New South Wales has released a new plan for industrial land as the government in that state moves to address a chronic industrial land shortage particularly in Sydney.

Last week, the NSW Government released its Industrial Lands Action Plan.

The plan sets out a new approach to plan, secure and manage the supply of industrial lands throughout the state. It’s aim will be to ensure that the state’s industrial sector has sufficient capacity to support ongoing expansion and development.

Under the plan, the government intends to:

• Deliver a statewide policy for industrial lands. Under this policy, lands and precincts will be classified as being either state significant, regionally significant or locally significant. This will be based upon their spatial contribution to economic activity along with their relative significance in a network of industrial lands.
• Continue an ongoing program to investigate opportunities to improve local and state-use plans. The objective will be to support the intensification of lands that are classified as being either state or regionally significant according to the above classifications.
• Finalise and release a statewide approach for a pipeline of industrial lands that will help to ensure that there is a sustainable pipeline of development-ready land which is adequate to facilitate ongoing expansion of manufacturing, warehousing and other industrial uses.
• Establish an Employment Land Development Program that will manage supply and coordinate infrastructure investment to provide greater certainty to industry and to support the expansion of employment in areas which are close to home for workers.

The plan comes as New South Wales is suffering a severe shortage of industrial land which is needed to support growth in manufacturing, warehousing and distribution across the economy.

An analysis released by Atlas Economics and Infosys Portland last October found that Greater Sydney had just one year of serviced industrial land remaining in the pipeline.

This compares with 11.5 years and 13.5 years for Melbourne and Southeast Queensland respectively.

As a result of land shortages, industrial land rents paid by manufacturers, wholesalers than others are now higher compared with those in Melbourne and Brisbane to the tune of between 65 and 85 percent.

This combination of limited availability and higher costs is placing severe limits upon the capacity and willingness of owners and operators of factories, warehouses, depots and distribution centres to find room for expansion.

This is turn will have wider long-term implications for economic development and employment opportunities across Sydney and New South Wales – especially in sectors which either service the industrial sector as clients or rely upon the industrial sector for critical supply.

Of particular concern is the construction sector, whereby industrial capacity within close proximity of new residential development sites will be critical in supporting the state’s target of delivering 377,000 new homes over the five years from 1 July 2024.

In its report, Alas Economics spoke with several industrial firms.

One general manager of structural products indicated that his firm’s warehouse operates at 80 to 90 percent capacity whilst the manufacturing facility is at 100 percent capacity.

Whilst his form would ideally like to remain in Sydney and use the existing network to meet demand, the high property costs are making this unfeasible.

As a result, the firm has shifted its capacity to its regional site and has needed to increase prices in order to offset the additional transport costs which are associated with this.

Another large manufacturer and distributor of large building products indicated that firm had ‘put a line through Sydney’ as an option to expand manufacturing.

Furthermore, there are significant problems with current land use planning approaches for industrial and employment lands across the state.

As things stand, these policies vary across specific regions and cities.

Moreover, existing policies are often passive tin their application. Rather than supporting industrial expansion, many of these policies focus on preventing the loss of existing industrial lands to alternative uses and providing guidance on relevant considerations in planning for or managing industrial lands.

As a result, there is no coordinated approach to either ensure there is a sustainable supply of industrial lands or to inform government and private sector investment decisions or remove barriers to support economic development, local jobs and businesses.

NSW Minister for Planning and Public Spaces Paul Scully welcomed the plan’s release.

“After years of neglect, our new Statewide approach will plot the steps to help us grow our industrial pipeline across the State,” Scully said.

“In 2024 alone, industrial related industries and activities contributed approximately $174 billion in gross value to the NSW economy, the Industrial Lands Action Plan provides industry, developers and councils with a holistic and state-wide approach to actively plan, secure, manage and monitor industrial lands across NSW.

“By unlocking the supply of well-located, serviced and competitive industrial land, we are helping to drive investment, create jobs and support the construction industry in the delivery of housing.

“More serviced and development ready industrial lands are required to shore up the supply chain for the housing and construction materials we need to build affordable, well-located houses across NSW.”

Industry lobby groups welcomed the announcement.

Property Council of Australia NSW Executive Director Katie Stevenson said that the plan represented an important step towards addressing the chronic shortage of zoned and serviced industrial land across NSW.

Stevenson said there are several examples of current planning systems failing in critical precincts.

Development on the Mamre Road Industrial Precinct that is expected to generate around 17,000 ongoing jobs within the Western Sydney Employment Area near Penrith has stalled, she said.

Meanwhile, Stevenson says that only two development approvals in the Western Sydney Aerotropolis that will surround the new international airport when it opens in 2026 have been issued since 2021.

Stephenson called for swift action to implement the plan.

She says that the Property Council had long advocated for urgent action and will continue to work with the government to help to realise the plan’s vision.

“Our focus is on outcomes – what matters now is that the Plan is delivered quickly and effectively to address the urgent needs of industry and the economy,” Stevenson said.

“The coming months will be critical to ensuring industrial lands are unlocked so that with the right infrastructure and planning support, we can drive long-term economic and employment growth in NSW.”

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