And NSW would be best able to capitalise on the developing Western Sydney Airport, according to an industry expert.
Head of Industry at Mirvac, Stuart Penklis, said there was a “significant decrease of available industrial land in Western Sydney”, and has urged both the State and Federal governments to acknowledge the shortage and to act.
“We have been seeing industrial users located in more traditional areas [like Auburn and Silverwater] looking to relocate to the west and having problems finding appropriate available land,” he said.
The Employment Lands Development Program 2015 Report indicates that undeveloped serviced land within the Western Sydney Employment Area (WSEA) has declined from 454.7 hectares in 2010 to 66.1 hectares in 2015 - a decline of more than 85 per cent.
Mr Penklis said the take-up of new employment land within the WSEA had averaged 60 hectares per annum since 2008, which meant there was only about a one-year supply of land available for immediate release.
He said this had led to increasing prices and intense competition among buyers and tenants, pushing businesses out of the Sydney market to other states.
“Victoria has an abundance of industrial land supply. We are starting to see industrial users who want to relocate to Western Sydney, looking at Victoria as an opportunity because land is cheaper and more available.
“From a rental perspective, rents are half the cost in Victoria compared to NSW.”
Knight Frank Managing Director - Sydney West, David Morris, said there was “plenty of land available” but agreed there was a shortage of serviced industrial land.
He said the 2200 hectare Western Sydney Employment Area, taking in Eastern Creek and Erskine Park, still had about 1300 hectares available for development.
“When we take that 1300 hectares and work out what can be developed in the next 12 months to two years, it starts to get skinny. There is 800 hectares that will take at least three to five years to be serviced.”
However, Mr Morris said businesses would migrate west along the M2, M4 and M5 corridors - mopping up a lot of the vacant land out west - for a few cycles before they would move interstate.
“If you’re looking at a national distribution centre, you’re going to look at Sydney or Melbourne, it’s less about the land and more about the rental situation, but there are plenty of businesses which need to be in Sydney.”
Mr Penklis said the proposed airport was fantastic but it was critical that more land be released in the region to ensure supply could cater for the demand it would bring.
“The land around the airport at the moment has very little service available. Even if it is rezoned tomorrow, it will be a significant period of time before infrastructure is available,” he said.
“It’s about zoning and having the infrastructure planning resolved, being able to provide clarity to the private sector as to how infrastructure will be rolled out.”
Mr Morris agrees greater clarity around the timing of services is needed.
He said more land suitable for small to medium sized industry, not just large users, should be released and infrastructure plans should be put in place so services could happen as quickly as possible.
