2,792 2,942 644 28% 3.3% Electricity, Gas, Water and Waste Services 533 549 576 596 621 648 114 21% 0.6% Construction 3,375 3,630 3,892 4,163 4,431 4,712 1338 40% 6.9% Wholesale Trade 2,732 2,734 2,760 2,798 2,846 2,917 185 7% 1.0% Retail Trade 3,884 4,123 4,321 4,513 4,716 4,950 1066 27% 5.5% Accommodation and Food Services 4,011 4,204 4,402 4,612 4,848 5,109 1098 27% 5.7% Transport, Postal and Warehousing 1,396 1,344 1,342 1,353 1,380 1,419 23 2% 0.1% Information Media and Telecommunications 5,681 5,719 5,780 5,864 5,977 6,137 456 8% 2.4% Financial and Insurance Services 9,381 9,733 10,286 10,813 11,362 11,913 2533 27% 13.1% Rental, Hiring and Real Estate Services 1,734 1,797 1,871 1,948 2,042 2,164 431 25% 2.2% Professional, Scientific and Technical Services 21,495 21,934 22,752 23,860 24,966 26,134 4639 22% 23.9% Administrative and Support Services 4,231 4,313 4,393 4,519 4,668 4,846 615 15% 3.2% Public Administration and Safety 2,752 2,832 2,922 3,006 3,088 3,173 421 15% 2.2% Education and Training 4,198 4,562 4,962 5,361 5,758 6,175 1977 47% 10.2% Health Care and Social Assistance 4,928 5,475 5,930 6,375 6,837 7,308 2380 48% 12.3% Arts and Recreation Services 1,072 1,087 1,136 1,189 1,240 1,320 248 23% 1.3% Other Services 2,144 2,197 2,272 2,356 2,441 2,537 393 18% 2.0% Unclassified 2,859 2,993 3,126 3,234 3,339 3,433 574 20% 3.0% TOTAL 79,099 82,104 85,763 89,767 93,935 98,470 19,370 24% - Source: BTS, 2014

The three industries which are forecast to experience the highest growth by total counts over the forecast period are Professional, Scientific and Technical Services, Financial and Insurance Services and Health Care and Social Assistance. The Health Care and Social Assistance and the Education and Training industries hold significance in their high growth rate and absolute amount over the forecast period.

Medium to high percentage growth is forecast among a cluster of industries which also hold a substantial increase in total counts in employment (between 1000 and 1500 jobs), such as the Retail Trade, Construction and Accommodation and Food Services classifications. There is a high percentage rate of increase in the Agricultural and Mining sectors, however the relevance of this growth is minimised by the low levels of growth in total counts of employment (<200 jobs) within these industries.

Table 7 below contains a comparison of the BTS employment forecasts for the North Sydney LGA to the Northern Subregion and the Sydney GCCSA. Overall, the North Sydney LGA is forecast to have a growth of 19,370 jobs through to 2041, being an increase of 24% on 2016 levels. This lags behind the forecast growth for both the Subregion and the Sydney GCCSA, which have a forecast increase of 30% and 39% in total employment respectively.

The substantial forecast growth in the Professional, Scientific and Technical and the Financial and Insurance industries anticipates further entrenchment of these industries as the dominant employers within the North Sydney LGA. There is a reduced rate of growth within these two industries when compared to the North Subregion and the Sydney GCCSA, an important point of note when considering the fact that these industries constitute the two largest employers within the North Sydney LGA.

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The Health Care and Social Assistance and the Education and Training classifications both display strong levels of growth in total counts and as a proportional increase (48% and 47%) respectively on the base year, which indicates these could be emerging industries of employment and specialisation for North Sydney. The forecast growth in both of these industries is comparable to the forecast rate of growth of the two benchmark regions.

Across the seven industries of highest growth within the North Sydney LGA (see Figure 13 above), three have comparable rates of growth to the benchmark regions, being Construction, Health Care and Social Assistance, and Education and Training. The other four of these high-growth industries all see substantially reduced rate of growth (between 13-20% less) in comparison to the Sydney GCCSA.

In simple terms, employment levels forecast for North Sydney are lower than the Northern Subregion and significantly lower than Greater Sydney. Health, education and construction sectors are expected to experience the highest rates of growth; although these growth levels are comparable to both the Northern Subregion and Greater Sydney, indicating that these population serving industries are largely increasing to accommodate future population growth.

TABLE 7: EMPLOYMENT FORECASTS 2016-2041: NORTH SYDNEY AGAINST BENCHMARK REGIONS North Sydney (A) North Subregion Sydney GCCSA

Total Percentage Proportion Total Percentage Proportion Total Percentage Proportion

Change Change of Growth Change Increase of Growth Change Increase of Growth

Agriculture, Forestry and Fishing 36 42% 0.2% 198 18% 0.1% 1,451 18% 0.2% Mining 200 64% 1.0% 372 54% 0.3% 2,096 41% 0.2% Manufacturing 644 28% 3.3% 6,728 23% 4.8% 20,657 10% 2.1% Electricity, Gas, Water and Waste Services 114 21% 0.6% 810 28% 0.6% 8,910 41% 0.9% Construction 1,338 40% 6.9% 9,745 35% 7.0% 56,140 41% 5.8% Wholesale Trade 185 7% 1.0% 6,006 18% 4.3% 36,351 28% 3.8% Retail Trade 1,066 27% 5.5% 14,264 30% 10.2% 118,445 47% 12.3% Accommodation and Food Services 1,098 27% 5.7% 8,519 32% 6.1% 69,043 44% 7.2% Transport, Postal and Warehousing 23 2% 0.1% 1,610 17% 1.2% 51,350 39% 5.3% Information Media and Telecommunications 456 8% 2.4% 4,494 17% 3.2% 23,890 31% 2.5% Financial and Insurance Services 2,533 27% 13.1% 3,925 20% 2.8% 66,009 40% 6.9% Rental, Hiring and Real Estate Services 431 25% 2.2% 2,602 28% 1.9% 19,180 42% 2.0% Professional, Scientific and Technical Services 4,639 22% 23.9% 18,938 28% 13.6% 103,601 44% 10.8% Administrative and Support Services 615 15% 3.2% 3,319 21% 2.4% 33,684 42% 3.5% Public Administration and Safety 421 15% 2.2% 4,612 31% 3.3% 60,701 43% 6.3% Education and Training 1,977 47% 10.2% 17,171 45% 12.3% 87,328 47% 9.1% Health Care and Social Assistance 2,380 48% 12.3% 29,760 49% 21.3% 144,532 52% 15.0% Arts and Recreation Services 248 23% 1.3% 946 15% 0.7% 16,058 41% 1.7% Other Services 393 18% 2.0% 4,263 25% 3.1% 32,405 36% 3.4% Unclassified 574 20% 3.0% 1,429 11% 1.0% 9,495 15% 1.0% TOTAL 19,370 24% - 139,710 30% - 961,326 39% - Source: BTS 2014

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4.2 Input-output analysis

The Input-Output (I-O) Model is a tool which quantifies the linkages of all sectors in a given economy. A region specific model for the North Sydney LGA was generated to assess economic impacts of developing in the North Sydney LGA, as well as from current activities on-site.

I-O models measure the relationships and inter-dependence between industries in the economy. The model identifies the buyer and supplier linkages in the local economy, highlighting those industries that have the greatest economic ‘multipliers’. Multipliers are measures of the total impact on all industries in an economy arising from changes in the output of a particular industry. For example, an increase in output of the construction industry (i.e. more houses) would have a flow-on effect to industries related to construction. The I-O model framework enables identification of those industries that have the biggest ‘bang for the buck’ – in terms of value add and employment per additional unit of output.

The Input-Output Model measures the effects of additional development in a particular industry. For every dollar or unit of output from one industry there are flow-on effects to other industries in the form of goods and services required. These supply-chain effects (generally referred to as ‘production induced effects’) are both direct (first round effects) and indirect (second round effects). For example, a housing construction firm might require the services of a bricklayer (direct round), who would in turn require the services of a brick maker (indirect effect), and so on. There are also consumer driven effects (otherwise known as ‘consumption induced effects’), which are created by the additional demand in the economy generated by the wages of those employed in the production process. The focus of this analysis is on the local ‘multiplier’ effects associated with an increase in production in a particular industry.

Multipliers derived from the model estimate three key measures:

 Output (or income);  Value added Gross Regional Product (GRP); and  Full time equivalent (FTE) jobs.

Table 7 shows the input-output multipliers for industries within the North Sydney LGA at the 1-digit ANZSIC level, with the industries that have the largest effects to the overall economy of North Sydney highlighted and a rank assigned in order of highest to lowest for each multiplier. These results are also graphed in Figure 14 below. The multipliers can be interpreted in the following ways:

 Output Multipliers – for every additional dollar earned in Financial and Insurance Services, the level of regional output increases by $2.05.  Employment Multipliers – at present each $1 million increase in output in this Financial and Insurance Services, 2.72 jobs will be generated.  Value Added Multipliers – for every extra dollar of output generated in the Financial and Insurance Services industries, total regional income and gross operating surplus will increase by $1.83.

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FIGURE 14: INPUT-OUTPUT MULTIPLIERS FOR NORTH SYDNEY LGA

Source: SGS Economics and Planning 2015.

TABLE 8: NORTH SYDNEY OUTPUT, EMPLOYMENT AND VALUE ADDED MULTIPLIERS Output Employment Value Added Aggregate Multipliers Rank Multipliers Rank Multipliers Rank Rank Agriculture, Forestry and Fishing 1.65 18 1.54 13 1.84 14 19 (A) Mining (B) 1.70 17 2.77 3 1.69 19 13 Manufacturing (C) 1.62 19 2.13 8 2.22 5 12 Electricity, Gas, Water and Waste 2.00 6 2.59 5 2.27 4 3 Services (D) Construction (E) 1.94 8 2.92 2 2.38 2 2 Wholesale Trade (F) 1.89 11 1.95 11 2.02 9 9 Retail Trade (G) 2.04 4 1.44 16 1.91 11 9 Accommodation and Food Services 1.78 14 1.34 19 1.97 10 18 (H) Transport, Postal and Warehousing 1.78 13 1.95 10 2.04 8 9 (I) Information Media and 1.73 16 2.19 7 1.79 17 14 Telecommunications (J) Financial and Insurance Services 2.05 2 2.72 4 1.83 15 5 (K) Rental, Hiring and Real Estate 1.90 10 3.22 1 1.85 13 6 Services (L) Professional, Scientific and 2.05 3 1.97 9 2.09 6 4 Technical Services (M) Administrative and Support 2.12 1 2.31 6 2.37 3 1 Services (N) Public Administration and Safety 2.00 5 1.68 12 2.04 7 6 (O) Education and Training (P) 1.99 7 1.46 15 1.76 18 14 Health Care and Social Assistance 1.91 9 1.44 17 1.83 16 16 (Q) Arts and Recreation Services (R) 1.73 15 1.54 14 2.39 1 8 Other Services (S) 1.78 12 1.37 18 1.91 12 16 Source: SGS Economics and Planning 2015

As observable by their high output multipliers, there are strong linkages within the North Sydney LGA in the Professional, Scientific and Technical Services and the Financial and Insurance Services classifications within North Sydney. Conversely, the Agriculture, Forestry and Fishing, the Mining and the Manufacturing classifications hold the lowest linkages within North Sydney.

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For the Professional, Scientific and Technical Services industry, the strongest linkages of supply within the LGA (i.e. the industries which have the most flow in effects to the industry in question) are from other firms within the Professional, Scientific and Technical Services industry, followed by the Administrative and Support Services and the Rental, Hiring and Real Estate Services industries. For the Financial and Insurance Services Industry, the main supply linkages are from firms within the Professional, Scientific and Technical Services industry and the Financial and Insurance Services industry itself. The third most substantial supply linkages to this industry come from the Administrative and Support Services. Given these linkages, the clustering of these industries within the North Sydney CBD is likely to be a deliberate strategy. Moreover, these linkages favourably position the North Sydney CBD, being nearby the Sydney CBD and other important office markets in the North Shore.

The most efficient generators of employment are the Mining, Construction and Rental, Hiring and Real Estate Services classifications, whereas the employment multipliers within the Retail Trade, Accommodation and Food Services and the Health Care and Social Assistance are comparatively diminutive in their effects.

In terms of value added, the industries with the highest multipliers are the Arts and Recreation Services, Construction and Administrative and Support Services classifications, with poor results in the Education and Training, Information Media and Telecommunications, and Mining classifications.

High performance overall within the input-output analysis is observable within the Administrative and Support Services classification, along with Construction, and the Professional, Scientific and Technical Services classifications. The Electricity, Gas, Water and Waste Services classification also displays a high performance herein; however its position as a minor part of North Sydney’s workforce (0.6%) reduces its relevance.

While a cost-effective and widely used technique for economic impact analysis, I-O modelling has some limitations, as follows.

 The model assumes relationships between industries are static over the forecast period. That is, productivity improvements are not factored in and historic relationships are assumed to hold.  The input output model derives relationships between industries using total production estimates. Consequently, the relationships are ‘average’, whereas the stimulus used as an input is ‘marginal’. Such an approach does not account for any ‘underutilised capacity’ at the industry level or additional economies of scale that might ensue, as production expands from its existing base.  The model assumes that there are no supply constraints. An additional drawback is that the model does not take into account the ‘crowding out’ of other sectors. This is recognition of the fact that there are scarce resources in an economy.

The combination of these limitations may lead to inflated economic impact results. Hence, the I-O model is generally considered a useful starting point only.

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4.3 Market analysis

Commercial At a metropolitan scale, the Sydney CBD is the major office market and is generally considered in isolation to the other metropolitan office markets. This is apparent when comparing the sheer size of its office market compared to the other metropolitan office markets across Sydney (refer to Figure 15). As a result, the following analysis generally considers North Sydney and St Leonards within the context of other metropolitan office markets rather than the Sydney CBD.

FIGURE 15. SYDNEY METROPOLITAN OFFICE MARKETS 2004 -2014

Source: CBRE 2004, 2009, Colliers 2004, 2005, 2009, Savills 2014.

There are a number of key trends which have been observed over the past decade including:

 the strength and growth in the Sydney CBD office market  the absolute and rapid percentage growth in the ‘business park’ markets of Macquarie Park, Norwest and Sydney Olympic Park  the slow but steady growth in Parramatta and North Sydney  the small decline in office floorspace in the lower north shore centres of Chatswood and St Leonards.

Drivers at work in these different markets have been covered in the earlier discussion looking at employment trends (in particular the forces centralising professional and business services jobs) but also demonstrates that, notwithstanding strong centralising forces, there is ‘life’ in suburban centre office markets where the conditions are favourable.

Overview of commercial centres in North Sydney LGA North Sydney LGA contains two major commercial centres, North Sydney, which includes the cluster of office development at Milsons Point, as well as St Leonards which is split between three LGAs (North Sydney, Lane Cove and Willoughby). Commercial development in North Sydney and St Leonards has been affected by broader trends in the office market, including the general downturn in commercial property during and following the GFC and the increasing attraction of business parks. North Sydney is no longer the second largest office market in Sydney, behind the CBD, with Macquarie Park/North Ryde now overtaking the centre, along with the growing Sydney Fringe market (includes Surry Hills and Pyrmont/Ultimo) (refer to Figure 16). St Leonards/Crows Nest remains a smaller office market, similar in size to Chatswood and Norwest Business Park.

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FIGURE 16. SYDNEY METRO OFFICE FLOORSPACE AND VACANCY

Source: Colliers, 2015.

North Sydney appears to be performing strongly based on positive net absorption and decreasing vacancy rates (refer to Figure 17); however this is mostly as a result of the turnover of commercial floorspace to residential uses which is slightly distorting the figures (Knight Frank, 2015). Vacancy rates are projected to rise slightly when the only large new commercial office development (177 Pacific Highway) is complete in 2016 due to uncertainty about the amount of floorspace that is pre-committed (a significant amount has pre-commitment from Leightons). Rents have been rising due to declining vacancies and this is projected to continue (refer to Figure 17).

FIGURE 17. OVERVIEW OF NORTH SYDNEY COMMERCIAL MARKET

Source: Knight Frank, 2015

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St Leonards is a strategic centre which contains both commercial uses and a significant health and education precinct. A recent study by SGS (2014) highlighted that the current market dynamics of St Leonards/Crows Nest suggest new commercial office development would be unviable in the short term. The office market in the area is suffering, with competition from surrounding office centres at North Sydney and Macquarie Park. According to real estate agent consultation, St Leonards currently attracts small businesses looking for cheaper, short-term lease office space, while larger and higher profile businesses tend to look for higher grade office space in Macquarie Park or North Sydney. Completion of commercial developments in North Sydney in the short term may result in relocations out of St Leonards/Crows Nest and into North Sydney as greater prime office space opportunities emerge.

Whilst vacancies in St Leonards have been decreasing and are projected to continue to decrease (refer to Figure 18) this is likely due to the turnover of commercial sites to residential development. Net absorption has been low, and often negative, with a number of firms leaving the centre including URS which was acquired by AECOM and moved to the CBD (Knight Frank 2015). URS, however, was located to the north of the Artarmon industrial precinct and therefore indicates that the commercial space within Artarmon is considered by real estate firms as within the St Leonards market.

FIGURE 18. OVERVIEW OF ST LEONA RDS SYDNEY COMMERCIAL MARKET

Source: Knight Frank, 2015

Competitors Aside from each other, there are two main competitors for North Sydney and St Leonards/Crows Nest within the North Shore office market:

 Chatswood  Macquarie Park/North Ryde

Chatswood is a major shopping and business centre for the surrounding area with a large shopping mall, Council offices, taller office buildings and residential buildings and central community facilities. It is the fourth largest regional centre in Sydney behind Sydney, North Sydney and Parramatta and has been a retail centre for northern Sydney since the 1960s. According to the Property Council of Australia, Chatswood is the largest single retail centre outside the Sydney CBD, and its catchment extends from North Sydney to Hornsby and east to the Northern Beaches.

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Although Chatswood still contains significant commercial floorspace, development of high density residential development has been occurring in various locations (with commercial and retail uses) since 1995 (Willoughby City Council, 2008). Although high density residential development assisted Chatswood in becoming a 24-hour centre, residential development has now been curbed to ensure the business, employment and service roles of Chatswood are not compromised by the amount of residential development.

Macquarie Park is a significant business growth centre in Sydney, with a high concentration of research and business, specialising in communications, medical research, pharmaceuticals and IT&T sectors. Macquarie Park is part of the Global Economic Corridor, with capacity for over 2 million square metres of commercial floor space. Apart from the commercial offices, Macquarie University, Macquarie Hospital and Macquarie Shopping Centre are also major assets in the area.

Since the opening of the Epping-Chatswood Rail Link in 2009, the accessibility of the precinct has been improved by the addition of new train stations. However, the area suffers from issues with pedestrian amenity. City of Ryde therefore commissioned a Pedestrian Access and Mobility Plan for Macquarie Park (2013) that highlighted the need for improved pedestrian crossings, footpaths, kerb ramps etc. The NSW government has also established an Urban Activation Precinct at Herring Road in Macquarie Park, which will increase the residential population of the area.

Parramatta and Sydney Olympic Park may be increasingly competitors for North Sydney into the future.

Type of office space Over 50 percent of the commercial floorspace within North Sydney is B Grade, which is a significant proportion compared to other centres within the North Shore market and Parramatta (refer to Figure 19). North Sydney also has a much smaller proportion of A Grade office space when compared to North Ryde/Macquarie Park where over 70 percent of the office space is A Grade. North Sydney offers a small amount of premium office space which is unavailable in the other centres and would likely compete mainly with premium commercial floorspace available in the Sydney CBD. St Leonards has a significant amount of C Grade office stock compared to the other centres and therefore is likely to attract a range of different types of firms or uses within the centre and may affect its competitiveness of other locations.

FIGURE 19. GRADE/QUALITY OF OFFICE STOCK

Source: SGS Economics and Planning, 2015 (Original data sourced from Savills, 2015)

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Rents North Sydney commercial rents are much more expensive compared to other metropolitan (non CBD) markets across Sydney. According to Colliers (2015), for A Grade office space, net face rents are $600/sqm for North Sydney, whereas net face rents are significantly cheaper in St Leonards/Crows Nest at $455/sqm. This compares to:

 $665/sqm for Sydney CBD  $545/sqm for Sydney CBD Fringe  $455/sqm for Chatswood,  $445/sqm for Parramatta  $405/sqm for Sydney Olympic Park  $333/sqm for North Ryde/Macquarie Park

North Ryde/Macquarie Park has likely been for a strong competitor market for North Sydney over the past decade due to the gap between rents and this trend is likely to continue. There have been a number of firms which have relocated from North Sydney, as well as St Leonards and Chatswood, to Macquarie Park due to not only the cheaper rents but the availability of A Grade office space and large floorplates.

The difference between these rents has generally been a consistent trend observed over the past decade and is likely to continue into the future (refer to Figure 20). The high rents for North Sydney are likely due to the small proportion of Prime A Grade stock as well as the proximity of the centre to the Sydney CBD.

FIGURE 20. PRIME NET FACE RENTS BY MARKET ($/SQM)

Source: CBRE Research, Q2 2015

Vacancy rates Vacancy rates have generally been declining across the major commercial markets within Sydney (refer to Figure 21). Vacancy rates in North Sydney are lower than for St Leonards/Crows Nest and Macquarie Park and this is likely a key reason for higher net face rents in North Sydney. Vacancy rates in North Sydney are expected to continue to decline and fall below the Sydney CBD due to both a lack of new stock and conversions to residential in North Sydney.

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FIGURE 21. VACANCY BY MARKET

Source: CBRE Research, Q2 2015

In terms of grade of commercial floorspace, the majority of vacant floorspace within North Sydney is B Grade floorspace (refer to Figure 22). Whilst there is much more vacant floorspace in absolute terms in North Sydney compared to St Leonards/Crows Nest and Chatswood, North Sydney is a much larger office market and vacancy rates are lower. According to Knight Frank (2015), the B Grade market is active and fit outs are crucial as tenants are after good quality floorspace. Demand is focused on sub 300 square metre tenancies. The vacant space in St Leonards/Crows Nest is primarily C Grade office space with some B and A Grade office space vacant.

FIGURE 22. VOLUME OF VACANT FLOORSPACE BY GRADE (2015)

Source: SGS Economics and Planning, 2015 (Original data sourced from Savills, 2015)

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Development activity According to Knight Frank (2015), new supply still remains relatively limited in North Sydney with only one major office project under construction (177 Pacific Highway). This development will add 39,000 square metres of new commercial floorspace to the North Sydney market in the first half of 2016. However with pre-commitment from Leighton Holdings (now CIMIC) there is likely to only be 10,000 square metres of new uncommitted space. Savills (2015) suggests that there is a lack of options for larger tenants who have leases due to soon expire. These tenants will likely have to negotiate to remain in their current location or move to the Sydney CBD (Savills 2015).

A number of other projects have been approved including 100 Mount Street (40,000 square metres) and 1 Denison Street (45,000 square metres); however both of these projects have struggled to achieved pre-commitments. DEXUS is reportedly in talks to acquire the site as the original developer went into receivership (Ruehl 2015). Again, securing pre-commitments still remain a barrier for this development to get off the ground.

St Leonards/Crows Nest is similarly constrained in terms of new supply, however St Leonards only has one small development expected to be completed in 2015 (1,400 square metres) with 75,000 square metres of mooted supply (Property Council of Australia, 2015). This is similarly due to difficulties securing pre-commitments (Knight Frank 2015).

Competition between commercial and residential floorspace The amount of supply is also affected by competition between commercial and residential floorspace and pressures for rezonings. According to Knight Frank (2015), 33,000 square metres of commercial floorspace has been withdrawn from the market for residential conversion, since the start of 2013. This has resulted in a decline of 4.4% in total stock. This is occurring predominantly in the periphery locations of Milsons Point and north of Berry Street (Knight Frank 2015). A further 45,000 square metres of commercial floorspace has been earmarked for potential conversion to residential with almost half of this stock expected to be withdrawn from the commercial market within the next 24 months (Knight Frank 2015).

