UNLOCKING MELBOURNE’S CBD 31 October 2018 PREPARED FOR PROPERTY COUNCIL OF AUSTRALIA URBIS STAFF RESPONSIBLE FOR THIS REPORT WERE: Director Rhys Quick Director Michael Barlow Associate Director Nathan Stribley Consultant Lily Havers Project Code MA11911 EFO Report Number Final © Urbis Pty Ltd ABN 50 105 256 228 All Rights Reserved. No material may be reproduced without prior permission. You must read the important disclaimer appearing within the body of this report. urbis.com.au CONTENTS TABLE OF CONTENTS Executive Summary ............................................................................................................................................. i Introduction ........................................................................................................................................................ 1 1. The Rise of CBDs ................................................................................................................................. 3 1.1. Metropolitan Age ................................................................................................................................... 3 1.2. Emerging Issues and Challenges For CBDs ........................................................................................ 6 2. Evolution of Melbourne’s CBD .............................................................................................................. 7 2.1. Timeline of Development ...................................................................................................................... 7 2.2. Melbourne’s Rapid Growth ................................................................................................................. 10 2.3. The Heart and Engine of Melbourne ................................................................................................... 12 2.4. The Strengths of Melbourne’s CBD .................................................................................................... 15 2.5. CBD’s Future Role – Protecting the Strengths of the CBD ................................................................ 16 3. CBD Growth and Land Use Impacts ................................................................................................... 17 3.1. City Users Increasing .......................................................................................................................... 17 3.2. Land Use Effects ................................................................................................................................. 19 3.2.1. Total Floorspace Growth..................................................................................................................... 19 3.2.2. Commercial Office Use ....................................................................................................................... 20 3.2.3. Residential Use ................................................................................................................................... 24 3.2.4. Retail Use ........................................................................................................................................... 26 3.2.5. Education ............................................................................................................................................ 27 3.2.6. Entertainment & Recreation ................................................................................................................ 28 3.3. A Shift from Commercial to Residential Development ........................................................................ 28 3.4. Growth And Land Use Conclusions .................................................................................................... 32 4. Future Influences on the CBD Landscape .......................................................................................... 33 4.1. Changing Needs of the Metropolitan Age ........................................................................................... 33 4.2. Population and Employment Growth .................................................................................................. 35 4.2.1. Future Resident Population ................................................................................................................ 35 4.2.2. Future Employment Growth ................................................................................................................ 35 4.3. The Needs of CBD Dwellers ............................................................................................................... 36 4.4. The Needs of CBD Office Tenants ..................................................................................................... 37 4.4.1. Accessibility to Public Transport ......................................................................................................... 37 4.4.2. Demand for large floorplates .............................................................................................................. 38 4.4.3. Tenants demand quality ..................................................................................................................... 39 4.4.4. Increased workplace efficiency ........................................................................................................... 39 4.4.5. Tenant Demand Summary .................................................................................................................. 40 4.5. Projected Floorspace Requirements and Change .............................................................................. 40 4.6. Future CBD Influences: Conclusions .................................................................................................. 42 5. Accommodating Growth...................................................................................................................... 43 5.1. Development Potential Methodology .................................................................................................. 43 5.2. Calculated Floorspace Capacity ......................................................................................................... 44 5.3. Development Constraints Impact Prior to Capacity Point................................................................... 47 5.4. Further Constraints on Office Development ....................................................................................... 48 5.4.1. Physical Site Constraints .................................................................................................................... 48 5.4.2. Planning Controls ................................................................................................................................ 48 5.4.3. Loss of Commercial Sites ................................................................................................................... 52 5.4.4. The Need for a Different Approach ..................................................................................................... 52 5.5. Impact of Constraining CBD Growth ................................................................................................... 53 URBIS UNLOCKING MELBOURNE'S CBD - FINAL - 1.11.18 6. The Approach of Other Cities ............................................................................................................. 55 6.1. Introduction ......................................................................................................................................... 55 6.2. New York ............................................................................................................................................ 56 6.3. Toronto ................................................................................................................................................ 59 6.4. London ................................................................................................................................................ 64 6.5. Sydney ................................................................................................................................................ 69 6.6. Summary ............................................................................................................................................. 73 7. Summary and Recommendations ...................................................................................................... 75 7.1. Summary ............................................................................................................................................. 75 7.2. Key Recommendations ....................................................................................................................... 76 7.2.1. Recommendation 1 - Immediately introduce interim CBD planning controls to increase flexibility and support employment growth ............................................................................................................... 76 7.2.2. Recommendation 2 - Prepare an Economic Strategy for the CBD to ensure that it remains a key economic hub ...................................................................................................................................... 76 7.2.3. Recommendation 3 - Conduct a comprehensive review of current CBD planning controls to support the Economic Strategy ........................................................................................................................ 77