A recovery in demand for warehouse space in Sydney’s western suburbs has been positive for blue collar employment levels but has raised fears about the available supply of serviced land on which development could occur, a new report states.

Released by the New South Wales Department of Planning and Environment, the Employment Lands Development Program report shows an increase in the volume of land taken up for warehouse and manufacturing purposes throughout the Sydney region from a low of 120 hectares in 2011 to 196 hectares in 2013 and a similar rise in the dollar value of industrial use buildings approved for construction from $510 million in 2011/12 to $650 million in 2012/13.

Of this, demand is primarily being concentrated around the Western Central, South Western and West subregions regions, with take-up activity particularly strong in Huntingwood West, Former Wonderland, Greystanes, Eastern Creek and Yarrunga/Prestons and Erskine Park.

All up, western regions accounted for 94 per cent of all land taken up last year.

In terms of sectors, meanwhile, demand is primarily being driven by warehousing activity, which accounted for three quarters of development applications and unlike its beleaguered manufacturing cousin is benefiting from the shift toward online retail and associated demand for storage space and fulfilment centres nearby large population areas.

Moreover, the report notes expectations of strong demand for warehousing space within Sydney’s west going forward amid buoyant sentiment regarding levels of population and business investment as well as a massive program of transport infrastructure upgrades being undertaken by the current government.

Nevertheless, it highlights concerns about the near to medium term supply of land. At average annual take up rates of 180,000 per annum over the past six years, the supply of land which remains undeveloped but is connected to water and sewerage services amounted to 2.5 years’ worth.

That is well below the supply standard benchmark of between five and seven years, albeit with longer term supplies of undeveloped land which has been zoned as industrial but not serviced (20 years) and future earmarked industrial land (39 years) being considered adequate.

Despite this, New South Wales Minister for Planning Pru Goward welcomed the report, which she said contrasted with bleak industrial sector conditions elsewhere in the country and had meant Sydney’s western suburbs had become the centre of a new blue collar jobs boom.

“Western Sydney is already an economic powerhouse, but now it’s experiencing a renaissance in industrial land development and jobs,” Goward said, adding that the figures reflected confidence in the government’s long term plan for the area.

The latest report follows an announcement last month by the government of plans to extend the Western Sydney Employment Area, a proposal of which was put out for public consultation.

If approved, those changes would allow the government to dedicate an additional 4,537 hectares to economic growth in the western suburbs and would see the creation of a new Broader Western Sydney Employment Precinct.