This issue is not unique to North Sydney, and it is occurring in St Leonards, Chatswood and even now in Macquarie Park/North Ryde, as well as a number of centres across Sydney such as Burwood, Hurstville and Epping (Lenaghan 2015).

In St Leonards, almost 20,000 square metres of stock (5.7% of total stock) has been withdrawn from St Leonards since the start of 2015. A further 42,000 square metres of commercial floorspace has been earmarked for potential conversion to residential uses (Knight Frank 2015).

Analysis of Cordell Connect data (refer to Table 33 in Appendix 1Error! Reference source not found.) reinforces the amount of conversions to residential proposed, particularly in St Leonards centre. These developments generally involve the conversion of an existing commercial building to mixed use which is primarily residential with some ground floor retail/commercial or a few floors of commercial. Majority of the developments are listed as possible with development approval.

The Cordell Connect data also highlights that there is evidence of firms moving from Macquarie Park back towards the inner-city with BBC World Australia electing to consolidate their operations in a building in McMahons Point, close to North Sydney. According to the Australian Financial Review (Ruehl 2015), BBC have signed a 10-year lease and were said to have been looking for “an open space with the potential for us to make it our own, in a location with good public transport links and access to local amenities”.

Sales price trends Residential sales prices have grown by almost $400,000 over the past decade (70% increase) across the LGA and also within North Sydney and St Leonards (refer to Figure 23). The majority of residential sales have occurred outside of North Sydney and St Leonards centres, across the rest of the LGA, due to the protection of commercial uses from residential development within the CBD of North Sydney and St Leonards.

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FIGURE 23. RESIDENTIAL STRATA UNITS, MEDIAN PRICES

Source: SGS Economics and Planning, 2015 (Original data sourced from RP Data, 2015).

Commercial sales (strata units) are generally concentrated within North Sydney and St Leonardswhich is reflective of the concentration of the office market within these two centres within the LGA (refer to Figure 24). The median prices have fluctuated which is due to fluctuations in the number of sales, however signifies the strength of the residential market in comparison and has potentially exacerbated the tension between residential and office uses.

FIGURE 24. COMMERCIAL STRATA UNITS, MEDIAN PRICES

Source: SGS Economics and Planning, 2015 (Original data sourced from RP Data, 2015) Note: Some data points within the Median sales price (North Sydney) and Median sales price (St Leonards) were removed as they were considered outliers

Summary and competitive positioning of North Sydney and St Leonards North Sydney and St Leonards have been compared to other commercial centres based on various factors which are likely to affect the choice of location made by investors and tenants (Table 9). This provides a qualitative overview of competing centres against criteria that attract industry location. It also identifies industries that may be more suited to locating in the centres. This is based on both the analysis above and an understanding of each of these centres based on previous studies undertaken by SGS Economics and Planning.

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TABLE 9. COMPARISON OF CENTRES

North Sydney St Leonards Chatswood Macquarie Park Sydney CBD CBD fringe Parramatta Olympic Park Rents 1 2 2 3 1 2 2 2 Potential for large floorplates 1 1 1 3 1 2 2 3 Competition for residential 1 1 1 3 3 2 1 3 Proximity to CBD 3 2 2 1 3 3 1 1 Transport accessibility 3 3 3 2 3 3 2 1 Capacity to accommodate growth 1 1 1 3 3 3 1 3 Proximity to professional workforce 3 2 2 2 3 2 2 2 Public domain and open space 2 2 2 1 3 2 2 3 Land use mix/activity 1 1 2 1 3 3 2 1 Industries professional and financial services 3 3 3 2 3 3 2 2 advanced manufacturing 1 1 1 3 1 1 1 1 wholesale 1 1 1 3 1 1 1 1 health 3 3 3 2 1 1 1 1 government 2 2 2 1 3 1 3 1 education 1 1 1 3 3 3 3 1 creative industries 1 1 1 1 2 3 1 1

Source: SGS Economics and Planning, 2015. Note: scoring for ‘rents’ is based on affordability.

Based on this comparison and the analysis above, the following conclusions can be drawn:

 Commercial development in North Sydney and St Leonards has been affected by broader trends in the office market, including the general downturn in commercial property during and following the GFC and the increasing attraction of business parks.  Rents are likely to be a significant determinant for tenants. Rents are lowest in Macquarie Park and highest within the Sydney CBD. North Sydney is likely to continue to experience strong competition from Macquarie Park, however there is evidence of firms relocating from Macquarie Park to North Sydney and surrounds chasing greater amenity associated with the inner city.  Industries and tenants which require large floorplates are likely to be attracted to Macquarie Park and Sydney Olympic Park due to the availability of large campus-style developments with large floorplates, as well as the capacity within these centres for growth. North Sydney is constrained in this regard, particularly in relation to A-Grade floorspace.  There are a number of development applications which have been approved for commercial development within North Sydney and St Leonards however these have reportedly been deferred due to a lack of pre-commitments.  Competition for residential development is a significant issue in North Sydney and along the North Shore and these are the centres which have limited capacity to accommodate growth in commercial floorspace. Residential encroachment and price competition will continue to impact North Sydney and St Leonards as well as Chatswood.  Professional services uses seeking A Grade office space outside of the Sydney CBD are likely to be attracted to commercial centres along the North Shore, particularly North Sydney and Macquarie Park, however the availability of A Grade office space is severely limited in North Sydney.  Advanced technology and wholesale industries are likely to continue to be attracted to Macquarie Park due to the lower rents and existing concentrations of these industries, as well as potential research links with Macquarie University.

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Industrial North Sydney contains a few small pockets of land zoned for industrial uses along the water, with one light industrial zone within McMahons Point (which accommodates warehouse and light industrial uses including office space). Despite this, there is limited market information available on the industrial market within North Sydney specifically, however there is some information on the market more generally across the North Shore, particularly significant industrial precincts in Artarmon, Lane Cove and St Leonards.

Net face rents for industrial precincts located on the north shore of Sydney are equivalent to the inner city industrial precincts which are facing significant pressure for rezoning to residential development. Capital land values for the North Shore are also significantly higher than other precincts within Sydney (refer to Figure 25); particularly in outer areas of Sydney where there is significantly more industrial land available.

FIGURE 25. SYDNEY INDUSTRIAL CAPITAL VALUES ($/SQM), 2005-2015

Source: Savills, 2015 Note the precincts include the following industrial areas:  South Sydney Botany, Mascot, Alexandria, Rosebery, Matraville  South West Sydney Moorebank, Prestons, Chipping Norton, Liverpool, Revesby, Kingsgrove  Outer South West Sydney Ingleburn, Minto, Smeaton Grange, Campbelltown  Central West Sydney Chullora, Homebush, Rydalmere, Silverwater, Granville, Auburn  Western Sydney Eastern Creek, Erskine Park, Arndell Park, Wetherill Park, Smithfield, Yennora, Girraween  North West Sydney Seven Hills, Kings Park, Blacktown, Baulkham Hills  North Shore Artarmon, Lane Cove, St Leonards

Supply of industrial land within the North Shore and inner city regions of Sydney more broadly, is constrained. In general, the industrial property market is experiencing a push westwards, into more affordable industrial lands in Western Sydney.

There are limited alternative industrial areas in the region. Artarmon plays a key role in the Lower North Shore context, hosting local service industry (e.g. auto repairs, domestic storage etc.) as well as hosting strategic industry servicing the sub-regional population (e.g. postal distribution) or other businesses and development in the Lower North Shore strategic centres (e.g. St Leonards, Chatswood, North Sydney).

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4.4 Economic specialisation

Location quotient analysis To further explore the economic profile of North Sydney a Location Quotient (LQ) analysis has been completed. The LQ demonstrates the concentration of an industry within a region in comparison to a larger benchmark area. It is a ratio calculated using total share of employment of a specific industry within the region of interest, in this case the North Sydney LGA, over the total share of employment of the same industry within the benchmark areas, in this instance the North Subregion and the Sydney GCCSA. A location quotient greater than 1 indicates North Sydney has a proportionately larger number of workers in the specific industry, compared to benchmark areas. It implies North Sydney LGA is producing more goods or services than it can consume and is therefore exporting the remainder out to other regions.

Generally a location quotient over 1.5 indicates a relatively high level of specialisation for that industry within that area. A high location quotient may indicate the industry has a competitive advantage in that industry for the local economy. Competitive advantage is the concept describing the unique attributes that North Sydney LGA may have within a certain industry that lets it outperform competitors. There may be the potential for further economic development in these industries due to the presence of a specialised skilled labour pool or other reasons such as the clustering of related industries within the supply chain. Alternatively, the specialisation may indicate a less diversified local economy, heavily reliant on a particular industry. To an extent, there is an element of scale associated with economic diversification. All other things being equal, a smaller economy is likely to be concentrated in fewer industries and less diverse than a larger economy.

Table 10 shows the location quotient by 1-digit ANZSIC for North Sydney LGA in comparison to the North Subregion and the Sydney GCCSA, with the results also displayed in Figure 26. The industries that North Sydney has a high degree of specialisation in are highlighted, being those holding a location quotient in excess of 1.5 compared to the benchmark areas. The industries with the highest location quotients in comparison to the Sydney GCCSA are ‘Professional, Scientific and Technical Services’, ‘Financial and Insurance Services’ and ‘Information Media and Telecommunications’. These are the industries wherein North Sydney has some competitive advantage to allow these industries to outperform the wider Sydney GCCSA.

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TABLE 10: LOCATION QUOTIENT ANALYSIS

Proportion of Regional Employment Location Quotient North Sydney North Subregion Sydney GCCSA North Subregion Sydney GCCSA Agriculture, Forestry and Fishing (A) 0.1% 0.2% 0.4% 0.460 0.31 Mining (B) 0.4% 0.2% 0.2% 2.466 1.67 Manufacturing (C) 3.1% 6.5% 8.8% 0.480 0.36 Electricity, Gas, Water and Waste 0.63 Services (D) 0.6% 0.5% 0.9% 1.091 Construction (E) 3.9% 5.6% 5.2% 0.699 0.75 Wholesale Trade (F) 3.6% 7.6% 5.6% 0.469 0.64 Retail Trade (G) 4.5% 9.8% 10.1% 0.459 0.45 Accommodation and Food Services (H) 4.7% 5.5% 6.2% 0.862 0.76 Transport, Postal and Warehousing (I) 1.8% 1.9% 5.1% 0.926 0.35 Information Media and 1.88 Telecommunications (J) 6.0% 5.3% 3.2% 1.123 Financial and Insurance Services (K) 12.5% 4.6% 7.1% 2.716 1.75 Rental, Hiring and Real Estate Services 1.18 (L) 2.2% 2.0% 1.9% 1.087 Professional, Scientific and Technical 2.94 Services (M) 30.2% 15.5% 10.3% 1.944 Administrative and Support Services 1.66 (N) 5.3% 3.3% 3.2% 1.630 Public Administration and Safety (O) 4.1% 3.4% 6.0% 1.218 0.69 Education and Training (P) 5.5% 8.7% 8.1% 0.631 0.68 Health Care and Social Assistance (Q) 5.9% 12.7% 11.3% 0.466 0.52 Arts and Recreation Services (R) 1.2% 1.4% 1.6% 0.917 0.78 Other Services (S) 2.7% 3.7% 3.7% 0.725 0.74 Inadequately described/Not stated (X) 1.6% 1.4% 1.2% 1.140 1.38 Source: SGS Economics and Planning 2015

FIGURE 26: LOCATION QUOTIENT AN ALYSIS

Arts and Recreation Services Health Care and Social Assistance Education and Training Public Administration and Safety Administrative and Support Services Professional, Scientific and Technical Services Rental, Hiring and Real Estate Services Financial and Insurance Services Information Media and Telecommunications Transport Postal and Warehousing Accommodation and Food Services Retail Trade Wholesale Trade Construction Electricity, Gas, Water and Waste Services Manufacturing Mining Agriculture, Foresty and Fishing

0.000 0.500 1.000 1.500 2.000 2.500 3.000 3.500 LQ Sydney GCCSA North Subregion

Source: SGS Economics and Planning 2015

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The North Sydney LGA has a high degree of specialisation (LQ > 1.5) in four industries when benchmarked against the North Subregion and in five industries when benchmarked against the Sydney GCCSA. The highest degree of specialty against the Sydney GCCSA region is found in the Professional, Scientific and Technical Services classification by a clear margin, being followed by a cluster of industries with an LQ between 1.66 and 1.88, being Administrative and Support Services, Mining, Financial and Insurance Services, and Information Media and Telecommunications.

Growth Share Analysis The growth share analysis plots the competitiveness (i.e. the location quotient), the growth of an industry and the size of the industry to determine the industries that have the greatest potential for economic development. Ideally, they are the industries that exhibit positive growth and a location quotient above 1.5. These industries fall in the top right hand quadrant.

Figure 27 highlights the growth share analysis of North Sydney LGA compared to the Sydney GCCSA. The horizontal axis indicates the degree of specialisation indicated by the location quotient and the vertical axis shows the change in employment over 2001 to 2011. The top right quadrant indicates the industries that have a high level of specialisation (i.e. a high LQ) and high growth in employment. The size of the circles indicates the relative size of the industry3.

FIGURE 27: LOCATION QUOTIENT GROWTH SHARE ANALYSIS: NORTH SYDNEY AGAINST SYDNEY GCCSA (2001-2011) 80% Low location quotient High location quotient High growth High growth Arts & Recreation 60% Public Administration Healthcare & Social & Safety Assistance Financial & Insurance 40% Construction Services Professional & Education & Training Technical Services 20% Accommodation & Manufacturing Food Rental & Real Estate 0%

Retail Trade Wholesale Administrative & -20% Trade Support Services Transport, Postal & Electricity, Gas, Information Media & Changein employment 2001 to 2011 (%) Warehousing Water & Waste Telecommunications -40% Services Low location quotient High location quotient Low growth Low growth -60% 0.25 0.50 1.00 2.00 4.00 LQ

Source: SGS Economics and Planning 2015

For North Sydney, there are very few industries located in the top right quadrant of the graph, which indicates that there have been few emerging industries within the North Sydney LGA between 2001 and 2011. The first industry located within this quadrant is the Financial and Insurance Services industry, which has displayed a strong level of

3 To allow for increased ease of interpretation, two categories have been removed. There being the Mining and the Agriculture, Forestry and Fishing industries, due to their small size resulting in low significance to the graph and a dramatic percentage change in employment growth over the time period.

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growth across the previous ten years, with the LGA-level statistics displaying a high degree of speciality. The other industry located in this quadrant is Mining, which has been removed due to its minute scale (and therefore impact), and the resultant abnormally large percentage growth.

The Information Media and Telecommunications industry has, whilst retaining a reasonably high level of specialisation within the region, has seen a decline of nearly 46 percent over the ten year period to 2011. At the same time it remained the third highest employer at the time of the 2011 Census. There is a clustering of industries which are of similar (yet slightly smaller) size to the Information Media and Telecommunications industry. These are located in the top left quadrant of the graph, holding a lower degree of specialisation than the Sydney GCCSA but these industries have experienced substantial growth across the period between 2001 and 2011. They include:  Health and Social Assistance Services  Education and Training  Public Administration and Safety; and  Construction

The graph, with only one industry located in the top-right quadrant, presents some concern for the North Sydney LGA. Whilst the Financial and Insurance Services sector has displayed positive growth along with achieving a high degree of specialisation, it can be considered to be relatively well established as the North Sydney LGAs second largest employer. The moderate reduction in the Administrative and Support Services industry (6%) and the large reduction (45.9%) in the Information Media and Telecommunications industry, establishes a pattern of decline in its areas of specialisation.

Shift-share analysis Shift-share analysis is a tool that is used to account the competitiveness of a region’s industries and to analyse the economic base. It indicates how well a region's industries are performing by observing the benchmark, local and industrial components of employment change. The shift-share analysis provides a dynamic account of total regional employment growth that can be attributed to the growth of the benchmark economy, the mixture of faster or slower than average growing industries, and the competitive nature of the local industries. This type of analysis identifies the industries that benefit from local competitive advantages and those that suffer from local growth limitations.

The shift-share analysis includes the following elements:

 Regional Growth Effect (RG) displays the overall growth of the Sydney GCCSA economy over the period of 2001-2011. This is the share of local job growth that can be attributed to growth of the state economy. Specifically, if the state as a whole is experiencing employment growth (“a rising tide lifts all boats”), one would expect total Sydney growth to exert a positive growth influence on the local area.

 Expected Change is the rate of growth of the particular industry at the regional level. It is the change that you would expect to see occurring in both the study and benchmark regions, all other things being equal. This is the share of local job growth that can be attributed to the region's mix of industries. This second factor is the change in a local industry that would be attributable to the growth or decline of the industry across a broader socioeconomic region, in this case being the GCCSA.

 Industrial Mix Effect (IM) represents the industry growth rate for the benchmark region (Sydney GCCSA) accounting for broader growth. The IM removes (or isolates) the effect of overall growth in the Sydney economy by subtracting the overall growth from the industry growth. For example, Construction grew by 18.6% between 2001 and 2011, but once the Sydney growth of 9.7% is accounted for, then it grew by only 8.9%.

 Competitive Shift (CS) explains how much of the change in a given industry is due to some unique competitive advantage that the local area possesses, because the growth cannot be explained by broader trends in that industry or the economy as whole. It is the total industry growth in the North Sydney LGA minus the change you would expect in that industry (expected change) given the benchmark rates. We observe that

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even during periods of general prosperity, some regions and still some industries grow faster than others do. This is usually attributed to some local comparative advantage such as natural resources, linked industries, or favourable local labour situations. The local component aids in identifying a local area's economic strengths. This element of the analysis is a representation of how a region's competitive position can contribute to regional job growth.

 The total column is the total amount of growth by industry in the North Sydney LGA from 2001-2011.

The shift-share analysis indicates what growth is attributable to factors unique to the North Sydney LGA and those that are attributable to general trends found in Sydney GCCSA. The competitive advantages are those unique factors that have sustained the growth of those industries within the North Sydney LGA.

A shift-share analysis was conducted for the North Sydney LGA against the Sydney GCCSA to determine the extent to which job growth can be attributed to unique regional factors and how much is due to broader trends (Table 11). The jobs growth for the North Sydney LGA and NSW is shown above in Table 4 on page 45, with the local growth within the LGA being included in the table below (as “Total Growth”) for ease of reference, along with the proportion of jobs that each industry provides within the North Sydney LGA in 2011 (as “Employment Proportion”).

Table 11 has the top and bottom five industries according to their competitive shift highlighted in green and red respectively. The industries which have employed in excess of 3000 persons within the North Sydney LGA at the time of the 2011 Census (the top 7 employers) have been also been highlighted, being in light brown where that industry’s competitive shift has decreased and in blue where it has increased.

TABLE 11: SHIFT-SHARE ANALYSIS: NORTH SYDNEY AGAINST SYDNEY GCCSA (2001 -2011) Regional Expected Industrial Mix Total Competitive Employment Growth (RG) Change (IM) Growth Shift (CS) Proportion Agriculture, Forestry and Fishing (A) 9.7% -34.0% -43.6% -19.3% 14.7% 0.1% Mining (B) 9.7% 53.0% 43.3% 132.4% 79.4% 0.4% Manufacturing (C) 9.7% -18.5% -28.2% 0.8% 19.3% 3.1% Electricity, Gas, Water and Waste 9.7% 18.2% 8.5% -26.1% -44.2% 0.6% Services (D) Construction (E) 9.7% 18.6% 8.9% 38.5% 19.9% 3.9% Wholesale Trade (F) 9.7% 1.1% -8.6% -6.3% -7.4% 3.6% Retail Trade (G) 9.7% 4.0% -5.7% -5.8% -9.8% 4.5% Accommodation and Food Services (H) 9.7% 7.9% -1.7% 0.8% -7.2% 4.7% Transport, Postal and Warehousing (I) 9.7% 6.9% -2.8% -26.4% -33.3% 1.8% Information Media and 9.7% -11.7% -21.4% -45.9% -34.2% 6.0% Telecommunications (J) Financial and Insurance Services (K) 9.7% 18.7% 9.0% 27.2% 8.5% 12.5% Rental, Hiring and Real Estate Services (L) 9.7% 1.3% -8.4% -1.7% -3.0% 2.2% Professional, Scientific and Technical 9.7% 17.2% 7.6% 7.5% -9.7% 30.2% Services (M) Administrative and Support Services (N) 9.7% 3.2% -6.4% -6.0% -9.3% 5.3% Public Administration and Safety (O) 9.7% 28.1% 18.5% 52.2% 24.0% 4.1% Education and Training (P) 9.7% 25.7% 16.0% 31.8% 6.1% 5.5% Health Care and Social Assistance (Q) 9.7% 35.0% 25.4% 46.2% 11.2% 5.9% Arts and Recreation Services (R) 9.7% 24.1% 14.4% 59.7% 35.6% 1.2% Other Services (S) 9.7% -3.0% -12.7% 13.9% 17.0% 2.7% TOTAL 9.7% 9.7% 0.0% 5.8% -3.9% 100% Source: SGS Economics and Planning 2015

There have been substantial decreases across a range of industries within the North Sydney LGA, most severely within the Utilities Sector (Electricity, Gas Water and Waste Services), along with the Transport Postal & Warehousing and the Information Media & Telecommunications industries. There have been substantial increases in competitive shift in the industries of Mining, Arts and Recreation Services, and Public Administration and Safety.

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The two highest changes in competitive shift, a 79.4% increase in Mining and a 44.2% decrease in the Utilities Sector have a reduced significance on the economic landscape of North Sydney due to the small size of these industries within the North Sydney LGA (<1% of total employment). The decrease in the competitive shift of the Professional, Scientific and Technical Services industry (9.7%) is highly significant due to its prominence as the North Sydney LGA’s largest employer. Additionally, the substantial decrease (34.2%) in the competitive shift of the Information Media and Telecommunications industry holds a similar significance due to its decrease from its 2001 level of 7,326 jobs (or 11.7% of employment) within the North Sydney LGA. This equates to a drop in the location quotient of the industry within the North Sydney LGA compared to the Sydney GCCSA from 2.97 to 1.88.

Of the seven highest employers within the North Sydney LGA (being those employing more than 3000 people, highlighted in the last column of Table 11), four have experienced a decline in their competitive shift, within which two are among the top five rates of decrease, and three have experienced an increase, within which none are among the top five rates of increase.

Despite overall growth within the Professional, Scientific and Technical Services industry, relative competitiveness of the North Sydney LGA with the greater Sydney region has declined, a factor which has operated in conjunction with the dramatic decline in the competitiveness of North Sydney within the Information Media and Telecommunications industry to create a concerning scenario for two of the North Sydney LGA’s top three employers; both of which are areas of specialisation within the LGA with their high location quotients.

The increases in the competitiveness of the Financial and Insurance Services industry provides a positive contrast to the above, being the industry’s second largest employer. Additionally, the increases in the competitiveness of the fourth and fifth largest employers within the precinct, Education & Training and Health Care and Social Assistance, highlight a potential increase in these industries’ role as major employers within the North Sydney LGA.

