Growing a stronger and more competitive Harbour CBD

The Harbour CBD contains 22 per cent of Greater Sydney's jobs¹¹ and is Australia's financial and business capital, containing a large proportion of the regional headquarters of multinational and national companies. It has the largest commercial office market in Australia with the largest concentration of high-value knowledge-intensive jobs. Backed by the Eastern Economic Corridor, the Harbour CBD underpins Greater Sydney's global and national economic strength, and its growth must be enabled for the region to remain competitive.

The Harbour CBD includes Sydney CBD, North Sydney CBD, Barangaroo, Darling Harbour, and Sydney East plus the Innovation Corridor which extends south from The Bays Precinct through Pyrmont, Ultimo, University of Sydney to Royal Prince Alfred Hospital and swings around through North Eveleigh, Australian Technology Park to Central Station and parts of Surry Hills (refer to Figure 16).

Australia's most significant industry clusters are in the Harbour CBD, including finance, health and education, business services and an emerging innovation cluster. The concentration of these large, specialised clusters attracts global talent and investment, and is expected to offer economic benefits to Greater Sydney and NSW.

The success of the Harbour CBD is underpinned by the competitive advantages of:

• internationally desirable premium-grade and A-grade office space supported by lower cost office spaces
• being connected to the agglomeration of businesses in the Eastern Economic Corridor
• a world-class health and education precinct
• a developing innovation precinct with a robust creative sector providing entrepreneurial opportunities
• entertainment, cultural, tourist and conference assets
• high accessibility, supported by an established transport network
• safe and high-amenity residential precincts
• a highly valued natural environment.

Office market

Of particular significance for Greater Sydney is the Sydney CBD office market, which at 5 million square metres is larger than all the other major metropolitan office markets combined12 (refer to Table 3). In 2014, the Sydney CBD generated $68 billion worth of Australia's Gross Domestic Product, compared to Melbourne CBD's $39 billion¹³.

However, there is limited capacity available to attract the investment that will support expansion of Sydney CBD's footprint and increase the supply of premium and A-grade office space. Barangaroo has provided a much-needed supply increase; however, new sites are required to expand Greater Sydney's competitive tradable export services. Planning Priority E13 provides more information on supporting industry sectors.

New office towers require relatively large floorplates (800 to 2,000 square metres) on large sites. The mid-town and southern precincts of the Sydney CBD, which hold most development potential, have a profusion of relatively small sites. New sites need to be consolidated, which takes time and occurs in phases.

The more difficult it is to merge sites, the higher the likelihood that existing buildings will be converted to other uses, thus limiting Sydney CBD's capacity to accommodate future demand for office space.

Table 3: Greater Sydney office precincts 2017

*components of Harbour CBD
Source: Colliers International 2017, NSW Office Market Research Report 2017 (unpublished)

However, sustained commercial rent growth should underpin new office developments in the short term. In 2015, commercial rents in the Sydney CBD grew by 8.2 per cent, and sustained rent growth puts Sydney CBD at the high end of commercial rents in the Asia-Pacific region¹⁴.

Residential price growth has been strong, particularly since 2009 when residential values strengthened significantly against office values. In the Sydney CBD, office to residential conversions since 2012 have resulted in the loss of over 15 years' office supply and space for 45,000 jobs¹⁵. While price growth is expected to lessen in the short term, resulting in moderated growth, the tension between residential and commercial office uses is expected to be a long-term feature of the market.

The added vibrancy created by residential development needs to be recognised. However, residential growth needs to be managed so it does not compromise the Eastern Economic Corridor.

Sydney CBD planning controls need to support commercial developments, otherwise there will be insufficient floor space to accommodate the 45,000-80,000 future jobs forecast¹⁶. The City of Sydney's Central Sydney Planning Strategy and the Planning Proposal Central Sydney propose controls to facilitate this and enable the delivery of these job forecasts.

Eastern Economic Corridor

The Eastern Economic Corridor stretches from Macquarie Park, Chatswood, St Leonards, the Harbour CBD and Randwick to Green Square, Mascot and the international trade and tourism gateways of Sydney Airport and Port Botany. Its connection to an efficient and reliable public transport network that provides unprecedented access to jobs and services is the Corridor's primary competitive advantage. The Corridor and surrounding neighbourhoods are attractive places to work and live, further encouraging substantial investment. For example, the Corridor includes four major university campuses, three principal referral hospitals and six of the top 10 office precincts in Greater Sydney. It also includes the important industrial areas of Artarmon, South Sydney and Marrickville. With its strong economic output, the Harbour CBD is a major anchor within this corridor.

The Corridor's agglomeration of nationally significant businesses and institutions generates about 775,000 jobs. Its connections will be further improved with Sydney Metro, which will provide faster business-to-business links and increase the size of the labour market catchment.

Health, education and innovation

The Camperdown-Ultimo health and education precinct is part of the Innovation Corridor along the western and southern fringes of the Harbour CBD. The Innovation Corridor contains knowledgeintensive, creative and start-up industries along with health, education and research services that support the global competitiveness of the Harbour CBD. The opportunities to grow this precinct are further discussed in Planning Priority E8.

Tourism, conferences, entertainment and culture

The Harbour CBD has a strong cultural, arts and entertainment focus, attracting 8 million domestic and international visitors in 2016¹⁷. It has established tourism facilities such as the Overseas Passenger Terminal at Circular Quay, many of Australia's internationally significant cultural institutions such as the Art Gallery of NSW, and major entertainment precincts such as Darling Harbour. Cultural, entertainment, arts and leisure activities must continue to be provided to build a more diverse and competitive offering in these sectors.

The Harbour CBD's attractiveness is further reinforced by night-time activities, from popular food precincts, clubs, venues and small bars to lifestyle activities like cinemas and 24-hour gyms. Protecting and diversifying the night-time economy in appropriate locations is an essential component of the CBD's growth.

The Circular Quay Precinct renewal, for example, aims to upgrade a busy transport hub and revitalise a strategically important destination for both domestic and international visitors. The renewal will stimulate the day and night-time economies through a mix of land uses based on place-based planning principles.

Transport networks

Growing a stronger and more competitive Harbour CBD, improving business-to-business links and providing a 30-minute city requires better transport connections and measures to address local congestion, as outlined in Planning Priorities E10 and E11.

High liveability and stunning natural environment

High liveability for workers and visitors and clean, safe and attractive public places and natural environments contribute to the productivity of the Harbour CBD. They generate business investment from around the world, leading to economic and jobs growth and a globally enhanced reputation. These considerations are detailed in Planning Priority E6 and Planning Priority E16.

Residential precincts

The Harbour CBD contains many established residential precincts that are vibrant, safe and attractive. The area is increasingly experiencing the renewal of residential and surplus sites for high density apartments. The nature of high-rise living necessitates a reliance on public places to meet a range of activities, and many new areas have been developed within high amenity precincts. In a global city, these precincts are important attractors for investment, especially for international relocation choice. Planning for great places across the Harbour CBD is integral to achieving this, and is detailed in Planning Priority E6.

Job targets

Job targets, expressed as a range, have been projected for the Harbour CBD. These targets seek to inform planning authorities and infrastructure agencies of anticipated growth. They should not be seen as maximum targets.

The lower end of the range of these job targets reflects the baseline of projected job growth that is anticipated in the centre, while the upper end is an aspirational higher growth scenario to reflect outcomes in the case of future investment and land use planning.

*excludes North Sydney