ACCOMMODATING GROWTH EMPLOYING SOUTH AUSTRALIANS CREATING OPPORTUNITY
NEW JOBS PRECINCTS: EXPANDING WORK OPPORTUNITIES IN ADELAIDE
PROPERTY COUNCIL OF AUSTRALIA – NEW JOBS PRECINCTS: EXPANDING WORK OPPORTUNITIES IN ADELAIDE
CREATING EMPLOYMENT OPPORTUNITIES The recently released Housing and Employment Land Supply Program Report 2010 revealed the concerning statistic that, based on historic and current consumption rates, Greater Adelaide only has 12 years of zoned employment land1. Of that about 20 per cent is in the Southern Suburbs and 27 per cent is the Western Suburbs2. Much of this potential land is contained in the Tonsley Park and Gillman job precincts. These precincts represent the two greatest opportunities to provide employment in close proximity to large workforces and maximise usage of the State Government’s infrastructure investment program. The opportunities for enhancing employment are immense. Even with a modest 50 per cent site coverage, almost 8,000 jobs could be created at the Gillman jobs precinct alone. These sites are also crucial to maintaining South Australia’s business competitiveness. Without access to an ongoing supply of developmentready land, costs of investing in industrial development will skyrocket, leaving South Australia uncompetitive for new businesses. This paper identifies and promotes the importance of these precincts to South Australia’s economic future and suggests policy settings that will deliver certainty in the state’s ongoing employment generation capacity.
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ONGOING INDUSTRIAL LAND SUPPLY IS CRITICAL TO ADELAIDE’S GROWTH PATH Growth is inevitable
Matching precincts to need
Site-specific constraints
South Australia is on track to hit a population of 2 million people by about 2030. Estimates in the 30-Year Plan for Greater Adelaide show that this will result in a further 282,000 additional jobs3 located in Greater Adelaide. Translated to industrial jobs, this will mean an additional 77,600 employees by 2039, of which 26,752 will be in Western Adelaide and 13,699 in Southern Adelaide4.
Many previous governments have attempted to deliver targeted employment precinct developments with covenants deeming specific industry types. Many of these have met with limited success.
There is enormous potential for industrial growth at the former Mitsubishi site at Tonsley Park and at the Gillman land crescent, but both have significant challenges to their delivery to market.
While critical mass and industry synergy are important in attracting new business investment, unwieldy and overly prescriptive conditions on site uses tend to hinder market outcomes.
Some of the detailed issues are explored further in this paper, however the biggest issue is ensuring appropriate investment in infrastructure to make these sites viable.
The best opportunities for locating this jobs growth rest with large, mostly untapped precincts where critical mass can drive innovation and economic outcomes.
It is critical that State and Local policies for these precincts are aligned but sufficiently flexible to allow for the natural evolution of industry as these precincts are rolled out.
These issues will require resolution if we are to deliver job opportunities for South Australians.
PROPERTY COUNCIL OF AUSTRALIA – NEW JOBS PRECINCTS: EXPANDING WORK OPPORTUNITIES IN ADELAIDE
Maintaining competitiveness South Australia’s Strategic Plan identifies business competitiveness as a critical plank in strategies to enhance the state’s economic growth. Target T1.2 calls for South Australia to ‘maintain Adelaide’s rating as the least costly place to set up and do business in Australia and continue to improve our position internationally.’ Employment land costs are a central element in investment decisions, and land prices in South Australia are quickly closing the gap on other jurisdictions. If this trend continues it would mean the end of Adelaide’s competitive advantage in employment land costs. The State Government’s Housing and Employment Land Supply Program report for Greater Adelaide identifies future stocks of developable and market-ready employment land, but it also points out that supplies are
under growing pressure from competing land uses, with consumption rates also rising. Between 1996 and 2002 consumption of industrial land in metropolitan Adelaide averaged 85 hectares per annum. Despite the global financial crisis slowing economic growth rates, that rate of uptake grew to 95 hectares between 2002 and 2008.