4.5 Precinct/Centre profiling

Centres and precincts of employment within the North Sydney LGA have been selected for specific profiling of their economic, built form and infrastructural characteristics. The precincts have been selected to encompass areas of significant employment within the LGA, with additional reference to areas where the B4 – Mixed Use is prevalent, in order to provide more information regarding the effects of an observed shift in favour of residential development within these zones. The precincts within the North Sydney LGA that have been selected are:  North Sydney CBD  North Sydney Periphery  St Leonards (located partially out of the North Sydney LGA)  Crows Nest  Milsons Point  Neutral Bay (Military Road)  Pacific Highway  Cremorne (Military Road)

Additionally, areas outside of the North Sydney LGA have been included in the precinct analysis where the precinct has been identified as likely having an economic nexus with the North Sydney LGA. These precincts are:  Royal North Shore Hospital  Artarmon Industrial Area

The precincts have been defined around the boundaries of the BTS Travel Zone geographies in order to easily obtain small area employment data. The precincts have been allocated two spatial definitions, one utilising the BTS 2011 Travel Zone Geographies (TZ11) and one utilising the BTS 2006 Travel Zone Geographies (TZ06). This method was chosen over utilising a concordance table is at was determined to more accurately capture the changes in employment over time due to the large variations in area observed within some of the travel zones between the TZ06 and the TZ11 definitions. A pictorial depiction of the extent of each precinct is included in the relevant section.

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Data has been obtained for each precinct pertaining to the employment within the relevant Travel Zones, categorised by industry and occupation at the 1-digit level, taken the BTS Journey to Work Data. As observed in the base case forecasts in section 4.1 above, the BTS Journey to Work figures have been adjusted to compensate for an undercount in census figures, having been increased by approximately 12%, and as such may appear to be slightly inflated when compared to ABS data.

Within the profile of each precinct, a location quotient has been derived, and is compared against the North Sydney LGA, the North Subregion and the Sydney GCCSA. Within the tables, the top three values in each relevant column have been highlighted in green, and the bottom three values highlighted in red. An exception to this rule is in the location quotient analysis for each precinct, wherein the values greater than 1.5 are highlighted in green, rather than the top three values. This is done to emphasise areas which hold a relatively high degree of specialisation, and the bottom three location quotient values remain highlighted in red.

The precincts have been arranged in order the greatest to least employment, with the two precincts located wholly outside of the North Sydney LGA being attached at the end of the list.

A substantially smaller proportion of persons employed within the Retail Trade and the Accommodation and Food Services industries within the North Sydney CBD, North Sydney Periphery and the St Leonards precincts than the benchmarked areas, being apparent within the location quotients for these industries with each precinct. Further comparative analysis was undertaken by deriving new benchmark areas of comparable size, built form and land use as these precincts, in areas within Chatswood, Parramatta and the Sydney CBD in proximity to Wynyard Station.

This comparison found that while the location quotient of all three precincts was low against the wider benchmarking areas (the North Sydney LGA, The North Subregion and the Sydney GCCSA), when compared to similar centres, a lower LQ was again observed within the Accommodation and Food Services industry. While this may indicate an undersupply in this industry, it does not definitively establish whether the current supply is insufficient to meet local demand. Within the retail trade industry, an LQ higher than the comparative centres was observed. When the comparative centres were expanded to include major nearby retail developments (i.e. Westfield Parramatta, Westfield Chatswood and Chatswood Chase) the LQ of the precincts within North Sydney were dramatically lower than the scores for the comparative centres.

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FIGURE 28: TZ06 PRECINCT BOUNDARIES

Source: SGS Economics and Planning, 2015

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FIGURE 29: TZ11 PRECINCT BOUN DARIES

Source: SGS Economics and Planning, 2015

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North Sydney CBD The North Sydney CBD precinct has the greatest total count of employment of the precincts selected for this study, with 41.2% of persons employed within the North Sydney LGA working within this precinct. The precinct has a comparable level of employees within the Professional, Scientific and Technical Services classification to the LGA-wide average; however there is a prominence of the Financial and Insurance Services classification within the precinct. The precinct has displayed strong rate of job growth in the past five years, and has high location quotients compared to the North Sydney LGA for the Financial and Insurance Services classification, and high location quotients for the Professional, Scientific and Technical Services and the Administrative and Support Services classifications when compared to the broader benchmark areas. The occupational split of the persons employed within the precinct shows a high proportion of professionals (41.5%), along with Managers and Clerical and Administrative Workers (21.8% and 20% respectively), with small proportions in all other occupational categories.

The North Sydney CBD has a very high level of transport accessibility. The North Sydney railway station is located centrally to the precinct, functioning also as a transport interchange with the various bus routes that run through the area to make connections regionally. There is a high degree of road connectivity within the area via the precinct’s location adjacent to the Warringah Freeway, and additionally as it is bisected by the Pacific Highway. The precinct is zoned B3 – Commercial Core, and the built form of the area predominantly of high-rise commercial towers. With various retail uses located on the lower floors of buildings and within enclosed shopping malls. The site is of commercial significance to the region and the wider metropolitan area.

TABLE 12: PRECINCT INDUSTRY PROFILE: NORTH SYDNEY CBD Employment Growth Location Quotient Total Proportion Proportion 2006- North Sydney North Sydney Counts of Precinct of LGA 2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing (A) 18 0.1% 25.4% 80.0% 0.61 0.28 0.19 Mining (B) 159 0.6% 65.2% 13.6% 1.58 3.90 2.63 Manufacturing (C) 464 1.7% 22.5% 6.2% 0.55 0.26 0.19

Electricity, Gas, Water and Waste 329 1.2% 85.2% 520.8% 2.07 2.26 1.31 Services (D) Construction (E) 1435 5.3% 55.3% 70.6% 1.34 0.94 1.01 Wholesale Trade (F) 1034 3.8% 44.1% 41.3% 1.07 0.50 0.68 Retail Trade (G) 616 2.3% 20.7% -30.1% 0.50 0.23 0.22 Accommodation and Food Services 704 2.6% 22.5% 2.0% 0.55 0.47 0.42 (H) Transport, Postal and Warehousing (I) 790 2.9% 66.8% 88.5% 1.62 1.50 0.57

Information Media and 1267 4.7% 32.0% -58.3% 0.78 0.87 1.46 Telecommunications (J) Financial and Insurance Services (K) 5566 20.5% 67.8% 30.9% 1.64 4.47 2.88 Rental, Hiring and Real Estate 464 1.7% 31.6% 18.1% 0.77 0.83 0.91 Services (L)

Professional, Scientific and Technical 8008 29.5% 40.3% 28.7% 0.98 1.90 2.87 Services (M) Administrative and Support Services 1847 6.8% 52.7% 17.2% 1.28 2.08 2.13 (N) Public Administration and Safety (O) 1225 4.5% 45.3% 215.7% 1.10 1.34 0.75 Education and Training (P) 665 2.4% 18.3% 19.0% 0.44 0.28 0.30 Health Care and Social Assistance (Q) 1004 3.7% 25.7% 28.7% 0.62 0.29 0.33 Arts and Recreation Services (R) 88 0.3% 10.7% -45.7% 0.26 0.24 0.20 Other Services (S) 774 2.8% 43.3% 25.9% 1.05 0.76 0.77 Inadequately described/Not stated 729 2.7% 69.6% 42.7% 1.69 1.92 2.32 (X) TOTAL 27,186 - 41.2% 19.8% - - - Source: BTS, 2014

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TABLE 13: PRECINCT OCCUPATION PROFILE: NORTH SYDNEY CBD Totals Change 2011 Proportion (2006-2011) Managers 5933 21.8% 21.2% Professionals 11,285 41.5% 21.4% Technicians and Trades Workers 1336 4.9% 21.8% Community and Personal Service Workers 676 2.5% 17.2% Clerical and Administrative Workers 5439 20.0% 14.4% Sales Workers 1413 5.2% 5.0% Machinery Operators and Drivers 155 0.6% 91.4% Labourers 396 1.5% 20.4% Inadequately Described 394 1.4% 24.3% Not Stated 161 0.6% 631.8% Totals 27,188 - 19.7% Source BTS 2014.

North Sydney Periphery

The North Sydney Periphery encompasses the mixed use and commercial core zones to the north of the CBD area, and has the second highest employment of the precincts within the North Sydney LGA. The area has seen growth in the Information Media and Telecommunications classification over the past five years, going against the LGA-wide trend of sharp decline in this industry, which has resulted in the precinct having a high location quotient in this industry. The precinct represents 18% of the North Sydney LGA’s total employment, and has experienced strong growth over the past five years, with employment growing by 32% over this period. The precinct contains a high proportion of workers’ occupations within the Professionals category (42.4%).

The North Sydney Periphery precinct has a high level of transport accessibility, being located within 1km to the north of North Sydney railway station. The area is serviced a range of bus routes which operate at a high frequency during peak times, and the area has a high level of accessibility via road due to its location adjacent to the Warringah Freeway and its bisection by the Pacific Highway. The precinct contains a range of independent tertiary education institutions, as well as three private primary and secondary schools. The area is predominantly zoned a mix of B3 – Commercial Core, B4 – Mixed Use, R4 – High Density Residential and SP2 – Infrastructure. The area’s built form transitions from high-rise commercial towers in closest proximity to the North Sydney CBD to lower-rise mixed use developments whilst progressing away from the B3 – Commercial Core zones. The precinct, in conjunction with the North Sydney CBD, remains a significant site in the commercial landscape of the Subregion and the wider metropolitan area.

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TABLE 14: PRECINCT INDUSTRY PROFILE: NORTH SYDNEY PERIPHERY Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 6 0.1% 8.5% -64.7% 0.47 0.22 0.14 (A) Mining (B) 48 0.4% 19.7% 60.0% 1.09 2.70 1.82 Manufacturing (C) 762 6.4% 36.9% 169.3% 2.05 0.99 0.73

Electricity, Gas, Water and Waste 17 0.1% 4.4% -52.8% 0.24 0.27 0.16 Services (D) Construction (E) 356 3.0% 13.7% 36.4% 0.76 0.53 0.57 Wholesale Trade (F) 440 3.7% 18.8% 20.9% 1.04 0.49 0.66 Retail Trade (G) 499 4.2% 16.7% 45.9% 0.93 0.43 0.42 Accommodation and Food 252 2.1% 8.1% 2.4% 0.45 0.39 0.34 Services (H) Transport, Postal and 105 0.9% 8.9% 114.3% 0.49 0.46 0.17 Warehousing (I)

Information Media and 1535 12.9% 38.8% 137.2% 2.15 2.42 4.06 Telecommunications (J) Financial and Insurance Services 832 7.0% 10.1% 24.0% 0.56 1.53 0.99 (K) Rental, Hiring and Real Estate 206 1.7% 14.0% -1.9% 0.78 0.85 0.92 Services (L)

Professional, Scientific and 3960 33.4% 19.9% 18.0% 1.11 2.15 3.26 Technical Services (M) Administrative and Support 623 5.3% 17.8% 6.0% 0.99 1.61 1.65 Services (N) Public Administration and Safety 435 3.7% 16.1% -20.0% 0.89 1.09 0.61 (O) Education and Training (P) 932 7.9% 25.6% 38.7% 1.42 0.90 0.97 Health Care and Social Assistance 271 2.3% 6.9% 30.9% 0.39 0.18 0.20 (Q) Arts and Recreation Services (R) 67 0.6% 8.1% 3.1% 0.45 0.41 0.35 Other Services (S) 219 1.8% 12.2% 62.2% 0.68 0.49 0.50 Inadequately described/Not 294 2.5% 28.1% 11.8% 1.56 1.78 2.15 stated (X) TOTAL 11,859 - 18.0% 32.0% - - - Source: BTS, 2014

TABLE 15: PRECINCT OCCUPATION PROFILE: NORTH SYDNEY PERIPHERY Totals Change 2011 Proportion (2006-2011) Managers 2797 23.6% 46.9% Professionals 5029 42.4% 29.5% Technicians and Trades Workers 626 5.3% 17.0% Community and Personal Service Workers 479 4.0% 19.5% Clerical and Administrative Workers 1834 15.5% 17.2% Sales Workers 625 5.3% 53.9% Machinery Operators and Drivers 47 0.4% 56.7% Labourers 188 1.6% 24.5% Inadequately Described 157 1.3% 37.7% Not Stated 78 0.7% 7700.0% Totals 11,860 - 31.9% Source: BTS, 2014

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St Leonards The St Leonards precinct has the highest proportion of people employed in the Professional, Scientific and Technical Services classification out of all of the precincts contained within the North Sydney LGA. As such this area has a high location quotient for this industry compared to all of the benchmarking areas, and there has been a very high level of growth in this industry between 2006 and 2011. The precinct has little other areas of specialisation (LQ >1.5). St Leonards has seen strong jobs growth over the period between 2006 and 2011 (increasing by 28.3%), and comprised 16.6% of the employment within the North Sydney LGA at the time of the 2011 Census. The occupational split within the precinct is again comprised mostly of Professionals, followed by Managers, and Clerical and Administrative Workers.

The St Leonards precinct is divided between the North Sydney, Willoughby and Lane Cove LGAs. The precinct has a very high level of transport accessibility, being situated directly above the St Leonards railway station, with a range of bus services which run along the Pacific Highway also servicing the precinct. The precinct is predominantly zoned B3 – Commercial Core, although it includes elements of the B4 – Mixed Use zoning. The area’s built form is comprised mainly of high-rise commercial office buildings within the core of the precinct, reducing in height as distance from the railway station increases. The precinct is of commercial significance to both the Subregion and the wider metropolitan area.

TABLE 16: PRECINCT INDUSTRY PROFILE: ST LEONARDS Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 3 0.0% 4.2% -50.0% 0.25 0.12 0.08 (A) Mining (B) 23 0.2% 9.4% 76.9% 0.57 1.40 0.95 Manufacturing (C) 588 5.4% 28.5% 46.3% 1.72 0.82 0.61

Electricity, Gas, Water and Waste 11 0.1% 2.8% -97.6% 0.17 0.19 0.11 Services (D) Construction (E) 424 3.9% 16.3% -14.9% 0.99 0.69 0.74 Wholesale Trade (F) 378 3.5% 16.1% -7.6% 0.97 0.46 0.62 Retail Trade (G) 321 2.9% 10.8% 14.6% 0.65 0.30 0.29 Accommodation and Food 358 3.3% 11.4% -14.1% 0.69 0.59 0.53 Services (H) Transport, Postal and 172 1.6% 14.5% -65.1% 0.88 0.81 0.31 Warehousing (I)

Information Media and 665 6.1% 16.8% -6.9% 1.01 1.14 1.91 Telecommunications (J) Financial and Insurance Services 671 6.1% 8.2% 12.0% 0.49 1.34 0.86 (K) Rental, Hiring and Real Estate 246 2.2% 16.8% 0.8% 1.01 1.10 1.19 Services (L)

Professional, Scientific and 4954 45.3% 24.9% 202.8% 1.50 2.92 4.42 Technical Services (M) Administrative and Support 414 3.8% 11.8% -14.1% 0.71 1.16 1.19 Services (N) Public Administration and Safety 108 1.0% 4.0% 28.6% 0.24 0.29 0.16 (O) Education and Training (P) 354 3.2% 9.7% 31.1% 0.59 0.37 0.40 Health Care and Social Assistance 420 3.8% 10.8% -58.0% 0.65 0.30 0.34 (Q) Arts and Recreation Services (R) 186 1.7% 22.6% 104.4% 1.36 1.25 1.06 Other Services (S) 321 2.9% 17.9% 32.1% 1.08 0.78 0.80 Inadequately described/Not 320 2.9% 30.5% 63.3% 1.84 2.10 2.54 stated (X) TOTAL 10,937 - 16.6% 28.3% - - - Source: BTS, 2014

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TABLE 17: PRECINCT OCCUPATION PROFILE: ST LEONARDS Totals Change 2011 Proportion (2006-2011) Managers 2421 22.6% 51.6% Professionals 4427 41.4% 45.8% Technicians and Trades Workers 744 6.9% 23.6% Community and Personal Service Workers 367 3.4% 1.4% Clerical and Administrative Workers 1912 17.9% -7.2% Sales Workers 632 5.9% 16.2% Machinery Operators and Drivers 46 0.4% -32.4% Labourers 157 1.5% -4.3% Inadequately Described 138 1.3% 39.4% Not Stated 93 0.9% 3000.0% Totals 10,937 - 28.1% Source: BTS, 2014

Crows Nest

The Crows Nest precinct holds a higher proportion of Retail Trade and Accommodation and Food Services Industries jobs than most precincts within the North Sydney LGA. Despite this, the Professional, Scientific and Technical Services classification is still the largest employer within the area. The precinct has experienced mediocre job growth over the previous five years, increasing in size by 7.1% to comprise 6.8% of the total employment within the North Sydney LGA. The precinct has a high location quotient in Accommodation and Food Services, as well as in the Rental, Hiring and Real Estate Services classification. The occupational split of the precinct is weighted slightly less towards the Professional category, which remains the highest category for the precinct by employment, and there are more pronounced roles for the Sales Workers, Community and Personal Service Workers, and Technicians and Trades Workers.

The Crows Nest precinct has a relatively good level of transport accessibility. It is located between 600m and 1.5km of St Leonards railway station, with a high level of bus services along the Pacific Highway corridor linking the precinct to heavy rail interchanges locally, along with other destinations within the region and select locations within the wider metropolitan area. The precinct is predominantly zoned B4 – Mixed Use, with large elements of R2 and R3 zonings, with a small proportion of B3 – Commercial Core. The precinct’s built form consists mostly of medium to low rise developments, being mostly retail developments along main street frontages, with some commercial office buildings and some mixed use developments containing a residential component. The precinct is significant locally for retailing and hospitality uses.

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TABLE 18: PRECINCT INDUSTRY PROFILE: CROWS NEST Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 3 0.1% 4.2% -25.0% 0.62 0.28 0.19 (A) Mining (B) 3 0.1% 1.2% - 0.18 0.44 0.30 Manufacturing (C) 180 4.0% 8.7% 29.5% 1.28 0.61 0.46

Electricity, Gas, Water and Waste 10 0.2% 2.6% -9.1% 0.38 0.41 0.24 Services (D) Construction (E) 135 3.0% 5.2% -34.8% 0.76 0.53 0.57 Wholesale Trade (F) 213 4.7% 9.1% 34.8% 1.33 0.62 0.85 Retail Trade (G) 520 11.6% 17.4% -15.3% 2.55 1.17 1.14 Accommodation and Food 538 12.0% 17.2% 7.8% 2.52 2.17 1.92 Services (H) Transport, Postal and 42 0.9% 3.6% -14.3% 0.52 0.48 0.18 Warehousing (I)

Information Media and 332 7.4% 8.4% 2.8% 1.23 1.38 2.31 Telecommunications (J) Financial and Insurance Services 241 5.4% 2.9% 10.6% 0.43 1.17 0.75 (K) Rental, Hiring and Real Estate 173 3.8% 11.8% -3.4% 1.73 1.88 2.04 Services (L)

Professional, Scientific and 1033 23.0% 5.2% 12.3% 0.76 1.48 2.24 Technical Services (M) Administrative and Support 151 3.4% 4.3% 10.2% 0.63 1.03 1.05 Services (N) Public Administration and Safety 9 0.2% 0.3% -82.0% 0.05 0.06 0.03 (O) Education and Training (P) 138 3.1% 3.8% 32.7% 0.56 0.35 0.38 Health Care and Social Assistance 357 7.9% 9.2% 75.0% 1.34 0.62 0.70 (Q) Arts and Recreation Services (R) 85 1.9% 10.3% 7.6% 1.51 1.39 1.18 Other Services (S) 215 4.8% 12.0% 2.9% 1.76 1.28 1.30 Inadequately described/Not 123 2.7% 11.7% 23.0% 1.72 1.96 2.37 stated (X) TOTAL 4501 - 6.8% 7.1% - - - Source: BTS, 2014

TABLE 19: PRECINCT OCCUPATION PROFILE: CROWS NEST Totals Change 2011 Proportion (2006-2011) Managers 862 19.5% -1.9% Professionals 1389 31.4% 12.8% Technicians and Trades Workers 435 9.8% 7.1% Community and Personal Service Workers 400 9.0% 24.2% Clerical and Administrative Workers 692 15.6% 7.8% Sales Workers 489 11.0% -1.0% Machinery Operators and Drivers 49 1.1% 8.9% Labourers 111 2.5% -25.5% Inadequately Described 43 1.0% 38.7% Not Stated 31 0.7% - Totals 4501 - 7.2% Source: BTS, 2014

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Milsons Point

The Milsons Point precinct has seen a slight contraction in employment between 2006 and 2011, decreasing by 2.7% to comprise 5.6% of the total employment within the North Sydney LGA. The precinct has a higher than average proportion of persons employed in the Financial and Insurance services, which has led the precinct to perform strongly in the location quotient analysis against all of the benchmarking areas. As with all of the precincts within the North Sydney LGA, occupations within Milsons Point are mainly Professionals, with Machinery Operators and Drivers being ranked last.

The Milsons Point precinct has a good level of transport accessibility, with the Milsons Point railway station providing access to the heavy rail network. The precinct has access to the Warringah Freeway at its north- eastern corner. There are several bus services which link the precinct to other places within the Subregion, and there is a ferry wharf situated at the southern end of the precinct. The precinct is predominantly zoned B4 – Mixed Use, with a significant portion of land additionally zoned for transportation infrastructure. The precinct encapsulates the Luna Park amusement park on its southern boundary. The precinct’s built form consists almost entirely of high-rise commercial, residential and mixed use buildings, extending north to south along Alfred Street.

TABLE 20: PRECINCT INDUSTRY PROFILE: MILSONS POINT Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 4 0.1% 5.6% -33.3% 1.01 0.47 0.31 (A) Mining (B) 10 0.3% 4.1% 66.7% 0.74 1.82 1.23 Manufacturing (C) 340 9.3% 16.5% -2.3% 2.96 1.42 1.06

Electricity, Gas, Water and Waste 13 0.4% 3.4% -7.1% 0.61 0.66 0.38 Services (D) Construction (E) 96 2.6% 3.7% -35.1% 0.67 0.47 0.50 Wholesale Trade (F) 143 3.9% 6.1% -19.7% 1.10 0.52 0.70 Retail Trade (G) 167 4.6% 5.6% -2.9% 1.01 0.46 0.45 Accommodation and Food 209 5.7% 6.7% 12.4% 1.20 1.04 0.92 Services (H) Transport, Postal and 22 0.6% 1.9% -62.1% 0.33 0.31 0.12 Warehousing (I)

Information Media and 85 2.3% 2.1% -58.3% 0.39 0.43 0.73 Telecommunications (J) Financial and Insurance Services 909 24.8% 11.1% 5.6% 1.99 5.41 3.49 (K) Rental, Hiring and Real Estate 63 1.7% 4.3% 6.8% 0.77 0.84 0.91 Services (L)

Professional, Scientific and 744 20.3% 3.7% 0.4% 0.67 1.31 1.98 Technical Services (M) Administrative and Support 222 6.1% 6.3% 14.4% 1.14 1.86 1.90 Services (N) Public Administration and Safety 31 0.8% 1.1% -60.8% 0.21 0.25 0.14 (O) Education and Training (P) 61 1.7% 1.7% 24.5% 0.30 0.19 0.21 Health Care and Social Assistance 38 1.0% 1.0% -20.8% 0.18 0.08 0.09 (Q) Arts and Recreation Services (R) 333 9.1% 40.4% 30.6% 7.27 6.67 5.67 Other Services (S) 64 1.7% 3.6% 4.9% 0.64 0.47 0.47 Inadequately described/Not 111 3.0% 10.6% 13.3% 1.91 2.17 2.62 stated (X) TOTAL 3665 - 5.6% -2.7% - - - Source: BTS, 2014

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TABLE 21: PRECINCT OCCUPATION PROFILE: MILSONS POINT Totals Change 2011 Proportion (2006-2011) Managers 746 20.7% 1.5% Professionals 1336 37.2% -1.6% Technicians and Trades Workers 207 5.8% -17.5% Community and Personal Service Workers 171 4.8% 13.2% Clerical and Administrative Workers 687 19.1% -10.0% Sales Workers 287 8.0% -4.7% Machinery Operators and Drivers 70 1.9% -10.3% Labourers 92 2.6% 17.9% Inadequately Described 40 1.1% -23.1% Not Stated 30 0.8% 400.0% Totals 3666 - -2.8% Source: BTS, 2014

Neutral Bay

The Neutral Bay Precinct has seen a substantial decline in employment (11.5%) between 2006 and 2011. Whilst the Professional, Scientific and Technical Services category remains the greatest industry of employment within the precinct, there is a greater than average level of employment within the Retail Trade and Accommodation and Food Services industries. Occupationally, there is a more even split between the different 1-digit classifications, with Sales Workers and Technicians and Trades Workers seeing a proportion of employment within the precinct that is higher than the average results for other precincts within the North Sydney LGA.

The Neutral Bay precinct has relatively poor transport accessibility when compared to other precincts within the LGA. Accessibility to the precinct is via Military Road, which bisects the precinct from west to east. Military Road does have a range of bus services which utilise it as a transport corridor connecting a range of locations in the North Subregion with the CBD and elsewhere, however frequent traffic congestion problems reduce the efficiency of both these services and the use of private automobiles along this route. The precinct is predominantly zoned B4 – Mixed Use, and is flanked by R4 – High Density Residential and R3 – Medium Density Residential zones. The precinct’s built form consists of medium to low-rise mixed use developments, typically with ground floor retail uses and commercial or residential uses on the upper floors.

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TABLE 22: PRECINCT INDUSTRY PROFILE: NEUTRAL BAY Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 18 0.5% 25.4% 157.1% 5.08 2.33 1.56 (A) Mining (B) 0 0.0% 0.0% - 0.00 0.00 0.00 Manufacturing (C) 56 1.7% 2.7% -32.5% 0.54 0.26 0.19

Electricity, Gas, Water and Waste 0 0.0% 0.0% -100.0% 0.00 0.00 0.00 Services (D) Construction (E) 64 1.9% 2.5% -44.3% 0.49 0.35 0.37 Wholesale Trade (F) 49 1.5% 2.1% -46.7% 0.42 0.20 0.27 Retail Trade (G) 524 15.9% 17.6% -2.4% 3.52 1.62 1.57 Accommodation and Food 418 12.7% 13.4% 23.7% 2.68 2.30 2.04 Services (H) Transport, Postal and 23 0.7% 1.9% -37.8% 0.39 0.36 0.14 Warehousing (I)

Information Media and 75 2.3% 1.9% 36.4% 0.38 0.43 0.71 Telecommunications (J) Financial and Insurance Services 139 4.2% 1.7% -21.0% 0.34 0.92 0.59 (K) Rental, Hiring and Real Estate 251 7.6% 17.1% 20.1% 3.42 3.72 4.04 Services (L)

Professional, Scientific and 1002 30.4% 5.0% 5.4% 1.01 1.96 2.97 Technical Services (M) Administrative and Support 83 2.5% 2.4% 13.7% 0.47 0.77 0.79 Services (N) Public Administration and Safety 6 0.2% 0.2% -95.2% 0.04 0.05 0.03 (O) Education and Training (P) 60 1.8% 1.6% -83.6% 0.33 0.21 0.23 Health Care and Social Assistance 247 7.5% 6.3% -10.5% 1.27 0.59 0.66 (Q) Arts and Recreation Services (R) 23 0.7% 2.8% -46.5% 0.56 0.51 0.44 Other Services (S) 163 4.9% 9.1% 0.0% 1.82 1.32 1.34 Inadequately described/Not 93 2.8% 8.9% 27.4% 1.78 2.02 2.45 stated (X) TOTAL 3294 - 5.0% -11.5% - - - Source: BTS, 2014

TABLE 23: PRECINCT OCCUPATION PROFILE: NEUTRAL BAY Totals Change 2011 Proportion (2006-2011) Managers 492 15.2% -10.7% Professionals 978 30.2% -18.1% Technicians and Trades Workers 346 10.7% 9.5% Community and Personal Service Workers 339 10.5% -4.0% Clerical and Administrative Workers 403 12.4% -15.7% Sales Workers 527 16.3% -1.9% Machinery Operators and Drivers 22 0.7% -77.6% Labourers 131 4.0% -17.6% Inadequately Described 32 1.0% -22.0% Not Stated 23 0.7% 228.6% Totals 3293 - -11.8% Source: BTS, 2014

Stage 1 Scoping study 80

Pacific Highway

The Pacific Highway precinct has seen above average growth in employment in the five years between the 2006 and 2011 censuses. The precinct has a high proportion of workers in the Health Care and Social Assistance industry classification, most likely due to the location of The Mater private hospital within the precinct., with the sector having seen just shy of a 60% increase in the number of persons employed within this sector between 2006 and 2011. The location quotient score for this industry is considerably high compared to all of the benchmark areas as a result. The occupational split of the precinct sees a higher proportion of Professionals than the other precincts located within the North Sydney LGA.

The Pacific Highway precinct holds a moderate level of transport accessibility. It is bisected by the Pacific Highway, which has a range of regional bus services, as well as providing arterial road access to the precinct. The precinct has a range of zones, being predominantly B4 – Mixed Use, R4 – High Density Residential and SP2 – Infrastructure. The precinct contains two public high schools and a private hospital, which constitutes the land uses within its infrastructure zones. Its built form consists largely of medium-rise mixed use developments fronting on to the Pacific Highway, with residential developments occupying the areas behind.

TABLE 24: PRECINCT INDUSTRY PROFILE: PACIFIC HIGHWAY Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 0 0.0% 0.0% -100.0% 0.00 0.00 0.00 (A) Mining (B) 8 0.3% 3.3% 14.3% 0.69 1.70 1.15 Manufacturing (C) 67 2.1% 3.2% 42.6% 0.68 0.33 0.24

Electricity, Gas, Water and Waste 3 0.1% 0.8% -50.0% 0.16 0.18 0.10 Services (D) Construction (E) 93 3.0% 3.6% -7.9% 0.75 0.53 0.57 Wholesale Trade (F) 67 2.1% 2.9% 34.0% 0.60 0.28 0.38 Retail Trade (G) 106 3.4% 3.6% -19.1% 0.75 0.34 0.33 Accommodation and Food 128 4.1% 4.1% 25.5% 0.86 0.74 0.66 Services (H) Transport, Postal and 40 1.3% 3.4% -28.6% 0.71 0.66 0.25 Warehousing (I)

Information Media and 148 4.7% 3.7% -10.8% 0.79 0.88 1.48 Telecommunications (J) Financial and Insurance Services 124 4.0% 1.5% -2.4% 0.32 0.86 0.56 (K) Rental, Hiring and Real Estate 38 1.2% 2.6% -39.7% 0.54 0.59 0.64 Services (L)

Professional, Scientific and 670 21.4% 3.4% 19.4% 0.71 1.38 2.08 Technical Services (M) Administrative and Support 80 2.6% 2.3% -1.2% 0.48 0.78 0.80 Services (N) Public Administration and Safety 166 5.3% 6.1% 3.1% 1.29 1.57 0.88 (O) Education and Training (P) 253 8.1% 7.0% 31.8% 1.46 0.92 1.00 Health Care and Social Assistance 1038 33.1% 26.6% 59.9% 5.60 2.61 2.92 (Q) Arts and Recreation Services (R) 14 0.4% 1.7% -26.3% 0.36 0.33 0.28 Other Services (S) 40 1.3% 2.2% 11.1% 0.47 0.34 0.35 Inadequately described/Not 53 1.7% 5.1% -19.7% 1.06 1.21 1.46 stated (X) TOTAL 3136 - 4.8% 19.3% - - -

Source: BTS, 2014

Stage 1 Scoping study 81

TABLE 25: PRECINCT OCCUPATION PROFILE: PACIFIC HIGHWAY Totals Change 2011 Proportion (2006-2011) Managers 400 13.0% 19.8% Professionals 1473 47.7% 28.1% Technicians and Trades Workers 170 5.5% 15.6% Community and Personal Service Workers 302 9.8% 19.8% Clerical and Administrative Workers 489 15.9% 6.8% Sales Workers 116 3.8% -10.8% Machinery Operators and Drivers 26 0.8% -16.1% Labourers 109 3.5% 31.3% Inadequately Described 33 1.1% 37.5% Not Stated 17 0.6% 183.3% Totals 3135 - 19.9% Source: BTS, 2014

Cremorne The Cremorne Precinct has seen a slight decrease in its number of jobs between the most recent census years and remains the precinct with the lowest level of employment by total counts within the North Sydney LGA. The precinct has seen contraction across most industries, with the notable exception being the Education and Training classification, which saw considerable growth. The occupational split of the area is again dominated by the Professionals classification, with a more even distribution between occupations than most precincts within the North Sydney LGA.

As with the Neutral Bay precinct, the Cremorne precinct has relatively poor transport accessibility when compared to other precincts within the LGA. Accessibility to the precinct is via Military Road, which bisects the precinct from west to east. Military Road does have a range of bus services which utilise it as a transport corridor connecting a range of locations in the North Subregion with the CBD and elsewhere, however frequent traffic congestion problems reduce the efficiency of both these services and the use of private automobiles along this route. The precinct is predominantly zoned B4 – Mixed Use, and is flanked by R4 – High Density Residential and R3 – Medium Density Residential zones. The precinct’s built form consists of medium to low-rise mixed use developments, typically with ground floor retail uses and commercial or residential uses on the upper floors.

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TABLE 26: PRECINCT INDUSTRY PROFILE: CREMORNE Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 0 0.0% 0.0% - 0.00 0.00 0.00 (A) Mining (B) 0 0.0% 0.0% -100.0% 0.00 0.00 0.00 Manufacturing (C) 16 1.2% 0.8% -46.7% 0.38 0.18 0.13

Electricity, Gas, Water and Waste 3 0.2% 0.8% - 0.38 0.41 0.24 Services (D) Construction (E) 30 2.2% 1.2% -57.7% 0.56 0.39 0.42 Wholesale Trade (F) 26 1.9% 1.1% -54.4% 0.54 0.25 0.34 Retail Trade (G) 170 12.5% 5.7% -28.3% 2.77 1.27 1.24 Accommodation and Food 177 13.0% 5.7% 4.1% 2.75 2.37 2.10 Services (H) Transport, Postal and 13 1.0% 1.1% 62.5% 0.53 0.49 0.19 Warehousing (I)

Information Media and 42 3.1% 1.1% -35.4% 0.51 0.58 0.97 Telecommunications (J) Financial and Insurance Services 38 2.8% 0.5% -37.7% 0.22 0.61 0.39 (K) Rental, Hiring and Real Estate 46 3.4% 3.1% -20.7% 1.52 1.65 1.80 Services (L)

Professional, Scientific and 170 12.5% 0.9% -20.2% 0.41 0.81 1.22 Technical Services (M) Administrative and Support 28 2.1% 0.8% -34.9% 0.39 0.63 0.65 Services (N) Public Administration and Safety 0 0.0% 0.0% -100.0% 0.00 0.00 0.00 (O) Education and Training (P) 269 19.8% 7.4% 449.0% 3.59 2.26 2.45 Health Care and Social Assistance 203 14.9% 5.2% -18.1% 2.53 1.18 1.32 (Q) Arts and Recreation Services (R) 34 2.5% 4.1% 78.9% 2.00 1.84 1.56 Other Services (S) 70 5.2% 3.9% 22.8% 1.90 1.38 1.40 Inadequately described/Not 24 1.8% 2.3% 50.0% 1.11 1.27 1.53 stated (X) TOTAL 1359 - 2.1% -3.8% - - - Source: BTS, 2014

TABLE 27: PRECINCT OCCUPATION PROFILE: CREMORNE Totals Change 2011 Proportion (2006-2011) Managers 168 12.6% -30.0% Professionals 481 36.1% 28.3% Technicians and Trades Workers 106 8.0% -2.8% Community and Personal Service Workers 149 11.2% 15.5% Clerical and Administrative Workers 173 13.0% -21.0% Sales Workers 162 12.2% -26.7% Machinery Operators and Drivers 16 1.2% -27.3% Labourers 77 5.8% 4.1% Inadequately Described 15 1.1% -21.1% Not Stated 12 0.9% - Totals 1359 - -3.5% Source: BTS, 2014

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Royal North Shore Hospital (RNSH)

The RNSH precinct is situated outside of the North Sydney LGA, to the North-West of St Leonards. The precinct also encompasses some of the industrially zoned land within the Artarmon Industrial Area. Unsurprisingly, the Health Care and Social Assistance industry classification takes up 59.3% of employment within the area. The occupational split of the precinct has a predominance of Professionals (54.5%), with the next highest proportion being Clerical and Administrative Workers (16.9%).

The RNSH precinct enjoys relatively good transport access, being situated adjacent to the St Leonards Railway station and a range of bus services which run directly to the hospital or alongside it on the Princes Highway, which also provides arterial road access for private automobiles. The precinct is zoned predominantly SP2 – Infrastructure and SP1 – Special Uses as a result of the hospital and an adjacent cemetery, along with some IN1 and IN2 industrial zones and a substantial proportion of RE2 – Public Recreation zoning. The built form of the precinct consists of purpose-built buildings for the two hospitals contained within the precinct.

TABLE 28: PRECINCT INDUSTRY PROFILE: RNSH Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 3 0.0% - -25.0% 0.35 0.16 0.11 (A) Mining (B) 0 0.0% - -100.0% 0.00 0.00 0.00 Manufacturing (C) 128 1.6% - -39.3% 0.51 0.24 0.18

Electricity, Gas, Water and Waste 32 0.4% - - 0.68 0.74 0.43 Services (D) Construction (E) 261 3.2% - 289.6% 0.83 0.58 0.62 Wholesale Trade (F) 321 4.0% - -11.8% 1.12 0.53 0.72 Retail Trade (G) 161 2.0% - -32.1% 0.44 0.20 0.20 Accommodation and Food 73 0.9% - -22.3% 0.19 0.16 0.15 Services (H) Transport, Postal and 406 5.1% - 290.4% 2.82 2.61 0.99 Warehousing (I)

Information Media and 128 1.6% - -54.4% 0.27 0.30 0.50 Telecommunications (J) Financial and Insurance Services 501 6.2% - 10.4% 0.50 1.36 0.88 (K) Rental, Hiring and Real Estate 37 0.5% - 2.8% 0.21 0.22 0.24 Services (L)

Professional, Scientific and 407 5.1% - -30.8% 0.17 0.33 0.49 Technical Services (M) Administrative and Support 85 1.1% - 80.9% 0.20 0.32 0.33 Services (N) Public Administration and Safety 74 0.9% - -70.9% 0.22 0.27 0.15 (O) Education and Training (P) 445 5.5% - -11.2% 1.00 0.63 0.68 Health Care and Social Assistance 4767 59.3% - 7.0% 10.03 4.67 5.24 (Q) Arts and Recreation Services (R) 13 0.2% - -23.5% 0.13 0.12 0.10 Other Services (S) 60 0.7% - -13.0% 0.28 0.20 0.20 Inadequately described/Not 135 1.7% - 82.4% 1.06 1.20 1.46 stated (X) TOTAL 8037 - - 2.2% - - - Source: BTS, 2014

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TABLE 29: PRECINCT OCCUPATION PROFILE: RNSH Totals Change 2011 Proportion (2006-2011) Managers 756 9.5% -10.7% Professionals 4319 54.5% 3.2% Technicians and Trades Workers 527 6.7% 9.6% Community and Personal Service Workers 390 4.9% -23.8% Clerical and Administrative Workers 1342 16.9% 10.1% Sales Workers 168 2.1% -22.9% Machinery Operators and Drivers 138 1.7% -1.4% Labourers 279 3.5% 46.1% Inadequately Described 66 0.8% 3.1% Not Stated 51 0.6% 1600.0% Totals 8036 - 2.2% Source: BTS, 2014

Artarmon Industrial Area

The Artarmon Industrial Area is situated outside of the North Sydney LGA, to the North-West of St Leonards. The precinct is of subregional significance due to its size and location. The precinct contains a relatively high proportion of employment within the Manufacturing and the Information Media and Telecommunications industries, which has positioned the area highly in its location quotient scores in these areas. The precinct sees a relatively even split between the Professionals, Technicians and Trades Workers, Managers and Clerical and Administrative Workers occupational classifications.

The Artarmon Industrial Area has a relatively low accessibility for public transportation. It is directly serviced by one bus route, with others skirting the precinct along with Princes Highway. The precinct has good accessibility via road on to the arterial road network via the Princes Highway, Lane Cove Tunnel and Gore Hill Freeway, an important factor given its industrial nature. The precinct is zoned almost entirely IN1 – General Industrial and IN2 Light Industrial, with a small portion of SP2 – Infrastructure which encompasses an electricity substation. The built form of the precinct consists of a mixture of small to medium sized industrial buildings on the precinct’s western side, with larger industrial buildings in the precinct’s east.

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TABLE 30: PRECINCT INDUSTRY PROFILE: ARTARMON INDUSTRIAL AREA Employment Growth Location Quotient Total Proportion Proportion North Sydney North Sydney Counts of Precinct of LGA 2006-2011 LGA Subregion GCCSA Agriculture, Forestry and Fishing 6 0.1% - 50.0% 0.71 0.33 0.22 (A) Mining (B) 8 0.1% - -52.9% 0.28 0.68 0.46 Manufacturing (C) 1128 14.5% - 14.3% 4.62 2.22 1.65

Electricity, Gas, Water and Waste 99 1.3% - -13.2% 2.17 2.37 1.37 Services (D) Construction (E) 591 7.6% - 12.8% 1.93 1.35 1.45 Wholesale Trade (F) 798 10.2% - 10.2% 2.88 1.35 1.83 Retail Trade (G) 824 10.6% - 4.6% 2.34 1.07 1.04 Accommodation and Food 114 1.5% - 39.0% 0.31 0.27 0.24 Services (H) Transport, Postal and 259 3.3% - -3.7% 1.85 1.72 0.65 Warehousing (I)

Information Media and 1237 15.9% - 16.0% 2.64 2.97 4.98 Telecommunications (J) Financial and Insurance Services 147 1.9% - 110.0% 0.15 0.41 0.27 (K) Rental, Hiring and Real Estate 222 2.8% - 62.0% 1.28 1.39 1.51 Services (L)

Professional, Scientific and 933 12.0% - 87.3% 0.40 0.77 1.17 Technical Services (M) Administrative and Support 224 2.9% - -47.0% 0.54 0.88 0.90 Services (N) Public Administration and Safety 56 0.7% - -62.7% 0.17 0.21 0.12 (O) Education and Training (P) 36 0.5% - -70.5% 0.08 0.05 0.06 Health Care and Social Assistance 229 2.9% - 160.2% 0.50 0.23 0.26 (Q) Arts and Recreation Services (R) 24 0.3% - 20.0% 0.25 0.23 0.19 Other Services (S) 657 8.4% - 14.3% 3.11 2.25 2.29 Inadequately described/Not 204 2.6% - 60.6% 1.65 1.88 2.27 stated (X) TOTAL 7796 - - 14.9% - - - Source: BTS, 2014

TABLE 31: PRECINCT OCCUPATION PROFILE: ARTARMON INDUSTRIAL AREA Totals Change 2011 Proportion (2006-2011) Managers 1261 16.5% 7.2% Professionals 1871 24.4% 31.6% Technicians and Trades Workers 1506 19.7% 11.6% Community and Personal Service Workers 147 1.9% 22.5% Clerical and Administrative Workers 1198 15.6% 14.3% Sales Workers 687 9.0% 20.5% Machinery Operators and Drivers 566 7.4% 10.1% Labourers 428 5.6% -14.2% Inadequately Described 64 0.8% -17.9% Not Stated 66 0.9% - Totals 7794 - 15.01% Source: BTS, 2014

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4.6 Summary

Market analysis key findings

Commercial

Commercial development in North Sydney and St Leonards has been affected by broader trends in the office market, including the general downturn in commercial property during and following the GFC and the increasing attraction of business parks. Vacancies are declining and rents are rising and this is projected to continue. However, this may reflect a lack of capacity rather than significant improvements in the market.

Rents are likely to be a significant determinant for tenants. Rents are lowest in Macquarie Park and highest within the Sydney CBD. North Sydney is likely to continue to experience strong competition from Macquarie Park, however there is evidence of firms relocating from Macquarie Park to North Sydney and surrounds chasing greater amenity associated with the inner city.

Industries and tenants which require large floorplates are likely to be attracted to Macquarie Park and Sydney Olympic Park due to the availability of large campus-style developments with large floorplates, as well as the capacity within these centres for growth. North Sydney is constrained in this regard, particularly in relation to A-Grade floorspace. Whilst this emerging trend may impact North Sydney, it is likely that North Sydney can provide for tenants seeking greater accessibility and proximity to the Sydney CBD.

There are a number of development applications which have been approved for commercial development within North Sydney and St Leonards however these have reportedly been deferred due to a lack of pre- commitments. It is unclear whether this issue is unique to North Sydney and St Leonards or an issue across Sydney associated with a tightening financial lending market.

Competition for residential development is a significant issue in North Sydney and along the North Shore. These centres also have limited capacity to accommodate growth in commercial floorspace. Residential encroachment and price competition will continue to impact North Sydney and St Leonards as well as Chatswood. Residential sales values have been rising and continue to rise. This is not unique to North Sydney, however will continue to place increasing pressure on commercial land uses.

Professional services uses seeking A Grade office space outside of the Sydney CBD are likely to be attracted to commercial centres along the North Shore, particularly North Sydney and Macquarie Park, however the availability of A Grade office space is severely limited in North Sydney. North Sydney should look for opportunities to encourage developers to upgrade lower grade stock and review constraints for commercial development.

Advanced technology and wholesale industries are likely to continue to be attracted to Macquarie Park due to the lower rents and existing concentrations of these industries, as well as potential research links with Macquarie University. However, North Sydney may be able to attract some advanced technology businesses by leveraging off its proximity to the universities located within the inner city of Sydney.

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Industrial

North Sydney contains a few small pockets of land zoned for industrial uses along the water, with one light industrial zone within McMahons Point (which accommodates warehouse and light industrial uses including office space). Rents are high and the supply of industrial land within the North Shore and inner city regions of Sydney more broadly, is constrained. In general, the industrial property market is experiencing a push westwards, into more affordable industrial lands in Western Sydney.

There is evidence that the small industry precinct is attracting some creative uses and there may be opportunities for North Sydney to further facilitate this.

Economic Profile key findings

Employment Profile The dominant industries within the North Sydney LGA are definitively the Professional, Scientific and Technical Services industry and the Financial and Insurance Services industry (at 30.2% and 12.5% of employment respectively). The prominence of employment within these sectors is particularly significant in the implication that the area is dominated by knowledge economy industries. However the rates of growth within these industries hold their own, more specific implications for the North Sydney LGA.

The higher rate of growth in Financial and Insurance Services is promising for the North Sydney LGA. However, the lower rate of growth than in the benchmark areas in Professional, Scientific and Technical Services suggests that the LGA has been missing out on adequately capturing the overall uplift in the wider performance of this industry. Similarly is the increased rate of decline in the Information Media and Telecommunications industry when compared to the benchmark areas, which has seen the North Sydney LGA lose a substantial proportion of its specialised advantage within this industry as it has contracted.

Overall, over the decade of the 2000s the employment performance in the North Sydney LGA fared similarly to the surrounding subregion. At the same time, employment growth was significantly lower than witnessed in Greater Sydney.

It can be inferred from this data that the growth and decline within these industries have contributed substantially to the decreased performance in employment growth at the LGA-wide level between 2001 and 2011.

BTS Employment Forecasts The substantial forecast growth in the Professional, Scientific and Technical and the Financial and Insurance industries anticipates further entrenchment of these industries as the dominant employers within the North Sydney LGA. However, both the North Subregion and the Sydney GCCSA have higher forecasted rates of growth in this industry than the LGA.

The Health Care and Social Assistance and the Education and Training industries both display strong levels of growth in total counts and as a proportional increase on the base year, which indicates these could be emerging industries of employment for the North Sydney LGA, and this is comparable to the forecasted growth rates for the two benchmark areas.