FOOTNOTES 1 SA Government, Housing and Employment Land Supply Program Report 2010, Greater Adelaide, October 2010, P4. 2 SA Government, Housing and Employment Land Supply Program Report 2010, Greater Adelaide, October 2010, P5. 3 SA Government, 30 Year Plan for Greater Adelaide, February 2010, P3. 4 SA Government, Housing and Employment Land Supply Program Report 2010, Greater Adelaide, October 2010, P153.
As economic growth returns, demand is expected to grow even more rapidly in areas well serviced by road, rail and port infrastructure, and proximity to a workforce. This indicates demand in the short to medium term for well connected developable land such as at Gillman and Tonsley Park.
+ South Australia’s traditional competitive advantage for industrial land rates is eroding as the long-term supply pipeline tightens.
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WHAT ARE THE OPPORTUNITIES? The scheduled, targeted and supported delivery of dedicated jobs precincts in the Greater Adelaide area will boost South Australia’s capacity to deliver employment growth expected to flow from economic growth and expansion of new industries.
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RESOLVING POLICY INCONSISTENCIES Current planning ordnance and governance institutions do not have the rigour to manage the competing interests presented by the projected growth of about 560,000 people and 282,000 jobs. Metropolitan Authorities should be implemented in growth areas and charged with ensuring that appropriate employment opportunities are provided in the new communities where people will live, and that appropriate buffer zones exist between land use types.
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BOOSTING COMPETITIVENESS Ensuring long-term supplies of developable and development-ready employment land will contain land rate increases. This is critical to South Australia remaining a competitive place to invest in productive businesses.
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CREATING JOBS Into the future, Australia’s cities will increasingly compete for people. The key motivators for people moving between cities are housing and job and career opportunities. South Australia’s growth industries will require access to substantial and well-serviced land to cater for the employment they will generate.
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INVESTOR CERTAINTY The certainty provided by the scheduled and supported delivery of new employment land - in desired precincts - builds on the competitive appeal of investing in South Australia. Business investors and developers need the certainty that their is capacity for their enterprise to expand. Precincts such as Gillman and Tonsley Park have the space and locations to provide that certainty.
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ECONOMIC BENEFITS Jobs precincts generate employment which perpetuates other economic opportunities, such as housing investment, demand for proximate shops, cafes and other amenities and general consumption. More importantly, they offer the capacity to value-add upon South Australia’s extensive natural resources, creating products that attract new money into the state.
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SUSTAINABLE OUTCOMES New jobs precincts present an opportunity to commence their development with the latest in environmentally-sensitive technologies that reduce greenhouse gas emissions, water use and harmful outputs.
In October 2010, the South Australian Government released the first audit of land in the Greater Adelaide area. This report, the Housing and Employment Land Supply Program (HELSP) clearly identifies areas proposed for housing and employment. HELSP seeks to rezone land to achieve a 15-year supply target of 1665 ha. It identifies land across all the regions of the Greater Adelaide area, but the majority of supplies are in the Northern, Western and Southern regions. In the Western Adelaide region, 150 ha is set to be rezoned at Gillman. This comprises a release of land owned by Land Management Corporation following site preparation and the completion of services. This release will serve as a test of the market’s interest in the wider Gillman jobs precinct and provide intelligence to the market on solutions to utilising complex and compromised sites. PROPERTY COUNCIL OF AUSTRALIA – NEW JOBS PRECINCTS: EXPANDING WORK OPPORTUNITIES IN ADELAIDE
WHAT ARE THE CHALLENGES? While both the Gillman and Tonsley Park jobs precincts present great opportunities, there are substantial challenges - existing and proposed - to bringing these sites to market effectively and efficiently.