The North Sydney LGA is forecast to have a total growth of 19,370 jobs through to 2041, being an increase of 24% on 2016 levels. This is lower in comparison to both the North Subregion, which is forecast to experience a 30% increase in the total number of jobs, and the Sydney GCCSA, which is forecast to experience a 39% increase in the total number of jobs over the same period.

In simple terms, employment levels forecast for North Sydney are lower than the Northern Subregion and significantly lower than Greater Sydney. Health, education and construction sectors are expected to experience the highest rates of growth; although these growth levels are comparable to both the Northern Subregion and Greater Sydney, indicating that these population serving industries are largely increasing to accommodate future population growth.

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Input-Output Analysis High performance overall within the input-output analysis is observable within the Administrative and Support Services industry, along with Construction, and the Professional, Scientific and Technical Services industries. These industries have the greatest economic ‘multipliers’ and have the biggest ‘bang for the buck’ – in terms of value add and employment per additional unit of output. The Electricity, Gas, Water and Waste Services industry also displays a high performance herein, however it’s positioning as a minor part of the North Sydney LGA’s workforce (0.6%) reduces its relevance.

Location Quotient Analysis The North Sydney LGA has a high degree of specialisation (LQ > 1.5) in four industries when benchmarked against the North Subregion and in five industries when benchmarked against the Sydney GCCSA. The highest degree of specialisation against the Sydney GCCSA region is found in the Professional, Scientific and Technical Services classification, being followed by a cluster of industries with an LQ between 1.66 and 1.88, being:  Administrative and Support Services  Mining  Financial and Insurance Services; and  Information Media and Telecommunications

Growth Share Analysis The resultant growth-share analysis, with one industry located in the top-right quadrant of the graph (Figure 27), presents some concern for the North Sydney LGA; whilst the Financial and Insurance Services sector has displayed positive growth along with achieving a high degree of specialisation, it can be considered to be relatively well established as the North Sydney LGA’s second largest employer. The moderate reduction in the Administrative and Support Services industry (6%) and the massive reduction (45.9%) in the Information Media and Telecommunications industry, establishes a pattern of decline in areas of North Sydney’s specialisation.

There is a clustering of industries which are of similar (yet slightly smaller) size to the Information Media and Telecommunications classification, with a lower degree of specialisation than the Sydney GCCSA but have experienced substantial growth across the period between 2001 and 2011, implying potential to become specialised areas in the future should the high rate of growth continue. These include:  Health and Social Assistance Services  Education and Training  Public Administration and Safety; and  Construction

Shift-share Analysis Four out of the seven highest employers within the North Sydney LGA have experienced a decline in their competitive shift when compared to the Sydney GCCSA between 2001 and 2011. The remaining three of these industries have seen an increase in their competitive shift; however, none of these rates of increase were among the top five increases experienced within the North Sydney LGA.

The decrease in the competitive shift of the Professional, Scientific and Technical Services classification is highly significant due to its prominence as the North Sydney LGA’s largest employer. Additionally, the substantial decrease in the competitive shift of the Information Media and Telecommunications industry holds a similar significance due to its decrease from its 2001.

The increases in the competitiveness of the Financial and Insurance Services industry provides a positive contrast to the above, being the industry’s second largest employer. Additionally, the increases in the competitiveness of the fourth and fifth largest employers within the precinct, Education & Training and Health Care and Social Assistance, highlight a potential increase in these industries’ role as major employers within the North Sydney LGA.

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Precincts

Out of the precincts within the LGA for closer analysis, five displayed employment growth between 2006 and 2011, whilst three experienced decline. The precincts which saw growth are listed below, along with the change in total counts and as a percentage:  North Sydney CBD (an increase of 4487 jobs, or 19.8%)  North Sydney Periphery (an increase of 2872 jobs, or 32%)  St Leonards (an increase of 2411 jobs, or 28.3%)  Crows Nest (an increase of 297 jobs, or 7.1%)  Pacific Highway (an increase of 508 jobs, or 19.3%)

The precincts which experienced decline are listed below, along with the change in total counts and as a percentage:  Milsons Point (a decrease of 100 jobs, or 2.7%)  Neutral Bay (a decrease of 428 jobs, or 11.5%)  Cremorne (a decrease of 53 jobs, or 3.8%)

The employment precincts located within the North Sydney LGA are overwhelmingly dominated by the Professional, Scientific and Technical Services industry. This dominance is more pronounced in certain precincts, such as St Leonards, or is accompanied by an increased level of employment in the Financial and Insurance Services industry, such as in the North Sydney CBD or Milsons Point. In the North Sydney Periphery, there is a substantial proportion of employment within the Information Media and Telecommunications industry along with the Professional, Scientific and Technical Services industry.

The Crows Nest precinct and the Neutral Bay precinct both have a higher proportional split in the Retail and Accommodation and Food Services industries.

In all of the above precincts the occupational split is weighted heavily towards the Professionals 1-digit occupation classification, typically followed by the Managers and Clerical and Administrative Workers occupations.

Implications

Two dominant industries The key observation that can be drawn from the economic profiling of the North Sydney LGA is the dominance of the Professional, Scientific and Technical Services industry and the Financial and Insurance Services industry. Together, they comprise 42.7% of the LGA’s employment. This dominance, whilst providing a key area of specialisation for North Sydney, also makes the economic profile of the North Sydney LGA sensitive to changes in these industries.

Reduced competitive shift in the Professional, Scientific and Technical Services industry This bears high relevance when considering the negative competitive shift of the Professional, Scientific and Technical Services industry against the Sydney GCCSA over the period of 2001 to 2011. The growth in the St Leonards precinct (202.8% between 2006 and 2011, or 3318 jobs) within this industry represents a substantial contribution to the growth of this industry regionally, however it is important to note that only a portion of this growth will be captured within the North Sydney LGA.

High performance in Financial and Insurance Services In contrast with this, the strong growth performance of the Financial and Insurance Services industry over the period has led to its entrenchment as one of the key industries for the North Sydney LGA. This industry has established itself primarily within the North Sydney CBD, which represents 67.8% of the total employment in this industry across the North Sydney LGA. The precinct holding a location quotient of 1.64 compared to the North Sydney LGA, 4.47 against the North Subregion and 2.88 when compared to the

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Sydney GCCSA, positioning it as a key area of specialisation within this industry both regionally and at the metropolitan scale

Information Media and Telecommunications in sharp decline The sharp decline of the Information Media and Telecommunications industry from 2001 to 2011 is particularly noteworthy within the economic landscape of North Sydney. The industry decreased by 45.9% of its 2001 level, which suggests that the competitive advantage held by the North Sydney LGA in this industry was lost during an overall period of decline in this industry to other areas which were able to present a more attractive business environment.

Administrative and Support Services – In decline, yet still valuable The decline in another area of specialisation for the North Sydney LGA, the Administrative and Support Services industry presents further concern. This rate of decline (6% over the ten years to 2011) is not as dramatic as the contraction within the Information Media and Telecommunications industry, and the high multipliers derived from the input-output analysis suggest that, due to the internal linkages within North Sydney’s economy, investment to reduce the decline in this industry would be beneficial.

Strong Growth Industries There is a clustering of industries which have displayed strong growth over the period between 2001 and 2011, which may have potential areas for growth in employment within North Sydney into the future. These industries include:  Health and Social Assistance Services (46.2% growth)  Education and Training (31.8% growth)  Public Administration and Safety (52.2% growth); and  Construction (38.5% growth)

While North Sydney has experienced slight overall job growth (5.8% between 2001 and 2011), the rate of growth is still slower than both the benchmark areas, suggesting that action is needed to improve the competitive stance of the North Sydney LGA in attracting economic activity.

Potential Directions The salient points from the economic profile of the North Sydney LGA can be summarised into directions as such:

 There is a need to reinforce the LGA’s competitive position as a key location for knowledge industries. This is with relevance both to the rest of the Northern Subregion and the wider metropolitan region, as the competitive shift of the Professional, Scientific and Technical Services industry has declined, seeing the LGA lose its competitive advantage to other regions.

 Industries of growth may need further reinforcement and support. The North Sydney LGA, and in particular its CBD, has positioned itself to be a significant financial centre through strong growth over the previous decade, and there has been considerable growth in a range of industries which have not yet developed to the point where specialisation has been achieved to a substantial degree within the LGA. Should these industries be supported, it is likely they will serve to facilitate increased growth within North Sydney as well as diversifying the employment profile of the area.

 Decline in Administrative and Support Services should be addressed. The decline in the Administrative and Support Services industry has seen a loss of jobs in an area of specialisation for the LGA. This industry still retains strong linkages within the LGA, with investment in these industries locally improving local output greater than any other industries, evidenced within its results in the input-output analysis.

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5 CONSULTATION

Overview

This chapter outlines the findings from consultation. Consultation was completed to gain insight from stakeholders on their vision for economic development in North Sydney, what they consider to be the key issues and how Council could best address these. An online survey and telephone consultation was conducted with business stakeholders within the North Sydney LGA from the retail and commercial office sectors, development and real estate industry and as well as local business groups.

5.1 Consultation process

Consultation was completed in tandem with analysis of third party data and literature. The consultation has two components:

 Telephone interviews. The telephone consultations were conducted with a series of stakeholders from major retail and commercial sectors located within the North Sydney LGA  An online survey. A survey was made available on North Sydney Council’s website for businesses to provide insight into the issues and opportunities for future development in the LGA

The participants included:

 Business  North Sydney Chamber of Commerce  Neutral Bay Chamber of Commerce  Crows Nest Chamber of Commerce  Sydney Business  Office of NSW Small Business Commissioner  Retail  Mirvac  Big Bear Shopping Centre  Real estate agents and developer groups  Colliers  Investa  CBRE  Property Council of Australia  Tourism and Education  Australian Catholic University  TAFE  Luna Park  Destination NSW

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5.2 Consultation findings

Consultation findings have been structured around the following themes:

 The role of Council  Precinct analysis  Commercial activity  Retail activity

A total of 174 survey responses were received during the period 19 November to 24 December 2015. The participants consisted of 58% from the commercial sector and 42% from the retail sector.

Businesses surveyed This section reviews the types of businesses that were surveyed, where they are located, how long they have been in North Sydney for and whether they anticipate to remain located in North Sydney. Further findings detailing the types of businesses surveyed, are presented in Appendix 2.

Error! Reference source not found.Figure 30 indicates that the greatest proportion of responses came from businesses based in North Sydney CBD. The participants located in North Sydney CBD accounts for 59% of total employment of the LGA. The survey findings do not reflect the position of businesses located in St Leonards as only 7.5% participated whereas the centre of St Leonards represents 28% of total employment in the LGA.

A number of businesses from Neutral Bay participated (11.8%), which may reflect the findings of the number of employees presented in Figure 44 (refer to Appendix 2).Error! Reference source not found. Overall, Neutral Bay accounts for 10% of total employment of the LGA.

Notably, a large portion of businesses operate out of home, accounting for 11.8% of total business participants.

FIGURE 30. LOCATION OF BUSINESS

Operate from home 11.8% Elsewhere in North Sydney LGA 2.5% Waverton 1.2% St Leonards 7.5% North Sydney 31.0% Neutral Bay 11.8% Milsons Point 5.0% McMahons Point 4.3% Kirribilli 1.9% Crows Nest 10.6% Cremorne 8.1% Cammeray 4.3%

Source: SGS, 2015

Of the businesses in North Sydney LGA, 68% plan to remain in the same location and 32% stated that they would relocate in the next five years (refer to Appendix 2). Given that 32% is a substantial figure, it is important to assess where the participants plan to relocate.

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Figure 31 illustrates where current businesses located in the LGA would relocate to. Of the participants planning to relocate, 35% are currently located in North Sydney CBD. The majority of these participants identified that they would relocate elsewhere in the North Sydney CBD, with a small number suggesting that they intend to relocate to the Sydney CBD. Telephone consultation found that businesses are becoming more attracted to Sydney CBD as they are drawn to incentives such as nigh time entertainment.

Of the businesses outside the North Sydney CBD that plan to relocate, 66% plan to relocate within the North Sydney centres including North Sydney CBD, St Leonards, Neutral Bay, Milsons Point and Crows Nest. Businesses with 0-5 employees that are located in smaller centres indicated that they plan to relocate within smaller centres, predominately Neutral Bay. The participants selecting relocation to the smaller centres in the LGA such as Crows Nest and Neutral Bay are primarily businesses operating out of home, the survey findings indicate that 58% of participants plan to remain in the same location and 42% plan to relocate to small centres in the LGA including Crows Nest and Neutral Bay.

As illustrated in Figure 31Error! Reference source not found., others intend to relocate elsewhere in Sydney, operate from home or Sydney CBD. Of the total participants that intend to relocate, 20.8% selected that they would relocate ‘elsewhere in Sydney’. This category accounts for other major commercial centres such as Macquarie Park. The businesses that plan to relocate ‘elsewhere in Sydney’ are predominately commercial businesses including consultants, technical services and travel and tourism. Most participants that indicated they were relocating suggested that weaknesses of their current location included the lack of night time entertainment, pedestrian activity, availability of car parking and links to research institutions. However, most outlined that the availability of public transport was a locational strength for North Sydney LGA. These factors may be influencing the relocation of commercial businesses out of North Sydney LGA.

Notably, with the exception of one participant, all of the businesses currently located in St Leonards identified the intention to remain in the same location in the next five years. The individual participant nominated plans to relocate to Milsons Point.

FIGURE 31. WHERE WOULD YOU RELOCATE TO?

Operate from home 1.9% Elsewhere in Sydney 20.8% Elsewhere in North Shore/Northern Suburbs 9.4% Sydney CBD 11.3% Elsewhere in North Sydney LGA 9.4% Waverton 0.0% St Leonards 5.7% North Sydney 22.6% Neutral Bay 5.7% Milsons Point 5.7% McMahons Point 0.0% Kirribilli 0.0% Crows Nest 7.5% Cremorne 0.0% Cammeray 0.0%

Source: SGS, 2015.

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The role of North Sydney Council As part of the online survey, participants ranked the role of North Sydney Council in promoting economic development. As illustrated in Figure 32Error! Reference source not found., 56% of survey participants ranked Council’s historic performance as neutral, 28% were pleased and 16% were dissatisfied.

FIGURE 32. COUNCIL’S PERFORMANCE AT PROMOTING ECONOMIC DEVELOPMENT

16%

28%

Good Neutral Bad

56%

Source: SGS, 2015

In moving forward, participants selected the role Council should adopt in promoting economic development: including ‘stimulator/promoter’, ‘facilitator’, ‘co-ordinator’ and ‘entrepreneur/developer’. Figure 33 illustrates that 31% of respondents would like Council to adopt the role as facilitator of economic development, while a similar proportion (29%) identified that Council should be a stimulator or promoter of economic development. The role of Council as a coordinator of services and infrastructure was selected by one-quarter of participants, while only 11% of participants considered that Council’s role should be as an entrepreneur or developer. The ‘other’ category accounted for 4% of the results.

As identified in Section 3.1, Council can adopt either role depending on a number of factors such as pre- existing organisational relationships, the local industrial structure, the relative level of social and economic prosperity, identified priorities for the future and available funding for economic development initiatives.

Based on the review of other Council’s economic development strategies, the majority of actions in those documents related to the ‘facilitator’ and ‘stimulator/promoter’ role of council. Therefore, the survey results support the economic development actions of other councils. For development of actions, this might mean Council chooses to focus on improvement to amenity and the public domain, building and marketing and identify for centres to attract business and advocacy and lobbying of state departments and agencies for infrastructure funding.

The comments included Council to provide an incentive program for small businesses, undertake urban renewal within the CBD, establish an online platform to promote North Sydney businesses, sponsor community welfare development projects and link small businesses and community groups.

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FIGURE 33. COUNCIL’S ROLE IN PROMOTING ECONOMIC DEVELOPMENT

Facilitator (eg Council reduces 'red-tape') 4%

Entrepreneur / Developer (eg 31% Council acting as developer) 25%

Stimulator / Promoter (eg Council establishes business programs) Coordinator (coordinating services or infrastructure) 11%

29% Other

Source: SGS, 2015

Participants provided comments on the services Council can provide in order to secure businesses within the North Sydney LGA. A range of services were identified that may benefit business performance in North Sydney LGA. Some include:

 Increase the availability and affordability of parking  Address the frequency of garbage collection  Improve local infrastructure to support new developments  Allow more restaurants in the North Sydney CBD to increase the variety outside business hours  Support businesses operating in heritage listed buildings  Assist in connecting local businesses and supporting entrepreneurs such as establishing an online local directory to promote small businesses  Improve connectivity and movement between centres in the LGA.  Promotion of industry clusters such as art and culture in Crows Nest  Provide local wifi in public spaces and domains

Participants identified a range of elements that Council can address in order to improve issues affecting businesses within the LGA. It is important to note that the survey enabled participants to select more than one option. The findings are presented in Figure 34Error! Reference source not found..

Improving connectivity and access was highlighted as the most important factor for Council to address accounting for 58.6% of findings. Following this, 54.6% of participants selected upgrading the built environment and 45.4% selected transport upgrades as important elements for Council to address. Survey comments from the ‘other’ category support these findings. Participants identified the need to improve connectivity and movement in the centres through cycle ways and upgrades to public thoroughfares.

The need for Council to be an advocate for improved physical and social infrastructure accounted for 44.8% of findings. Issues for Council to address such as increase the marketing of places and change planning controls reported 33.3% of findings.

Findings illustrate that 23.6% of participants identified that Council should support particular industries. Survey comments addressed the need for better integration between businesses and residents of North Sydney through pop up markets, online networking opportunities and exhibition nights.

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FIGURE 34. WHAT CAN BE DONE TO ADDRESS THE ISSUES AFFECTING BUS INESSES

Other (please specify) 18.4%

Support particular industries 23.6% Advocate for improved physical and social infrastructure 44.8%

Increase branding / marketing of places 33.3%

Transport upgrades 45.4%

Improve access / connectivity 58.6%

Upgrade built environment / public domain 54.6%

Change planning / development controls 33.3%

Source: SGS, 2015

Precinct analysis

Competitive advantage

As outlined in Chapter Four of the report, the current business market of North Sydney predominately consists of information technology, finance and business services. Telephone consultation with real estate agents suggested that North Sydney upholds a competitive advantage through assets including proximity to the Sydney CBD, cheaper office space compared to the CBD and a variety of building stock.

Figure 35 reveals the importance of each factor contirbuting locational strenghts and weaknesses. Participants were required to rank each aspect ranging from strong (5) to weak (1). Figure 35 illustrates the average ranking of each aspect in terms of locational strenghts.

The availability of public transport and the level of pedestrian activity were considered locational strengths for businesses operating in North Sydney. Access to quality food outlets and public spaces were also rated as strengths for businesses located in the LGA. However, telephone consultation with the Chamber of Commerce and real estate agents contrasted with this finding, identifying an undersupply of open space and poor public domain in North Sydney.

Telephone consultation also highlighted the importance of connectivity and movement in attracting businesses to North Sydney. It was outlined that staff demographics influence where businesses locate and that many businesses chose to locate in North Sydney CBD as it’s the “last stop before the city and therefore, access to services are a significant factor in North Sydney’s competitive advantage”.

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FIGURE 35. AVERAGE RANKING OF LOCATION STRENGTHS

Other 2.59

Links to research institutions 2.54

Night time entertainment / services 2.67

Number / quality of food outlets 3.34

Number / quality of retail stores 2.86

Quality of public spaces 2.98

Availability of car parking 2.84

Pedestrian activity 3.49

Availability of public transport 4.10

Source: SGS, 2015.

Survey findings in Figure 36 outlines the location of competitor businesses. For the majority of retail and commercial business respondents, major competitors are located in the Sydney CBD, followed by North Sydney CBD. The ‘elsewhere in Sydney’ category accounts for 11.1% of responses – this is likely to represent other major commercial centres such as Macquarie Park.

Telephone consultation with local business groups identified that “Macquarie Park had more of an effect on drawing people away from North Sydney ten years ago, however not so much now”. In particular, it was noted that the technology sector have relocated to Macquarie Park as it is more affordable and accessible for parking.

St Leonards is struggling to compete with Macquarie Park and North Sydney and is recently experiencing conversion from commercial to residential use. This corresponds to the market analysis in Section 4.3, which indicates a loss of 20,000 square metres of commercial floorspace in St Leonards in 2015 and 33,000 square metres of commercial floorspace in North Sydney CBD in 2015.

Both telephone and survey consultation found that for the centres in North Sydney to remain competitive, Council must address improvements to the public domain to make working in the LGA more attractive such as upgrades to open space and the streetscape. Consultation suggested that improvements to the public domain will draw pedestrian activity to the streetscape and generate retail spending.

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FIGURE 36. COMPETITOR LOCATIONS

Online 4.7%

Overseas 4.7%

Melbourne 3.5%

Elsewhere Sydney 10.6%

Parramatta 1.2%

Elsewhere on the North Shore 8.2%

Macquarie Park 0.0%

Chatswood 1.2%

St Leonards 7.1%

North Sydney 24.7%

Sydney CBD 34.1%

Source: SGS, 2015

Role of centres in LGA

The role and function of the various centres throughout North Sydney LGA has been explored as a part of consultation. North Sydney CBD is a major strategic centre positioned on the Global Economic Corridor. North Sydney CBD has a strong commercial focus and is an attractive location for international headquarters, business activity and educational institutions. St Leonards is also a commercial centre in the LGA, however plays less of a commercial role in comparison to the strategic centre of North Sydney CBD. Telephone consultation found that the role of the Pacific Highway precinct provides a cluster of educational institutions and health services on the edge of North Sydney CBD.

Neutral Bay and Cremorne markets are centred between North Sydney strategic centre and the Mosman local centre. Telephone consultation found that Neutral Bay and Cremorne operate as mixed use centres with major food, retail and commercial segments along Military Road. The commercial uses are well integrated with other uses. This is a strength as the weekday traffic from the commercial offices support the retail and food along the Military Road corridor. Telephone consultation found that Neutral Bay and Cremorne are similar local centres to Crows Nest in terms of integrated retail, food and commercial land uses, however consultation identified that the two centres do not compete.

Section 4.6 of the report identified the employment population for each centre within the LGA. The major industry types (by 4 Digit ANZSIC) for each centre includes:  Neutral Bay  Cafes and Restaurants  Takeaway Food Services  Primary Education  Engineering Design and Engineering Consulting Services  State Government Administration  Cremorne  Combined Primary and Secondary Education  Takeaway Food Services  Cafes and Restaurants  Supermarket and Grocery Stores  Computer System Design and Related Services

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 St Leonards  Engineering Design and Engineering Consulting Services  Computer System Design and Related Services  Management Advice and Related Consulting Service  Advertising Services  Crows Nest  Cafes and Restaurants  Computer System Design and Related Services  Real Estate Services  Engineering Design and Engineering Consulting Services  Pacific Highway Periphery  Hospital  Specialist Medical Services  Police Services  Computer System Design and Related Services  North Sydney CBD  Computer System Design and Related Services  Other Auxiliary Finance  Banking  Engineering Design and Engineering Consulting Services

Office sector Industry types

As outlined in Section 4.6 of the report, the dominant industries within the North Sydney LGA include the Professional, Scientific and Technical Services industry and the Financial and Insurance Services industry (at 30.2% and 12.5% of employment respectively). The prominence of employment within these sectors is particularly significant in the implication that the area is dominated by knowledge economy industries. However the rates of growth within these industries hold their own, more specific implications for the North Sydney LGA.

The higher rate of growth in Financial and Insurance Services is promising for the North Sydney LGA. However, the lower rate of growth than in the benchmark areas in Professional, Scientific and Technical Services suggests that the LGA has been missing out on adequately capturing the overall uplift in the wider performance of this industry. Similarly is the increased rate of decline in the Information Media and Telecommunications industry when compared to the benchmark areas, which has seen the North Sydney LGA lose a substantial proportion of its specialised advantage within this industry as it has contracted. These industries serve subregional, metropolitan and international markets.