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GILLMAN JOBS PRECINCT INFRASTRUCTURE INVESTMENTS: costs and timeframes inherent in augmenting and connecting network infrastructure services such as sewer, power and water. These projects are complex, involved and costly, but critical to the project’s long-term success; ROAD INFRASTRUCTURE: major upgrades will be needed for local, major and arterial road networks to meet industrial requirements and this will incur cost and time penalties; FILL: the site will require vast quantities of fill to bring it to a height level sufficient to protect it from seawater and stormwater inundation protection requirements; and ACID SULFATE SOILS: the site is prone to actual and potential acid sulfate soil issues that could complicate developments
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TONSLEY PARK JOBS PRECINCT GOVERNMENT RETURNS ON INVESTMENT: government investment in terms of cost and time needed to develop Tonsley Park into a jobs precinct requiring significant capital outlays in the early years of the redevelopment. INFRASTRUCTURE: the Government must commit funding for the upgrade of the existing surrounding infrastructure – particularly road networks – to ensure the development can sustain the incremental increases in traffic, people and freight. LAND COSTS: land once released for development must be affordable in comparison with surrounding and other employment land releases in similar proximity vicinity of the city. LAND RELEASE DELAYS: once approval is given to proceed with the development of Tonsley, the land must be released within commercial time frames. RESIDENTIAL GROWTH DEMANDS: Tonsley Park’s proximity to the CBD places it at risk of being put over, in part or in full, to residential development. COVENANTS: The covenants on the land must be commercially acceptable and barriers to entry must be set lower than has been done in the past, in recognition that the end goal is to attract businesses to the area. LOCAL COMPETITION: The City of Onkaparinga has recently announced it will release a 21 hectare site to be developed for renewable industries, in direct competition with the Government’s stated aim for Tonsley Park.
The advantages of these jobs precincts: + Ready access to workforces in areas of rapid population growth + Existing infrastructure that is amenable to augmentation + Proximity to road networks that connect to distribution nodes + Zoned or ready capacity for rezoning for industrial use + Public awareness and comfort with industrial zoning
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GILLMAN JOBS PRECINCT Adelaide has traditionally had a good supply of well-located, competitively priced serviced industrial land. However, Adelaide’s supply of suitable industrial land has come under increasing pressure from competing uses, interface-related constraints and rising land values in recent years. The situation needs to be addressed as a shortage could diminish the city’s attractiveness for industrial investment.
BENEFITS OF UNLOCKING THE GILLMAN JOBS PRECINCT:
Jobs: Gillman has the potential to provide 100 – 110ha of built form.. This will not only stimulate construction work in the short term but can provide approximately 4,500 to 5,000 permanent jobs over the medium and long term.
Geographical location: Future demand will be driven by economic activity, particularly in transport, defence, and mining as well as population growth. Demand is expected to continue to be greatest in the Northern Adelaide and Western Adelaide regions (primarily Gillman, LeFevre Peninsula, Wingfield and Pooraka). These regions are connected to major road and rail transport networks, which is a significant factor in the location of new industrial land. According to the 2010 Housing and Employment Land Supply Program (HELSP) report, both of these regions combined will make up nearly 70 per cent of the demand for industrial land over the next 30 years. Furthermore, the report forecasts there will be a deficit of industrial land supply in these regions within the next 15 years. Gillman represents an excellent opportunity to help fill the projected deficit in the market place. Not all of Gillman is suitable for development. Currently, we estimate there is approximately 210Ha of developable land for general industrial use. After allowing for infrastructure such as roads, services, open space etc, Gillman has the potential to provide approximately 178Ha of market-ready industrial land. There are benefits to and constraints in developing the land at Gillman.
The infrastructure upgrades of the Port River and Northern Expressways and Hanson and South Roads together with its proximity and access to all major transport corridors and the Port facilities at Outer Harbour enhance Gillman’s position in the Adelaide industrial market. Also, occupiers – both tenants and owners – wanting to be based in the inner north, have been considering moving their operations to the outer north for affordability reasons. Location is always a specific requirement of end users when seeking new premises and this will often be driven by non financial factors such as suitability for existing staff and clients and customers. Other benefits include: + Increased contribution to State and Local Government revenues. + No proximity risk to future residential uses CONSTRAINTS TO UNLOCKING THE GILLMAN JOBS PRECINCT INCLUDE: + Geotechnical issues + Site filling requirements + Multiple ownerships + Satisfying various authorities WHAT NEEDS TO HAPPEN FOR THE GILLMAN JOBS PRECINCT TO SUCCEED? + Developed industrial land must be brought to the market at affordable rates. Current land prices in the western regions are prohibitive to development, especially for tenants. + No constraints or covenants on land uses. + Development outcomes should be maximized such as increased site coverage and reducing car parking requirements based on merit.