Aligning with the economic profiling analysis in Section 4.6, the survey results found that of the survey participants, 43% were from the Technical Services, Finance/Insurance and Information Technology/Media sectors.

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FIGURE 37. OFFICE INDUSTRY TYPE

25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Technical services IT / Media Finance / Insurance

Source: SGS, 2015

Market performance

Telephone consultation with real estate agents identified that the North Sydney market is performing well, the St Leonards market is flat at the moment, yet this may change with increasing residential development.

A range of issues influencing the market performance of centres in the LGA was identified through telephone consultation. Issues identified included:  Demand for A grade building supply.  The need for transport and connectivity to keep up with the growth of development.  The lack of retail and activity outside commercial peak periods.

Demand for A Grade building supply

Consultation identified that there is market demand for new commercial development as there is currently a large supply of B and C grade stock and an undersupply of A grade stock. The age of the B and C grade stock is approximately 25 years, which is considered a weakness. As a result, consultation with real estate agents outlined that tenants in North Sydney LGA are increasingly seeking A grade stock.

The commercial industries that participated in the survey outlined the strengths and weaknesses of the current office supply in the LGA, ranging from strong (5) to weak (1). The findings illustrate the average ranking for each factor in Figure 38.average ranking of office stock.Error! Reference source not found.Error! Reference source not found. The size and configuration and value for money were ranked as important strengths of the current office supply of office stock.

So despite the fact that the market analysis indicates North Sydney office market is one of the most expensive, the value proposition of the areas is still seen as strong. Facilities within the building was ranked highly as an important consideration of office stock for businesses. At the same time, the age of the stock was not as strong as the other attributes, indicating that location, rather than office stock, is the driver for businesses locating in North Sydney. This aligns with the findings above suggesting that competitors such as Macquarie Park are driven by access to parking and affordability, rather than intrinsic locational advantages.

Survey participants identified ‘other’ factors concerning the weaknesses of current office stock, including parking supply for staff and client and, the need for smaller office space at an affordable price. Comments regarding the strengths of the current office stock included a recent increase in the supply of A grade

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buildings. Consultation with real estate agents confirmed this, highlighting the need to address the building stock with adequate facilities to encourage companies to stay in North Sydney. Agents further outlined that North Shore tenants are looking to move from B to A grade stock more commonly now.

FIGURE 38. AVERAGE RANKING OF O FFICE STOCK

Other 2.73

Size / configuration 3.24

Value for money 3.17

Facilities within building 3.04

Age of building 2.70

Source: SGS, 2015

The need for transport and connectivity to keep up with the growth of development

Transport connectivity and pedestrian accessibility were also raised as issues influencing the performance of the market. Consultation with property agents found that “North Sydney is generally well connected at the moment, however it is important that connectivity is able to keep up with the rate of market growth”. It was identified in telephone consultation that the new Victoria Cross station along the Sydney Metro rail line will create opportunities for market growth in North Sydney CBD. The new station provides an opportunity for commercial office renewal and public domain works.

The lack of access for pedestrian movement, particularly in North Sydney CBD was raised as an issue in consultation. Real estate agents indicated that improvements to the built form such as investment in the public domain and place making will attract business to North Sydney CBD. This was further supported by the results of the online survey, where 54% of survey participants indicated that upgrades to the quality of public spaces will help improve issues affecting business (refer to Figure 35).

The lack of retail and activity outside commercial peak periods

Telephone consultation also identified that the lack of retail amenity and night time activity in North Sydney CBD were issues affecting the market performance. It was suggested in consultation that introducing mixed use developments will enable the opportunity to activate North Sydney CBD and improve retail and cultural facilities; although consultation identified the importance of protecting the commercial core and intensifying residential in existing areas. Northpoint Tower and Greenwood plaza were identified as the activity spine of retail activity. Consultation suggested that improvements to these locations may provide a catalyst to activate the retail and cultural scene of North Sydney CBD.

In moving forward, telephone consultation identified a range of opportunities for Council adopt in order to address future economic challenges. Suggestions included the establishment of an innovation hub to attract start-up businesses, businesses that require a small scale floor plate and provide opportunities for knowledge sharing. It was outlined in consultation that this movement will address the needs of the future given the number of businesses now operating from home. Analysis of the ABS Census data on those who ‘work from home’ (taken as a proxy for home based businesses), reveals that

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North Sydney LGA had a proportion of around three percent of the local workforce that worked from home, compared with around seven percent for the Northern subregion and around five percent for Greater Sydney. So the data reveals that the North Sydney LGA has a lower rate of those who worked from home and (by proxy) a potentially lower rate of home based businesses.

Vacancy rates

Telephone consultation with property agents indicated that vacancy rates for the LGA have decreased from previous years and were “around 8% mid-year and close to the long term average”. Further, consultation found that “there is the right amount of stock available at the moment, however this can change with the development of new buildings”. The limited amount of A grade stock in the North Sydney CBD is becoming an issue, with a lack of space placing upward pressure on rents, which are becoming comparable with Sydney CBD. Although, it was identified that there are two major commercial developments occurring on the Pacific Highway and Miller Street in North Sydney CBD, each contributing to the supply of A grade building stock. Consultation outlined that once these developments are complete, it is likely that vacancy rates in North Sydney CBD will increase as tenants are expected to relocate from within the LGA.

Telephone consultation found that there is more amenity in the Sydney CBD, such as access to entertainment after work hours, and some tenants that would likely have gone to North Sydney are now locating in the Sydney CBD for these reasons.

With reference to other centres within the LGA, consultation identified that St Leonards has experienced no improvement in vacancy rates with a number of tenants moving out of the centre. This has significantly been driven by change in the commercial market and an increase in residential uses.

Capacity and feasibility

Telephone consultation with property agents identified that scope for expanding office space in North Sydney through development is difficult due to strata title arrangements.

Telephone consultation suggested improvements to the current supply of building stock such as expanding vertically in North Sydney CBD and St Leonards is likely to increase capacity. Consultation with real estate agents outlined that the ideal size for new stock would be 20,000 m2 to 30,000m2 as a maximum.

Increased residential development

The online survey explored the impact of increased residential development on commercial development. Error! Reference source not found. Figure 39 illustrates the impact increased residential development has on the commercial sector in North Sydney LGA.

As shown in Figure 38, 32% of participants identified that increased residential development improves competitiveness, whereas 57% of commercial participants considered that increasing residential development will have a neutral effect. The types of businesses that indicated an increase of residential development will improve competitiveness were real estate, IT/media, technical services and health. 11% of participants, predominately from finance and insurance businesses highlighted that increased residential development reduces competiveness.

Almost half (49%) of participants from technical services, IT/media and finance/insurance thought that increased residential development had a neutral effect on commercial activity, while 40% indicated that it improves competitiveness and 11% outlined that it reduces competitiveness.

Telephone consultation with property agents found that increased residential development is having a positive effect on the commercial market. With a particularly focus on North Sydney CBD, consultation outlined that an increase in residential development is likely to drive a level of demand for activated spaces, services and retail. This was noted as a positive opportunity for North Sydney CBD to activate the streetscape

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outside weekday peak hours. It was also suggested that an increase in residential development will increase the liveability of North Sydney CBD making it attractive for both commercial tenants and residents.

However, consultation emphasised that residential development should occur through the intensification of existing residential areas rather than a further erosion of commercial floorspace. It was identified that there are opportunities in North Sydney such as Berry Street for residential development.

Outside North Sydney CBD, telephone consultation identified that the conversion of commercial to residential floorspace in Neutral Bay, is having a negative effect on the commercial market. Telephone consultation found that the supply of commercial floor space in the B4 Mixed Use zone is not keeping up with the demand for commercial floorspace. This is partly due to the conversion of commercial floorspace to residential. The loss of commercial floorspace is reducing the supply of commercial tenants in Neutral Bay. Less commercial tenants has resulted in less weekday traffic stimulating the local retail economy.

Telephone consultation with the retail sector highlighted the importance for North Sydney CBD to increase residential development in order to activate the centre on weekends. It was outlined that this may enable Greenwood Plaza to trade on Sundays. One stakeholder indicated that the future development of Victoria Cross Station will influence the future of the northern precinct of the CBD and potentially reshape the retail demand. On the other hand, a consultee from Neutral Bay indicated that the loss of commercial office floorspace in this centre was negatively affecting daytime retail trade in this centre.

As noted in Section 4.3, the ‘crowding out’ of commercial office by residential uses is occurring across major office centres throughout Sydney including at Chatswood, Burwood, Hurstville and Epping and even in Macquarie Park/North Ryde. The same issue is also being experienced in London, based on recent changes to the planning controls, which favour large scale conversion of office and industrial uses to residential as permitted development. The policy has led to the loss of office jobs with areas such as Richmond losing 24 percent of its office space as a result of the rule and criticism from some quarters that the policy squeezes out office uses by increasing land values and driving up rents, diminishing the development equation for new or refurbished office space and “forcing businesses to close or to leave London” (The Guardian 2015).

Overall, telephone consultation highlighted that increasing residential development in the CBD was seen as an opportunity to increase the critical mass of pedestrian movement and rejuvenate the North Sydney CBD outside peak hours, but strongly emphasised increasing residential via intensification of existing residential areas.

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FIGURE 39. INCREASED RESIDENTIAL DEVELOPMENT IMPACT ON COMMERCIAL DEVELOPMENT

11%

32%

It improves competitiveness Neutral It reduces competitiveness

57%

Source: SGS, 2015

Figure 40 addresses the different avenues that can be adopted by Council in order to make North Sydney a more attractive place for business. Of the 85 survey participants that answered ‘what can be done to make North Sydney more attractive?’ around two-thirds (67%) identified the need to improve the public domain and a similar proportion (66%) noted the need to facilitate improvements in amenity. Telephone consultation with a North Sydney CBD retailer highlighted that “to improve the public domain and amenity, the activity spine needs to be identified and then it is important to prioritise ways to improve the public domain with the consideration of the Sydney Metro Victoria Cross Station”. The findings again reinforce earlier comments and indicate that improvements to the public domain and amenity are considered valuable elements in making North Sydney more attractive for commercial sectors.

The ‘other’ category reflects suggestions around the need to upgrade current building supply and provide more A-grade green buildings. The findings under ‘facilities within the building’ in Error! Reference source not found. support some of these comments in that the current facilities provided in the North Sydney CBD are not responding to the increased demand for environmentally friendly spaces and hot desk arrangements.

Telephone consultation with property agents found that there is a lack of entertainment, restaurants, cultural venues and events. It was highlighted that through improvements in the public domain, there is an opportunity to activate the centre.

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FIGURE 40. WHAT CAN BE DONE TO MAKE NORTH SYDNEY MORE ATTRACTIVE

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% Review planning / Improve the public Facilitate Other development domain improvements in the controls amenity offered

Source: SGS, 2015

Retail sector The survey received 12 participants from the retail sector, including food retail. This is considered to be a relatively low response rate for data analysis, however provides detail on the types of customers and the times of the week when the majority of business is conducted. This is important to analyse as it reflects the type of activity that occurs within North Sydney at different periods.

Retail participants located in North Sydney and St Leonards centres identified that their main cliental were local workers and that the majority of work is generated on week days. Figure 41Error! Reference source not found. highlights that the majority of business is conducted during weekday working hours, suggesting that a large portion of the client base is local. This reflects that the majority of survey participants are reliant on commercial businesses for trade as 61% identified that the busiest period for business is weekday work hours.

Telephone consultation with real estate agents supported this finding by outlining that the growth of retail in North Sydney is restricted by the lack of activity outside week day work hours. Consultation suggested that increased residential development may increase demand for retail outside these hours and therefore expand the customers from local based to a subregional catchment.

Notably, there was no data retrieved for retail businesses located in Crows Nest which skews the findings given that the precinct operates as a major food and entertainment hub within the LGA.

As reported above, telephone consultation identified that the loss of commercial floor space in Neutral Bay was detrimentally affecting local retail trade as it reduces commercial pedestrian traffic. This was highlighted as a significant issues in Neutral Bay as mixed use developments were primarily focused on retail tenants, reducing the amount of commercial tenants in the area. Therefore, the retail market in smaller centres within the LGA including Neutral Bay, Cremorne and Crows Nest are reliant on local cliental such as pedestrian food traffic from commercial industries.

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FIGURE 41. WHEN IS THE MAJORITY OF BUSINESS CONDUCTE D?

8%

23% Weekdays - work hours Weekdays - evenings Weekends

61% Unsure 8%

Source: SGS, 2015

Survey participants from the retail sector ranked the importance of different factors attracting customers. As illustrated in Figure 42Error! Reference source not found., word of mouth is a factor of highest value, followed by prime location on a major thoroughfare and then the internet. These results indicate that the retail businesses in the LGA are attracted to locating where there is high foot traffic and a significant local residential population. The importance of word of mouth and location on a major thoroughfare was most important for smaller centres in the LGA such as Neutral Bay.

The findings show that the internet and signage are also of relevant importance in attracting customers. The ‘other’ category accounted for issues such as accessibility and affordability of parking, the quality of the streetscape and clustering of other retail businesses. Accessibility and improvements to the public domain are elements that the North Sydney Council could assist with to improve the attractiveness of local businesses.

FIGURE 42. AVERAGE RANKING OF FACTORS THAT ATTRACT CUSTOMERS

Other

Internet

Word of mouth

Signage

Location on a major thoroughfare

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Source: SGS, 2015

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Tourism

Telephone consultation with organisations including Destination NSW, Luna Park and the North Sydney Chamber of Commerce identified the opportunity to increase the visitor population to the North Sydney CBD through entertainment and tourism. Luna Park and the immediate surrounding land uses currently make up the entertainment precinct of North Sydney. Consultation with Luna Park outlined concern for the conversion of commercial buildings to a mixed use zone has encouraged the growth of residential buildings around Luna Park, resulting in conflict between the park and residents.

Festivals and events such as Vivid were outlined as opportunities to promote mixed uses in the LGA as well as the benefits of working or living in the LGA. This was further discussed in consultation with Luna Park who highlighted that North Sydney CBD is a sound location for festivals such as Vivid to relocate to whilst the Sydney CBD is constrained by light rail construction. Funding for the event would be a challenge, however it is an opportunity to attract people to North Sydney during winter, which was identified as a slow time of year for tourism.

Destination NSW highlighted that accommodation facilities clustered around Milsons Point attract a variety of people, particularly with business in North Sydney CBD, North Ryde and Sydney CBD and tourists. Further, short term accommodation is mostly full Monday to Friday, yet it was identified that attracting people to stay in the precinct on weekends remains a challenge.

Consultation with tourism organisations found that improvements could be made to the LGA to capitalise on the business travel market and attract leisure visitors to the CBD on weekends.

Education Consultation with the Australian Catholic University (ACU) identified that ACU aim to create a sustainable education precinct for North Sydney and in order to do so, there is a need to develop formal associations between ACU and Council. ACU have scoped expansion through master and precinct planning for the North Sydney campus and anticipate up to 10,000 students on campus over the next five to eight years. ACU identified issues that need to be resolved for expansion to occur including the development of commercial and heritage buildings and the Development Application process associated with development.

The increased residential development has not impacted ACU, however it they noted that a greater population density would contribute the vibrancy of the CBD. It was noted that the staff and students at ACU contribute significantly to the local economy, however for the education precinct to grow, big retailers need to locate in the North Sydney CBD.

5.3 Summary

Councils past performance in promoting economic development was considered neutral by survey participants. In moving forward, 72% of participants outlined that Council should be a ‘facilitator’ and 67% identified that Council should adopt the role as a ‘stimulator’ and ‘promote of economic activity. As outlined in the analysis, some participants provided commentary such as addressing planning controls in order to improve economic development. It is evident that the majority of survey participants are interested in the economic development of North Sydney, led by Council through the role of a facilitator.

58% of survey responses were from the commercial sector and 42% were from the retail sector. The majority of participants are based in North Sydney accounting for 31%, 11.8% for Neutral Bay and operating from home and 7.5% were located in St Leonards. Of the total participants, 93% has fewer than 20 employees and most (68%) have fewer than five employees. This suggests that the survey results are skewed towards the issues and demands of small businesses. Notably, the findings indicate participants operating from home account for the second largest business group. This suggests that some of the findings related to business activity may be more relevant to the issues associated with operating in a residential or mixed use area and not the commercial core of North Sydney CBD.

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The strengths of locating business in the North Sydney centres included proximity to other centres, food outlets and public transport. The increase in supply of A grade buildings was noted as a strength for North Sydney CBD as consultation with major property estates indicated that commercial tenants on the North Shore are seeking to relocate from C and B grade building stock to A grade developments. This highlights the significant finding that only 20% of survey participants plan to relocate ‘elsewhere in Sydney’, which includes other major commercial centres such as Macquarie Park. Of those businesses planning to relocate, most are commercial offices who indicated the lack of night time entertainment, availability of car parking and links to research institutions as locational weaknesses.

Yet, telephone and survey consultation highlighted a number of weaknesses for economic activity within centres of the LGA including limited access to open space and the public domain. Findings indicate that improving connectivity and movement through public domain upgrades and the construction of bicycle lanes are important factors in attracting business to locate in the LGA.

In terms of competitor location, consultation highlighted that the North Sydney CBD is becoming less competitive with the Sydney CBD. Findings highlighted that commercial tenants that would have located in North Sydney CBD are attracted to the incentives such as night time entertainment in the Sydney CBD. The strengths and weaknesses identified in the online survey further support this finding as a number of participants highlighted the need to increase the supply of entertainment and activity in North Sydney CBD outside working hours.

There was a mixed response in terms of the effect of encroaching residential development within centres. The types of businesses that indicated an increase of residential development will improve competitiveness were real estate, IT/media, technical services and health. 11% of participants, predominately from finance and insurance businesses highlighted that increased residential development reduces competiveness.

Telephone consultation with the retail sector highlighted the importance for North Sydney CBD to increase residential development in order to activate the centre on weekends. On the other hand, consultation with real estate agents and the property development sector suggested that a continued decline of office floorspace meant that North Sydney was at risk of losing its relevance in the office market. It was outlined that residential development should occur through the intensification of existing residential areas rather than a further erosion of commercial floorspace.

Consultation findings from the retail sector illustrate that the majority of business is generated during work hours on week days and only 7% of business is generated on weekday evenings. Consultation with real estate agents indicated that the retail market of North Sydney CBD is reliant on pedestrian traffic during week day work hours. Consultation highlighted the opportunity to increase pedestrian traffic through residential development which is likely to increase local retail demand and therefore enable Greenwood to trade on Sunday’s.

Retail businesses value word of mouth and locating on a major thoroughfare in order to attract customers. Findings indicate that the factors most affecting the retail sector are change in retail expenditure and competition from other town centres. Participants highlighted that the main competitors are predominately located on the North Shore and online. From this, it is evident that the retail sector in North Sydney is reliant on activity during commercial week day hours.

Overall, consultation has highlighted the need to activate North Sydney CBD. Opportunities to do so have been discussed such as improvements to the public domain, improve connectivity and increasing the availability of entertainment in the CBD. Consultation has indicated that these aspects will further contribute to the attractiveness of North Sydney and further stimulate economic growth.

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6 STAGE 1 – SUMMARY FINDINGS

6.1 Literature and trends and drivers

Commercial office At the highest level, globalisation is having a profound impact on the structure and economies of cities throughout the world. Australia’s economic backbone has transitioned from one built on manufacturing to one predominately based on supplying services. Knowledge intensive jobs have, and are projected to represent an increasing share of the economy in the future. Productivity is significantly affected by the size and structure of cities, particularly in terms of transport accessibility and connectivity.

Agglomeration economies are increasingly being observed in Australian cities. Urbanisation and localisation are two distinct effects at work in relation to agglomeration. Agglomeration also helps to improve the quality of labour inputs available by increasing the stock of human capital. North Sydney is located in a highly agglomerated area of Sydney with high levels of productivity and is well placed to accommodate the continued growth of high-value professional services as well as the growth of new industries.

In the context of economic development literature, North Sydney LGA is well-located in close proximity to the resurgent inner city where there is expected to be strong employment and residential growth associated with the resurgence of the inner city. There will be increased demand for mixed-use activity in centres within the inner city of Sydney to accommodate both residential and employment growth.

The common denominator with the new economy is skills as the driver of competitiveness and innovation (leading to improvements in existing goods and service delivery and the creation of new goods and services). Skilled labour is now a more important input into the value adding process.

Firms making locational decisions will have as a key decision criterion the potential to access the best and brightest. If a region does not have a deep pool of skills within its borders, or is unlikely for whatever reason to draw skilled workers on a commuting basis, it is unlikely to be high on the list of priorities for firm location. Moreover, without skills within, the capacity to grow knowledge businesses locally is diminished.

Retail The impact of these trends on North Sydney will depend on the type of retail which is concentrated within the various retail centres (convenience or comparator retail). Comparator retail (such as fashion and specialty retail) is more likely to be vulnerable to shifts rather than convenience retail. Retail will also be susceptible to shifts within the number of workers within commercial centre, but also supported by population growth.

Consultation findings from the retail sector illustrate that the majority of business is generated during work hours on week days and only 7% of business is generated on weekday evenings. Consultation with Mirvac indicated that the retail market of North Sydney CBD is reliant on pedestrian traffic during week day work hours. Consultation highlighted the opportunity to increase pedestrian traffic through residential development which is likely to increase local retail demand and therefore enable Greenwood to trade on Sunday’s.

Retail businesses value word of mouth and locating on a major thoroughfare in order to attract customers. Findings indicate that the factors most affecting the retail sector are change in retail expenditure and

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competition from other town centres. Participants highlighted that the main competitors are predominately located on the North Shore and online. From this, it is evident that the retail sector in North Sydney is reliant on activity during commercial week day hours.

Education Education is Australia’s fourth largest export industry and largest non-resources export with a $17.6 billion revenue in 2015. With the Australian Catholic University located within the LGA there may be opportunities to leverage off this institution and develop research links. However this trend will likely create more competition rather than opportunities for North Sydney with other centres across Sydney attracting integrated business parks such as Macquarie University and the Australian Technology Park.

Consultation with the Australian Catholic University (ACU) identified that ACU aim to create a sustainable education precinct for North Sydney and in order to do so, there is a need to develop formal associations between ACU and Council. ACU have scoped expansion through master and precinct planning for the North Sydney campus and anticipate up to 10,000 students on campus over the next five to eight years. ACU identified issues that need to be resolved for expansion to occur including the development of commercial and heritage buildings and the Development Application process associated with development.

The increased residential development has not impacted ACU, however it they noted that a greater population density would contribute the vibrancy of the CBD. It was noted that the staff and students at ACU contribute significantly to the local economy, however for the education precinct to grow, big retailers need to locate in the North Sydney CBD.

Health The healthcare and social assistance sector is a rapidly growing employment sector in NSW and Australia. There could be opportunities for North Sydney to leverage off the St Leonards health and education precinct as well as provide local services for the community.

6.2 Strategy context summary

Role of Council in Economic development A critical review of economic development strategies for other Councils in Sydney was completed. The findings provide important background direction to the way that North Sydney Council could conduct and organise economic development activity.

Key recommendations/outcomes

Economic development strategies have tended to focus on either specific, significant centres or the whole LGA. They contained similar areas of opportunity and focus for the future directions of economic development in the local government areas. These themes could be relevant to the economic development of North Sydney as they relate to wider economic trends underway in Sydney and across Australia and relate to areas which local government can influence. Common themes and opportunities raised include:

1. Branding the local government area and or centres to highlight the character and advantages of the area 2. Assisting in building local business capacity and facilitating collaboration between businesses 3. Making it easier for businesses to establish and operate by explaining or modifying regulations 4. Supporting start-up businesses, in particular technology based start-ups, through the possible provision of office space and providing information on resources available 5. Advocating for improved infrastructure for transport, telecommunications and social needs such as childcare.

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The types of recommendations are generally broad and apply to all businesses within centres, rather than provide industry specific recommendations. The exception is creative industries and start-ups. Some councils, such as Parramatta, focus solely on a few key centres and do not provide recommendations for the economic development of other areas in the LGA. Alternatively, Waverley Council incorporates broad recommendations that apply to centres of economic activity, with a few place specific recommendations.

Responsibilities for implementation of strategy within council

Each LGA also benefits from having an Economic Development Officer or team to facilitate the implementation of the majority of actions included in the economic development strategy.

The preparation of an economic development strategy was identified as an important step to gaining support for economic development activities and to explain the role and function of other areas in Council in the economic development of centres.

Role of external stakeholders

External stakeholders are, for the most part, not incorporated into the recommendations of the economic development strategies apart from lobbying activities to state agencies and departments. These organisations can significantly impact on the economic development of a place or a local government area and local government can advocate to influence their actions and priorities.

Measurement and indicators

All of the economic development strategies reviewed include a range of measurements and indicators to determine the success of the strategy. These indicators largely rely on data collected from sources other than council and are used to track progress over time. The economic development strategies reviewed generally do not contain specific targets or deliverables as part of the proposed actions.

Areas of success identified include:

6. Strong advocacy and lobbying of state departments and agencies for infrastructure funding 7. Improvement to amenity and the public domain, including the activation of public spaces 8. Networking and professional development of the workforce in the LGA due to strong relationships with Chambers of Commerce and Business Chambers 9. Building and marketing an identity for centres to attract businesses

The timeframe for these strategies ranged between a five to 10 year strategy, with a longer term vision.

Role of Council

There are four basic ‘roles’ or economic development models that Local Government can adopt to encourage local economic development. Council would not necessarily need to ‘choose’ any one of these types of roles and in fact, the best outcomes may be achieved with a mix of activities that cut across all of these broad classifications: 10. Stimulator/Promoter 11. Facilitator 12. Co-ordinator 13. Entrepreneur/Developer

Councils take on a mix of roles in the economic development strategies reviewed, including promoter/stimulator, facilitator, coordinator, and entrepreneur/developer. The majority of actions included in these economic development strategies relate to the facilitator and stimulator/promoter role of council. The facilitator role providing an ‘enabling’ environment for local development through Council processes, such as streamlined development approvals, and Council actions, such as improvements of the public domain and place management initiatives to improve the vibrancy and amenity of local centres. The

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facilitator role of Council is wide-ranging and involves several business units of Council beyond the economic development team, such as public works and environmental regulation. Stimulator/promotor roles in the economic development strategies reviewed have generally aimed to induce business creation or expansion through branding local centres and building upon their individual character. In the economic development strategies reviewed, this role was largely managed by the economic development team. The coordinator role involves working with local businesses and business groups as well as other organisations including regional organisations of councils and state agencies and departments to promote business creation. Local business and community groups were most commonly identified in the economic development strategies reviewed. This role was largely performed by economic development teams in the strategies reviewed. Under this coordinator role, Councils advocate and to lobby other levels of Government and State agencies to act in the interest of local, subregional and regional economic development. This advocacy is common across all economic development strategies reviewed, with the economic develop team and senior management identified as the main advocate members of Council. The entrepreneur/developer role is less common in the economic development strategies reviewed. In economic development strategies where an entrepreneur/developer role is present, it is largely managed by the team responsible for Council assets.

Based on the online survey, North Sydney Council’s past performance in promoting economic development was considered neutral by survey participants. In moving forward, 72% of participants outlined that Council should be a ‘facilitator’ and 67% identified that Council should adopt the role as a ‘stimulator’ and ‘promote of economic activity. As outlined in the analysis, some participants provided more detailed suggestions such as using planning controls in order to improve economic development. It is evident that the majority of survey participants are interested in the economic development of North Sydney, led by Council through the role of a facilitator.

Existing strategies and documents Current North Sydney Council policies and documents focus primarily on the economic development of the North Sydney CBD and immediate surrounds, such as the Education Precinct and Careening Cove. St Leonards is also subject to extensive planning. Other smaller centres, such as Crows Nest, Neutral Bay and Cremorne have limited plans and policies directed towards their development. This is a reflection of the importance played by North Sydney CBD and St Leonards in the local economy, however the role of these centres in the local economy should not be overlooked.

In relation to the North Sydney CBD, improvements to the public domain have been repeatedly identified as a key initiative to improve the functioning and attractiveness of the centre. This includes public open space such as Brett Whiteley Place as well as other spaces such as footpaths. Improvements to the public domain are considered vital to improving the attractiveness and amenity of the North Sydney CBD to residents, students and workers. The emphasis on an improved public domain responds to the sentiments expressed in economic development literature that a quality built environment as important to attracting knowledge workers. It also aligns with the findings from consultation that identify upgrades to the public domain as critical in improving the attractiveness of these centres.

Traffic and congestion are also raised in multiple documents as adversely impacting on the amenity and vibrancy of the North Sydney CBD. Traffic and congestion can negatively impact on the perception and attractiveness of the North Sydney CBD to businesses and limit the economic development potential of the centre. The focus of several documents on improving the pedestrian experience in the North Sydney CBD are positive ways to improve the attractiveness of the centre and contribute to the image of North Sydney as a less ‘hectic’ version of the Sydney CBD.

In particular, Table 32 outlines strategies and actions for the North Sydney CBD that were considered as a part of the North Sydney Centre Review, Economic Study and Commercial Centre Study.

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TABLE 32. STRATEGIES AND ACTIONS FOR NORTH SYDNE Y CBD North Sydney Centre Review North Sydney Centre Economic Study North Sydney Commercial Centre Study

Greater leadership, cooperation and Creating a dedicated Council resource to A review of existing public domain coordination. This is an ongoing action for actively support key revitalisation and strategies Council. investment projects Reinvent the public domain. Currently, there Attract an additional full line supermarket A comprehensive urban design and are upgrades to Brett Whitely Place, Walker environmental sustainability study Street and Miller Street. Elevate the role of culture. Council has Change the Centre’s planning controls Capacity analyses facilitated this through public art trail and events. Attract an additional full line supermarket. Enhance the night time economy Opportunities to revitalise and activate the As a result of this action, Coles has recently Centre opened on Walker Street. Improve the convenience of public parking. Develop the public domain by maximising Identifying opportunities and constraints for Council has advised that this has not activity in public spaces, improving corner future growth occurred at this stage. amenity, running activities and events, and preparing an urban design study The drafting of new controls to realise Embrace the education economy. Create and market a compelling identity desired future direction Change the Centre’s planning controls. This may change as a result of the capacity study. Reduce barriers to business entry and adaptability. Council has advised that this is an ongoing action. Enhance the night time economy. As a result, Council has completed a late night trading review. Create and market a compelling identity. Source: Various sources.

Issues with the St Leonards centre raised include aging commercial stock, low pedestrian amenity and a lack of night time activity. The precinct planning process for the St Leonards/Crows Nest area is addressing these issues through the introduction of some residential development and temporary creative spaces to generate additional activity and interest in the centre. A potential conflict may arise from the introduction of shop top housing in the B3 Commercial Core zone recommended in the St Leonards/Crows Nest Planning Study. This may result in the erosion of the commercial core of the St Leonards centre and decrease the floorspace for employment uses, working against the objectives of the B3 Commercial Core zone and the directions of A Plan for Growing Sydney.

Compared with the economic development strategies prepared by other councils, the documents prepared for North Sydney Council contain limited actions and strategies for developing the capacity of businesses and business networks. Current council documents do not provide recommendations or actions for supporting technology-based start-ups; an area of focus in economic development strategies for other local government areas. The facilitating role of local government is largely absent in current documents. The actions are largely on the stimulator/promoter role, focusing on the public domain and marketing North Sydney. These are areas which Council can directly influence and relate primarily to public land.

6.3 Current position

Economic profile The economic profile, areas of specialisation and competitive advantage for North Sydney LGA were reviewed.

The dominant industries within the LGA are definitively Professional, Scientific and Technical Services and Financial and Insurance Services (at 30.2% and 12.5%, respectively). The Professional, Scientific and Technical Services sector in the LGA is approximately twice the proportion compared to the Subregion and approximately three times the proportion when compared the whole of Sydney.

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While the North Sydney LGA has lower proportions of employment in Manufacturing, and Transport, Postal and Warehousing, Retail Trade and Health Care and Social Assistance in the North Sydney LGA, these industries are located just to the north of St Leonards at the Royal North Shore Hospital and the Artarmon industrial area, while Chatswood to the north functions as a subregional retail destination.

There is a high concentration of the IT sector within the LGA. At a fine grain, 4-digit ANZSIC level the Computer System Design and Related Services industry holds a proportion of 13.5% of the employment within the North Sydney LGA, compared to 6% and 2.5% when compared to the benchmarked areas, demonstrating the importance of this industry within North Sydney. Other important industries include: 14. Engineering Design and Engineering Consulting Services 15. Other Auxiliary Finance and Investment Services 16. Management Advice and Related Consulting Services 17. Advertising Services

The nature of existing industry linkages were reviewed. As observable by their high output multipliers within the North Sydney LGA, there are strong linkages in the Professional, Scientific and Technical Services and the Financial and Insurance Services classifications.

Similarly, examining (Location Quotient), the highest degree of specialisation is found in the Professional, Scientific and Technical Services classification, being followed by a cluster of industries with an LQ between 1.66 and 1.88, being: 18. Administrative and Support Services 19. Mining 20. Financial and Insurance Services; and 21. Information Media and Telecommunications.

Examining industry growth against specialisation noted some concern for the North Sydney LGA. Whilst the Financial and Insurance Services sector has displayed positive growth along with achieving a high degree of specialisation, it can be considered to be relatively well established as the North Sydney LGA’s second largest employer. The moderate reduction in the Administrative and Support Services industry (6%) and the significant reduction in the Information Media and Telecommunications industry (45.9%), establishes a pattern of decline in areas of North Sydney’s specialisation.

Despite overall growth within the Professional, Scientific and Technical Services industry, the relative competitiveness of the North Sydney LGA (compared to the greater Sydney region) has declined, a factor which has operated in conjunction with the dramatic decline in the competitiveness of North Sydney within the Information Media and Telecommunications industry. This raises concern for two of the North Sydney LGA’s top three employers; both of which are areas of specialisation within the LGA with their high location quotients.

The increases in the competitiveness of the Financial and Insurance Services industry provides a positive contrast to the above, being the industry’s second largest employer. The increases in the concentration of the health and education industries highlight a potential increase in these industries’ role as major employers within the North Sydney LGA. While the North Sydney LGA had a higher rate of employment growth in the Financial and Insurance Services, it had a lower rate of growth in Professional, Scientific and Technical Services and a greater rate of decline in the Information Media and Telecommunications industry.

Public Administration and Safety industry has also experienced growth at a faster rate (52.2%) than the two benchmark areas to position itself as a substantial employer within the LGA. However, overall the North Sydney LGA has experienced a lower employment growth rate than the benchmark areas between 2001 and 2011.

In the absence of an economic development strategy, this lower trend-based growth could continue.

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Looking at forecast employment growth, the North Sydney LGA is forecast to have a lower employment growth (24%) than the Subregion (30%) and greater Sydney (39%) to 2041.

Employment levels forecast for North Sydney are lower than the Northern Subregion and significantly lower than Greater Sydney. Health, education and construction sectors are expected to experience the highest rates of growth; although these growth levels are comparable to both the Northern Subregion and Greater Sydney, indicating that these population serving industries are largely increasing to accommodate future population growth.

Given that no significant sectors are forecast to grow faster than the benchmark regions, this suggested that no industry in the LGA is expected to have a more prominent role in the future.

Precinct profile

Out of the precincts within the LGA for closer analysis, five displayed employment growth between 2006 and 2011, whilst three experienced decline. The precincts which saw growth are listed below, along with the change in total counts and as a percentage: 22. North Sydney CBD (an increase of 4487 jobs, or 19.8%) 23. North Sydney Periphery (an increase of 2872 jobs, or 32%) 24. St Leonards (an increase of 2411 jobs, or 28.3%) 25. Crows Nest (an increase of 297 jobs, or 7.1%) 26. Pacific Highway (an increase of 508 jobs, or 19.3%)

The precincts which experienced decline are listed below, along with the change in total counts and as a percentage: 27. Milsons Point (a decrease of 100 jobs, or 2.7%) 28. Neutral Bay (a decrease of 428 jobs, or 11.5%) 29. Cremorne (a decrease of 53 jobs, or 3.8%)

Market dynamics There are two major centres in the North Sydney LGA – North Sydney CBD and the St Leonards centre. Their two main competitors within the North Shore office market are Chatswood and Macquarie Park/North Ryde. Development in these North Sydney centres has been affected by competition from Macquarie Park/North Ryde, the general downturn in commercial property during and following the GFC and competition with residential development.

Corresponding to the economic analysis above that indicates a lower employment growth rate in North Sydney LGA between 2001 and 2011, North Sydney is no longer the second largest office market in Sydney, behind the CBD. Macquarie Park/North Ryde along with the growing Sydney Fringe market (includes Surry Hills and Pyrmont/Ultimo) have now overtaken the centre.

North Sydney CBD appears to be performing strongly based on positive net absorption and decreasing vacancy. But this is mostly as a result of the turnover of commercial floorspace to residential uses which is slightly distorting the figures. The vacancy rates are projected to rise slightly when the only large new commercial office development (177 Pacific Highway) is complete in 2016.

Coming out of consultation, the strengths of locating business in the North Sydney centres included proximity to other centres, food outlets and public transport. The increase in supply of A grade buildings was noted as a strength for North Sydney CBD as consultation with major property estates indicated that commercial tenants on the North Shore are seeking to relocate from C and B grade building stock to A grade developments. This highlights the significant finding that only 20% of survey participants plan to relocate ‘elsewhere in Sydney’, which includes other major commercial centres such as Macquarie Park (although this likely reflects the fact that most participants (93%) were in businesses with fewer than 20 employees). Yet, telephone and survey consultation highlighted a number of weaknesses for economic activity within the LGA’s centres including limited access to open space and the public domain. Findings indicate that

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improving connectivity and movement through public domain upgrades and the construction of bicycle lanes are major factors in attracting business to locate in the LGA. In terms of competitor locations, consultation highlighted that the North Sydney CBD is becoming less competitive against Sydney CBD. Findings highlighted that commercial tenants that would have located in North Sydney CBD are attracted to the incentives such as night time entertainment in the Sydney CBD. The strengths and weaknesses identified in the online survey further support this finding as a number of participants highlighted the need to increase the supply of entertainment and activity in North Sydney CBD outside working hours.

St Leonards/Crows Nest remains a smaller office market, similar in size to Chatswood and Norwest Business Park. St Leonards is a strategic centre which contains both commercial uses and a significant health and education precinct. A recent study by SGS (2014) highlighted that the current market dynamics of St Leonards/Crows Nest suggest new commercial office development would be unviable in the short term. There have been a number of firms which have relocated from North Sydney, as well as St Leonards and Chatswood, to Macquarie Park due to not only the cheaper rents but the availability of A Grade office space and large floorplates.

According to real estate agent consultation, St Leonards currently attracts small businesses looking for cheaper, short-term lease office space, while larger and higher profile businesses tend to look for higher grade office space in Macquarie Park or North Sydney. Completion of commercial developments in North Sydney in the short term may result in relocations out of St Leonards/Crows Nest and into North Sydney as greater prime office space opportunities emerge.

Consultation findings from the retail sector illustrate that the majority of business is generated during work hours on week days and only 7% of business is generated on weekday evenings. Consultation with Mirvac indicated that the retail market of North Sydney CBD is reliant on pedestrian traffic during week day work hours. Consultation highlighted the opportunity to increase pedestrian traffic through residential development which is likely to increase local retail demand and therefore enable Greenwood to trade on Sunday’s.

Competition between commercial and residential floorspace The amount of supply is also affected by competition between commercial and residential floorspace and pressures for rezonings. According to Knight Frank (2015), 33,000 square metres of commercial floorspace has been withdrawn from the market for residential conversion, since the start of 2013, mostly in periphery locations including Milson Point and north of Berry Street. This has resulted in a decline of 4.4% in total stock. A further 45,000 square metres of commercial floorspace has been earmarked for potential conversion to residential with almost half of this stock expected to be withdrawn from the commercial market within the next 24 months

In St Leonards, almost 20,000 square metres of stock (5.7% of total stock) has been withdrawn from St Leonards since the start of 2015. A further 42,000 square metres of commercial floorspace has been earmarked for potential conversion to residential uses (Knight Frank 2015).

This issue is not unique to North Sydney and St Leonards, it is occurring in Chatswood and even now in Macquarie Park/North Ryde, as well as a number of centres across Sydney such as Burwood, Hurstville and Epping (Lenaghan 2015). Although high density residential development assisted Chatswood in becoming a 24-hour centre, residential development has now been curbed to ensure the business, employment and service roles of Chatswood are not compromised by the amount of residential development.

Summary and competitive positioning of North Sydney and St Leonards North Sydney and St Leonards have been compared to other commercial centres based on various factors which are likely to affect the choice of location made by investors and tenants. Based on this comparison and the analysis above, the following conclusions can be drawn:

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30. Commercial development in North Sydney and St Leonards has been affected by broader trends in the office market, including the general downturn in commercial property during and following the GFC and the increasing attraction of business parks. 31. Rents are likely to be a significant determinant for tenants. Rents are lowest in Macquarie Park and highest within the Sydney CBD. North Sydney is likely to continue to experience strong competition from Macquarie Park, however there is evidence of firms relocating from Macquarie Park to North Sydney and surrounds chasing greater amenity associated with the inner city. The high commercial rents in North Sydney LGA also reflect the attractiveness of this centre. 32. Industries and tenants which require large floorplates are likely to be attracted to Macquarie Park and Sydney Olympic Park due to the availability of large campus-style developments with large floorplates, as well as the capacity within these centres for growth. North Sydney is constrained in this regard, particularly in relation to A-Grade floorspace. 33. There are a number of development applications which have been approved for commercial development within North Sydney and St Leonards however these have reportedly been deferred due to a lack of pre-commitments. 34. Competition for residential development is a significant issue in North Sydney and along the North Shore and these are the centres which have limited capacity to accommodate growth in commercial floorspace. Residential encroachment and price competition will continue to impact North Sydney and St Leonards (as well as nearby Chatswood). 35. There are issues with the office grade and age in North Sydney. More than 50% of commercial office floorspace within North Sydney is B Grade. St Leonards has a significant amount of C Grade office stock compared to the other centres. Competitor such as Chatswood, North Ryde and Parramatta now have much more A Grade space. Professional services uses seeking A Grade office space outside of the Sydney CBD are likely to be attracted to commercial centres along the North Shore, particularly North Sydney and Macquarie Park, however the availability of A Grade office space is severely limited in North Sydney. 36. Advanced technology and wholesale industries are likely to continue to be attracted to Macquarie Park due to the lower rents and existing concentrations of these industries, as well as potential research links with Macquarie University.

6.4 Key issues and next steps

North Sydney LGA is an attractive centre for knowledge rich jobs… The literature and economic trends and drivers analysis point to the increasing importance of knowledge jobs in the economy and the attractiveness of highly accessible, amenity rich, inner city locations for highly skilled labour. North Sydney LGA clearly sits favourably against the literature and as confirmed in consultation, one of the strengths of North Sydney CBD was its ability to attract highly skilled labour compared to other locations. The economic analysis substantiates the LGAs position as a knowledge economy centre, with specialisation in the professional, financial and IT sectors.

However, the relative competitiveness of North Sydney LGA has declined…with slower growth than the Northern Subregion and greater Sydney over the decade to 2011. The factors contributing to this relative decline include competition with other centres (particularly Macquarie Park), the general downturn in commercial property during and following the GFC and competition with residential development.

North Sydney CBD and St Leonards centres role has been diminished, becoming a smaller office market than Macquarie Park. The North Sydney LGA is forecast to have a lower employment growth forecast than the Subregion and greater Sydney to 2041.

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The challenge is to address improve the attractiveness of North Sydney LGAs centres…

While Council cannot control external and broader factors and the pressure that these bear down to the various centres in the North Sydney LGA, it can affect the economic fortunes of the centre by creating an environment that leverages and protects intrinsic assets. The focus is for North Sydney to retain its current position and role, without losing ground.

In order to continue to attract knowledge and creative workers, North Sydney will need to ensure that the commercial centres are amenity-rich, vibrant and diverse. Overall, consultation has highlighted the need to activate North Sydney CBD. Opportunities to do so have been discussed such as improvements to the public domain, improve connectivity and increasing the availability of entertainment in the CBD. Consultation has indicated that these aspects will further contribute to the attractiveness of North Sydney and further stimulate economic growth.

The successful modern urban economies are built around knowledge and creative industries, and attracting firms and workers in these industries, depends on economically diverse and dense environments. To facilitate a shift in locational preferences North Sydney Council should consider when developing its economic development strategy.

A recurrent theme is to address the competition between residential and commercial office land use. In simple terms, planning to either entrench or encourage existing commercial and office clusters or to develop new ones is a long term task. However, in metropolitan Sydney’s centres there is intense short term pressure for residential development given recent under-supply. North Sydney and St Leonards are centres where residential development has ‘squeezed’ out commercial potential. Sydney CBD itself and Chatswood are under similar pressure given a medium to long term view, particularly given foreign investment in what is seen as a residential development ‘safe haven’. In centres with scarce opportunities allowing a simple market contest between residential and office will result in residential ‘winning’, which may undermine long term employment potential and economic competitiveness. Taking a structural and long term view, it is too important to allow short-term imperatives driven by market cycles to undermine the economic geography and structure of our cities.

The challenges of ensuring that sites in strategic centres provide for longer term employment outcomes, and a critical mass for commercial or office employment activity, while allowing for market responsive outcomes remain. Configuring planning controls and implementing a resolute economic development strategy are key to managing this issue.

The historical approach has been to establish commercial only (or non-residential employment) zones to ensure an employment outcome, which may lead to the underutilisation of land in the short term, but ultimately focusses sustainable economic development. And then investors and institutional capital still struggle with the financing of new and large-scale commercial floorspace, given requirements for pre- commitment.

Renewing and redeveloping commercial office stock in the North Sydney and St Leonards centres is also a key challenge, with B Grade and C Grade stock being refreshed to compete with Sydney CBD and Macquarie Park. This also presents an opportunity to increase the capacity of existing office floorspace. A difficultly will be in overcoming existing strata title office buildings and securing sufficient pre-commitments to attract new office development. A recent study by SGS (2014) highlighted that the current market dynamics of St Leonards/Crows Nest suggest new commercial office development would be unviable in the short term.

There are a raft of existing strategies within Council documents that focus on improvements to the public domain to improve the functioning and attractiveness of the centres. Traffic and congestion are also raised in multiple documents as adversely impacting on the amenity and vibrancy of the North Sydney CBD. Existing documents also highlight the importance of changes to planning controls to facilitate development, improving the night time economy and marketing of centres. These existing strategies align with findings from the literature, economic analysis and consultation and the North Sydney EDS would need to align with, and potentially build on, these strategies or unify them within the umbrella of the EDS.

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Implementation will be critical to the success of the EDS…

Each case study LGA reviewed benefited from having an Economic Development Officer or Economic Development Team to facilitate the implementation of the majority of actions included in the economic development strategy. North Sydney Council will at least require an Economic Development Officer to actively implement actions and monitor economic development issues.

There are a range of roles that Council could implement including ‘stimulator/promoter’, ‘facilitator’, ‘co- ordinator’ and ‘entrepreneur/developer’. The review of other Council’s EDS’ found that the majority of actions related to the ‘facilitator’ and ‘stimulator/promoter’ role of council.