PROPERTY COUNCIL OF AUSTRALIA – NEW JOBS PRECINCTS: EXPANDING WORK OPPORTUNITIES IN ADELAIDE
TONSLEY JOBS PRECINCT The State Government has taken control of the Tonsley Precinct and has designated it as a sustainable construction and education precinct. A consortium has been appointed to plan and deliver the site under the auspices of the Department for Trade and Economic Development. The site will include a range of uses including education and a TransitOriented Development site. This is critically important to ensure the site works for all uses and the community. However, we must remember the lessons of the past and not be overly prescriptive with the types of uses on the site. Given the ongoing need for property sector input into this critical development, the first step in creating Tonsely Park as a world-leading job precinct is for the Government and the Property Council to form a Tonsley Park Development Leadership Group to facilitate the appropriate development of Tonsley Park. The Leadership Group would •
Ensure the majority of the land at Tonsley Park is retained as employment land. As part of the overall site development, it will be necessary to put aside portions of land for the planned education and community hubs, student accommodation, retail facilities and infrastructure, but the immediate short-term focus must remain on expanding the small industrial precincts prevalent in the surrounding areas of St Mary’s, Melrose Park and Edwardstown.
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Monitor land release timeframes. These must be put to market as soon as the master plan is completed. The market must be kept updated and informed throughout the development and timelines must be met to give the market confidence to invest in the area.
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Develop incentive programs to encourage ‘green’ investment while balancing the need for immediate growth.
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Agree on covenants. Any covenants set to retain land for “green” industries must be realistic and easily achievable to encourage a high take up rate of the land. Large tracts of undeveloped land create uncertainty for other potential users as it gives the impression the development has failed.
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Take a headline role on providing purchasers of land at Tonsley Park with certainty in the planning process. The Government must ensure that the development of buildings and businesses in this area are not delayed by inefficiencies or local politics in the planning process.
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Ensure that the land parcels cover a broad spectrum of sizes to stimulate demand from a wide range of user groups.
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Examine the opportunity for Growth Area Bonds to be used to fund upfront infrastructure development critical to attracting appropriate investors.
The price of opportunity lost Job precinct developments underpin the economic strength of the state, support sustainable population growth and helps position South Australia as an up-and-coming economic powerhouse. However, when ranked against every state and territory over the last decade, South Australia is trailing behind in terms of economic growth A fully developed Tonsley Park job precinct has the ability to lift the state’s economy significantly through jobs growth and creation by attracting businesses from other states to establish themselves in South Australia. To do this, the land must be competitive in terms of landed cost, facilities, covenants and regulation. While the Government’s ambition for the area to be a world-leading sustainable technology hub is admirable, it must first function as an industrial market in its own right. Tonsley Park has many factors that appeal to the industrial market as a whole; any policy initiatives to influence a sustainability focus should provide additional incentives for this type of investment rather than penalise others.
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THE ACTION PLAN
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Gillman Jobs Precinct
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Tonsley Jobs Precinct
Government must continue to work with the Property Council to ensure that the Gillman Jobs Precinct is delivered to market at nationally-competitive rates. Through Land Management Corporation the Government should: • explore solutions to fill and other geotechnical challenges; • streamline the provision and augmentation of site infrastructure; • maintain flexible planning controls on the site; and • retain and reinvest dividends into public infrastructure Form the Tonsley Park Development Leadership group to ensure industry is represented during the planning, development and market release of land at Tonsley Park.
PROPERTY COUNCIL OF AUSTRALIA – NEW JOBS PRECINCTS: EXPANDING WORK OPPORTUNITIES IN ADELAIDE
Property Council of Australia Limited ABN 13008 474 422 142 Gawler Place Adelaide SA 5000 Telephone: 08 8236 0900 Facsimile: 08 8223 6451 Email: sa@propertyoz.com.au Web: www.propertyoz.com.au
Copyright 2010