Based on the online survey, most participants outlined that Council should be a ‘facilitator’ and identified that Council should adopt the role as a ‘stimulator/promoter’ of economic activity.

Any economic development strategies or actions should require a range of measurements and indicators to determine the success of the strategy.

The timeframe for the North Sydney EDS could range between a five to 10 year strategy, with a longer term vision.

The next phase of this study will need to articulate an economic vision and establish a coordinated plan for economic development in a comprehensive policy document. It will investigate actions to address this and other issues in relation to commercial office development.

Important to ‘hold-the-line’ and take a long-term view that promotes the economic importance of the North Sydney centres both locally and within the Global Economic Corridor. Seeing past short-term market cycles that favour residential development with an eye on the structural importance of the North Sydney centres.

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7 STAGE 2 – ECONOMIC DEVELOPMENT STRATEGY

Vision and goal development . SWOT analysis & vision development. At the start of stage 2 we will distil the stage 1 summary report and any feedback received on this report into a simple SWOT structure. This will provide the framework for goal development. Leading directly from the SWOT analysis, we will draw out a clear vision for economic development in North Sydney. The vision will be sufficiently specific to focus future activity and will consider the findings of the economic narrative and opportunities to leverage future drivers of economic growth. The vision will consider North Sydney’s needs in the context of its relationship with the rest of Sydney and the state. . Synthesis & goal development. We will consider the findings of the SWOT analysis, draft vision and stage 1 research findings to prepare a series of clear goals. These goals will directly address key economic development issues, will build on the competitive position of North Sydney and will address gaps in the strategic framework while also recognising the prevailing policy landscape.

Strategies and actions . Strategy development. Under each of the goals produced in the previous task, we will develop a series of strategies. Initially a ‘long list’ of strategies will be produced through an internal workshop. The long list will then be subjected to a simple multi-criteria analysis to produce a strategy short-list. Strategies will be aimed at achieving the subregional plan targets and will be consistent with any directions from the subregional plan. These strategies will provide the basis for the North Sydney Economic Development Strategy. As part of the strategy development we will consider existing capabilities (e.g. for innovation, collaboration, investment and advocacy) required to convert opportunities into economic growth and articulate whether sufficient capabilities exist. Where capabilities do not currently exist, we will suggest how these might be developed and how these should be prioritised. Strategies will be organised into a matrix using the concept of the 4 roles of local government and the 3 horizons.

1st horizon - Protection of core 2nd horizon - leverage core assets, business/ assets diversification into related streams 3rd horizon - new opportunities  e.g. promote the local economy Stimulator/ and local facilities to existing promoter residents/ businesses  e.g. explore opportunities/ for Facilitator commercialisation of research activity

 e.g. explore potential for public Co-ordinator domain improvement in employment hubs  e.g. explore opportunities to leverage Entrepreneur/ Council owned sites in centres/ developer precincts

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. Risk assessment. A risk assessment will be completed for each strategy. This will indicate, associated risks, the potential impact of the risk and risk mitigation options. . Action plan. For each strategy, we will develop a series of clear actions. These will have associated responsibilities and timeframes attached and will allow Council to practise activity to give effect to the Economic Development Strategy.

Draft strategy document A concise, easy to read, plain English document will be produced. This will include:

. the existing strategy and policy framework . trends and drivers of economic development in North Sydney . current economic profile, areas of specialisation and competitive advantage (including workforce characteristics, demographics, etc.) . the nature of existing industry linkage and sectoral contribution to the economy . intrinsic attributes, infrastructure and assets driving economic development . emerging economic development issues and SWOT analysis . a clearly articulated economic development vision with supporting goals, strategies and actions . 3 horizons/ role of council matrix . action plan with timeline and responsibilities . risk assessment with mitigation options

Incorporation of feedback and final strategy. After discussion of the draft strategy with the client team we anticipated receiving a consolidated asset of comments within 2 weeks. Feedback and comments will be incorporated in a full final strategy document.

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REFERENCES

Adonis, J. 2013, ‘The Lucky Country?’, The Sydney Morning Herald. 13 September.

AEI 2014, International student data 2014, Australian Education International.

ARUP (2014) North Sydney Traffic and Pedestrian Management Study.

Bankstown City Council (2014) Economic Development Strategy.

City of Sydney (2013) Economic Development Strategy.

CBRE 2015, Australia Office Marketview, Q2 2015

Colliers International 2015, Metro Office: Research and Forecast Report, First Half 2015

Colliers International 2015, Metro Office: Research and Forecast Report, Second Half 2015

Colliers International 2015, CBD Office: Research and Forecast Report, Second Half 2015

Department of Education and Training (2015), 2014 Full Year Student Summary, DIICSRTE, Canberra.

Department of Education and Training (2015), Export income to Australia from international education activity in 2014, DIICSRTE, Canberra

Department of Industry (2014) NSW Economic Development Framework.

Department of Planning (2007) Draft Inner North Subregion Strategy.

Department of Planning and Environment (2014) A Plan for Growing Sydney.

Department of Planning and Environment (2015) Employment Lands Development Program.

Desrochers, P., & Leppälä, S. 2011, ‘Creative cities and regions: The case for local economic diversity’, Creativity and Innovation Management, 20(1), pp. 59-69

Ernst and Young (2013), University of the future: A thousand year old industry on the cusp of profound change.

Hill PDA (2013) Economic Development and Employment Strategy. Leichhardt Council.

Hill PDA (2013) North Sydney Centre Economic Study.

Filion, P 2001, Suburban mixed-use centres and urban dispersion: what difference do they make?, Environment and Planning A, 33, pp. 141-160

Florida, R 2003, The Rise of the Creative Class, Pluto Press, North Melbourne

Glaeser, E 1998, ‘Are Cities Dying?’, Journal of Economic Perspectives, 12(2), pp. 139-160

Glaeser, E 2011, ‘Cities, Productivity and Quality of Life’, Science, 333, pp. 592-594

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HSBC 2013, ‘Study costs most in Australia,’ HSBC, 13 August 2013.

Hutton, T. A. 2010, The new economy of the inner city: Restructuring, regeneration and dislocation in the 21st century metropolis. Routledge.

Infrastructure NSW (2012) State Infrastructure Strategy.

Infrastructure NSW (2014) State Infrastructure Strategy Update.

International Education Advisory Council (2013), Australia – Educating Globally: Advice from the International Education Advisory Council. February 2013.

Knight Frank 2015, North Shore Office Market Overview, October 2015

Lenaghan 2015, ‘Sydney residential conversions eat up suburban office markets’, Australian Financial Review.

Moretti, E 2012, The New Geography of Jobs, Houghton Mifflin Harcourt

NAB 2015, Online Retail Sales Index: Monthly update September 2015

North Sydney Council (2009) Affordable Housing Strategy.

North Sydney Council (2009) North Sydney Local Development Strategy.

North Sydney Council (2012) Arts and Cultural Strategic Plan.

North Sydney Council (2012) St Leonards/Crows Nest Planning Study Precinct 1.

North Sydney Council (2012) State of the Community Sector.

North Sydney Council (2013) Community Strategic Plan.

North Sydney Council (2013) Education Precinct Planning Study.

North Sydney Council (2014) North Sydney Childcare Review.

North Sydney Council (2014) Public Domain Style Manual and Design Codes.

North Sydney Council (2015) Draft Careening Cove Masterplan.

North Sydney Council (2015) Events Strategy.

North Sydney Council (2015) St Leonards/Crows Nest Planning Study Precincts 2 and 3.

North Sydney Development Control Plan 2013

North Sydney Local Environmental Plan 2013

Oculus (2014) Education Precinct Public Domain Masterplan.

Parramatta City Council (2011) Economic Development Strategy

Place Partners (2015) North Sydney Public Domain Review.

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Productivity Commission (2011), Economic Structure and Performance of the Australian Retail Industry. December 2011.

Property Council of Australia 2015, ‘Demand sees cut in north shore vacancy rates’, Property Council of Australia, 6 August.

Reich, R 2003, ‘Nice work if you can get it’, Wall Street Journal, 29 December.

Ruehl, M 2015, ‘DEXUS eyes $400m North Sydney Project’, Australian Financial Review, 14 September.

Ruhel, M 2015, BBC's creative office moves to North Sydney’, Australian Financial Review, 25 June.

Sassen, S 2005, ‘The Global City: Introducing a Concept’, Brown Journal of World Affairs, XI(2), pp.27-43.

Savills 2015, Briefing: North Shore Office, August 2015

Savills 2015, Briefing: Sydney Industrial, July 2015

Transport for NSW (2012) NSW Long Term Transport Masterplan.

Transport for NSW (2012) Sydney’s Ferry Future.

Transport for NSW (2012) Sydney’s Rail Future.

Urbis (2015) North Sydney Commercial Centre Study.

Waverley Council (2015) Economic Development Strategy

Wood, S. Sneesby, T. and Baker, R. 2012, ‘Maintaining town centre vitality in competitive environments: pedestrian movements, land-use and built-form in Armidale and Tamworth, NSW’. Australian Planner, vol. 49, no. 2, 172-187.

World Economic Forum 2014, The Global Competitiveness Report 2014-15.

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APPENDIX 1

TABLE 33. DEVELOPMENT PIPELINE (NORTH SYDNEY AND ST LEONARDS CENTRES) Project Title Project Address Project City Classification Estimated Value Project Details Development Completion Status Project Stage Type Date Eden St Mixed 1A Eden St North Sydney Mixed use $6,550,000 Conversion and adaptive reuse of existing 3 storey commercial Addition 31/07/2015 Commenced Construction Development - building including addition of an extra floor to accommodate a Rigel mixed use development. Comprising 29 apartments, 6 serviced apartments & cafe. Berry St & 18 Berry St & North Sydney Mixed use $83,049,000 Demolition of existing structures. Construction of a 24 level New 26/02/2018 Firm Site Preparation Pacific Hwy 144-154 Pacific mixed use building consisting of 2,862 sqm commercial/retail in Progress Mixed Hwy floor space, & 230 residential apartments. Development - Polaris Pacific Hwy & 225-235 Pacific North Sydney Mixed use $68,000,000 Demolition of existing buildings. Construction of an 18 storey New 31/07/2015 Firm Contract Let Angelo St Hwy & 22 Angelo mixed use building consisting of basement & ground floor Mixed St retail/commercial area 224 sqm, restaurant 302 sqm, cafe 85 Development - sqm, bar 256sq m, & 211 apartments. Lucent Pacific Hwy 211-223 Pacific North Sydney Mixed use $57,600,000 Demolition of existing buildings & site improvements. New 27/11/2015 Firm Contract Let Mixed Hwy Construction of a 20 storey mixed use building comprising Development - ground floor retail; commercial on part of level 1; 232 Skye By Crown residential apartments. GFA commercial/retail 860.8 sqm, residential 20,695.9 sqm. Mount St 86-96 & 100 North Sydney Commercial $189,000,000 Demolition of the existing buildings. Construction of a 36 storey New 26/06/2020 Possible Development Commercial Mount St commercial building with total GFA of 45,439 sqm with a NLA of Approval Development 40,893 sqm, including retail 216 sqm. Denison Place 1 Denison St, North Sydney Commercial $209,269,000 Demolition of all existing buildings & structures on the site New 26/06/2020 Possible Development formerly 77-81 including pedestrian bridge linking 77-81 Berry St (now known Approval Berry St as 1 Denison St) with Tower Square. Construction of a part 26/part 32 storey retail/commercial building comprising 59,090 sqm GFA.

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Project Title Project Address Project City Classification Estimated Value Project Details Development Completion Status Project Stage Type Date Myrtle St Mixed 17-23 (Lot 1) North Sydney Mixed use $3,250,000 Substantial retention of the existing floor slabs and columns. Renovations, 29/12/2017 Possible Development Development - Myrtle St Expansion of existing 3 storey commercial building to create a Refurbishments Approval Reside On (SP37957) mixed use development incorporating approximately 268.9 etc. Myrtle sqm of ground floor business/retail floor spaces in 3 separate tenancies & 17 residential apartments above. Pacific Hwy 319-321 (Lots 1 North Sydney Mixed use $11,651,000 Demolition of existing building. Construction of a 4 storey mixed New 15/06/2018 Possible Development Shop Top & 2) Pacific Hwy use shop top housing development comprising 3 x Approval Housing (DP717389) retail/commercial tenancies at ground level total 790 sqm & 36 Development apartments above. Myrtle St Mixed 25-27 Myrtle St North Sydney Mixed use $1,800,000 Conversion of an office building to a mixed use building Renovations, 30/10/2017 Possible Development Use Buidling containing 9 units. Refurbishments Application etc. Cliff St Mixed 10-18 ( Lot 14) Milsons Point Mixed use $7,000,000 Alterations & additions to existing & adaptive reuse of 5 storey Addition 27/01/2017 Deferred Development Development - Cliff St mixed use building to convert commercial space on ground, first Approval The Astonia (DP749277) & second floors to 2 x non residential tenancies 136 sqm & 8 apartments. Transfield 30 (Lot 100) Milsons Point Mixed use $25,000,000 Demolition of existing Transfield House. Construction of a 10 New 22/06/2018 Deferred Development House Site Alfred St South storey mixed use building comprising 66 units & 544 sqm Approval Mixed Use (DP1170079) commercial/retail space. Development Vibe Hotel 84-88 (Lot 100) Milsons Point Mixed use $30,000,000 Alterations & additions to existing hotel to provide 123 Renovations, 31/03/2017 Firm Contract Let Redevelopment Alfred St South residential units & 778 sqm of commercial space (3 tenancies) Refurbishments - 88 Alfred St (DP793622) on the ground level etc. BBC Worldwide 35-51 (Lot 1) McMahons Point Commercial $2,200,000 Office fitout of level 1 as a general commercial office space by Renovations, 31/07/2015 Commenced Construction Australia Mitchell St BBC Worldwide Australia. Relocated with BBC Worldwide Refurbishments McMahons DP557873) (level Australia's current offices at Macquarie Park. etc. Point 1)

Pacific Hwy 619 Pacific Hwy St Leonards Mixed use $17,250,000 Demolition of existing 7 storey commercial building & site New Abandoned Development Mixed structures. Construction of a 16 storey mixed use building Approval Development - comprising ground level retail/business premises/cafe uses, Refer To Project total 410sqm; 21 serviced apartments, & 48 residential Id1939698 apartments. Albany St 7-19 Albany St St Leonards Mixed use $33,000,000 Demolition of existing commercial building. construction of a New 26/06/2020 Commenced Construction Mixed part 6/part 13 storey mixed use building with 4 storey podium, Development - containing 125 apartments, , with 4 x cafe/restaurant tenancies Metropolitan at ground floor GFA 150 sqm, 108 sqm, 122 sqm & 407 sqm & Residences commercial tenancy at first floor 1,016 sqm.

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Project Title Project Address Project City Classification Estimated Value Project Details Development Completion Status Project Stage Type Date Atchison St 5-7 Atchison St St Leonards Mixed use $7,500,000 Demolition of existing buildings. Construction of a 13 storey New 8/07/2016 Commenced Construction Mixed mixed use development comprising 54 apartments. Development Christie St 100 (Lot 2) St Leonards Mixed use $17,642,000 Alterations & additions to existing building involving conversion New 21/09/2018 Deferred Development Mixed Christie St of levels 4-11 to 96 residential apartments. Levels 1-3 will Approval Development (DP733528) contain offices 1,100 sqm per level. Levels 4-11 will contain residential apartments, 860 sqm per level. 77-83 Christie 77-83 Christie St St Leonards Mixed use $5,000,000 Potential development site suitable for hotel, serviced New 31/05/2019 Deferred Early Planning St apartments, medical centres, commercial premises or child care (STCA). 49m height limit (approx 16 storeys). Zoned B3 North Sydney LEP 2013. Opposite St Leonards train station. Dual street frontage. Chandos St & 79-89 Chandos St Leonards Mixed use $100,000,000 Rezoning of the site from B4 Mixed Use to part B4 and part RE1 New 29/09/2023 Early Rezoning Atchison St St, 23-35 & 58- Public Recreation and increase the building height over the Application Mixed 62 Atchison St remainder of the site. The proposal includes the amalgamation Development of 13 lots to create one site. The indicative concept scheme comprises a retail gross floor area across the site of 1,180sq m, a commercial GFA across the site of 1,021sq m & approximately 540 x 1, 2 & 3 bedroom residential apartments within a 32-36 storey development. Pacific Hwy 563-565 (Lot 1) St Leonards Mixed use $6,250,000 Demolition of existing commercial building. Construction of a New 16/12/2016 Firm Contract Let Mixed Pacific Hwy mixed use building containing 17 units & commercial space at Development - (DP1096026) ground 158 sqm & lower ground level 127 sqm. The Davenport Albany St 48 Albany St St Leonards Mixed use $3,650,000 Demolition of existing building. Construction of a 6 storey mixed New 9/12/2016 Possible Development Mixed Building use building containing commercial, serviced apartments & Approval boarding house rooms. Ground floor will contain commercial tenancy 89 sqm. Atchison St 18-20 (Lot 1) St Leonards Mixed use $22,900,000 Demolition of existing 3 storey commercial building. New 17/07/2017 Possible Development Mixed Atchison St Construction of a 15/part 16 storey mixed use building. Non- Approval Development - (DP740017) residential GFA 3,613 sqm, comprising office 2,362 sqm, gym Site B 714 sqm, child care centre 406 sqm, retail 131 sqm. Residential GFA 2,576 sqm. Chandos St 63-65 (Lot 1) St Leonards Mixed use $10,191,000 Demolition of existing commercial building. Construction of a New 24/02/2017 Possible Development Mixed Chandos St 12/13 storey mixed use building comprising street level Approval Development - (DP104816) retail/commercial floor space 178 sqm & 30 apartments. Manhattan

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Project Title Project Address Project City Classification Estimated Value Project Details Development Completion Status Project Stage Type Date Albany St 22-28 (Lots A-D)St Leonards Mixed use $13,235,000 Demolition of existing buildings. Construction of 13 storey New 25/08/2017 Possible Development Residential Albany St mixed use building with 4 storey podium comprising ground Approval Development (DP443072) floor cafe/restaurant tenancy at ground level 155sq m; Site commercial tenancy at first floor level 162sq m; first level communal facilities & 48 apartments. Oxley St Mixed 38 (Lot 1) Oxley St Leonards Mixed use $9,600,000 Demolition of existing buildings. Construction of a mixed use New 22/06/2018 Possible Development Development St (DP570425) development comprising 4 storey podium & 9 storey tower Application containing 32 apartments, 2 x cafe/retail tenancies 143 sqm & 23 sqm at ground floor & 1 x commercial tenancy 155 sqm at first floor. Pacific Hwy 479 (Lot 101) Crows Nest Mixed use $4,900,000 Demolition of existing building. Construction of a 3 storey mixed New 13/07/2016 Commenced Construction Mixed Pacific Hwy use development comprising 3 x ground floor commercial/retail Development (DP747672) suites & 16 apartments. The ground floor contains 3 x commercial/retail suites of 94.5 sqm, 97.8 sqm & 238.7 sqm. Pacific Hwy 222 (Lot 6) Crows Nest Mixed use $5,500,000 Demolition of existing building. Construction of a mixed use New 9/12/2016 Possible Development Mixed Pacific Hwy building containing 21 apartments, & 275 sqm Approval Development (DP656455) retail/commercial space split over 2 levels, ground & below ground. Source: Cordell Connect, 2015

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APPENDIX 2

Appendix 2 presents the findings from the survey consultation outlined in Chapter 5.

Figure 43 indicates that the types of businesses involved were primarily from the private sector.

FIGURE 43. TYPE OF BUSINESS

Not For Profit 1.2%

Government 0.0%

Private 98.8%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%

Series1

Figure 44 below identifies the number employees within each business that was involved in the online survey. As outlined, a significant portion of participants were from small businesses. Less than 10% were from businesses between 21 and 100 employees and none from businesses with over 100 employees. Therefore, the results of some questions such as ‘when choosing your location, how important are the following?’ may be favoured towards small businesses.

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FIGURE 44. NUMBER OF EMPLOYEES

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% 0-5 6-20 21-100 100+

Source: SGS, 2015

In terms of the length of time that businesses have been located in North Sydney, 50.9% of the 161 respondents had been in North Sydney LGA for longer than five years. As illustrated in Figure 45Error! Reference source not found., 32.3% of participants have been in North Sydney LGA for 1-5 years and 16.8% less than one year.

FIGURE 45. HOW LONG HAVE YOU BEEN IN NORTH SYDNEY LGA?

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% Less than 1 year 1-5 years Longer than 5 years

Source: SGS, 2015

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FIGURE 46. BUSINESS PERFORMANCE IN THE NEXT FIVE YEARS

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% Grow Stay the same size Shrink

Source: SGS, 2015

The survey found that 68% of participants that have a business located in North Sydney LGA, plan to remain in the same location in the next five years. Of the participants that selected they plan to relocate in Figure 47Error! Reference source not found., 22.6% outlined that they would relocate to the North Sydney CBD and 9.4% selected relocating elsewhere within the North Sydney LGA.

Findings indicate that 11.3% of survey participants would relocate business to the Sydney CBD. The ‘elsewhere in Sydney’ accounts for other major commercial centres such as Macquarie Park. 20.8% identified relocating elsewhere in Sydney.

FIGURE 47. BUSINESS PERFORMANCE IN THE NEXT FIVE YEA RS

32%

Remain in the same location Relocate

68%

Source: SGS, 2015

Of the total survey participants, 63% were from the commercial sector, 21% from retail and 16% were considered ‘other’. The survey findings outlined that the ‘other’ category represented those from the health industry, including health services and health specialists.

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FIGURE 48. BUSINESS FUNCTION

16%

Commerical Retail 21% Other 63%

Source: SGS, 2015

The survey findings illustrate that cafes, restaurants and specialty retail stores are the predominate form of retail outlet in the North Sydney LGA. There is a distribution of these retail outlets around the LGA, however they are predominately located in Crows Nest and Neutral Bay as the food and entertainment precincts within the LGA.

FIGURE 49. TYPE OF RETAIL OUTLETS

50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Food grocery Café / restaurant Retail speciality Hotel

Source: SGS, 2015.

Retail participants indicated that local residents are predominately the main customers for retail businesses in the Cammeray, Milsons Point and Neutral Bay centres. Survey findings illustrate that the cafés and restaurants and speciality retail owners located in mixed use areas of Milsons Point, Neutral Bay and Cammeray expect to grow in the next five years and remain located in the LGA.

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FIGURE 50. TYPE OF RETAIL CUSTO MERS

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0% Local workers Local residents Tourists or outside region

Source: SGS, 2015

Figure 51Error! Reference source not found. highlights that the North Shore retail market is quite competitive with 26 % of retail participants outlining that the location of their competitors are elsewhere on the North Shore and 20% North Sydney. 18% of retail participants identified that major competitors are online. This emphasises that only 22% of competitors were considered to be in the North Sydney LGA, indicating that those businesses surveyed serve a broad catchment.

FIGURE 51. LOCATION OF RETAIL COMPETITOR

Online 18.0% Overseas 6.0% Melbourne 4.0% Elsewhere Sydney 26.0% Parramatta 0.0% Elsewhere on the North Shore 12.0% Macquarie Park 0.0% Chatswood 0.0% St Leonards 2.0% North Sydney 20.0% Sydney CBD 12.0%

Source: SGS, 2015

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Contact us

CANBERRA Level 1, 55 Woolley Street Dickson ACT 2602 +61 2 6262 7603 [email protected]

HOBART Unit 2, 5 King Street Bellerive TAS 7018 +61 (0)439 941 934 [email protected]

MELBOURNE Level 5, 171 La Trobe Street Melbourne VIC 3000 +61 3 8616 0331 [email protected]

SYDNEY 209/50 Holt Street Surry Hills NSW 2010 +61 2 8307 0121 [email protected]

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