Memorandum To: From: Amex Corporation c/- Greg Wood, Tract Consultants Matthew Lee Cc: Date: 12 June 2013 Subject: Economic Statement for Amex site Tarneit North PSP Dear Greg, This economic statement provides analysis with respect to land at Tarneit North, and has been prepared on behalf of Amex Corporation. The project brief is to examine the extent of retail and other business services that will be available to residents when the subject land is developed, and to determine the need for local provision of these services for future residents. 1. Background The Tarneit North Precinct Structure Plan (PSP) is currently under preparation by the Growth Areas Authority (GAA) as part of four PSPs that are being prepared for new urban growth areas in Wyndham North (refer Map 1). Tarneit North PSP (1089), which incorporates the subject land, extends from Boundary Road in the north to Leakes Road in the south, and from Davis Road in the west to Derrimut Road in the east. PSPs for Truganina (1090) and Riverdale (1091) are currently being finalised, with draft amendment documentation likely to be available by late 2013. The Tarneit North and Oakbank PSPs will be finalised subsequently, with the planning scheme amendment and initial permits issued for part of the subject site by the end of 2014. The Wyndham North PSPs are affected by the Regional Rail Link project, which involves the construction of new tracks, grade separated rail crossings and station infrastructure along the route from West Werribee Junction to Deer Park. Land acquisitions bisect the Amex property approximately 350 metres north of Leakes Road. Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 1
Map 1: PSP Context Source: Deep End Services; MapInfo; Ausway The subject land consists of 120 ha located west of Tarneit Road, between Leakes Road to the south and Dohertys Road to the north, as shown in Map 2. The property is bisected by the RRL to form two parts comprising 97 ha north of the rail alignment and 23 ha between the RRL and Leakes Road. Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 2
Map 2: Subject site location Source: Deep End Services; MapInfo; Ausway; NearMap imagery Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 3
2. Proposed subdivision and lot yield The subject land will create 1,444 residential lots across three precincts (refer Figures 1 to 3 and Table 1) consisting of: Approximately 24 hectares of land (gross) in Precinct 1 generating 296 residential lots Approximately 71 hectares of land (gross) in Precinct 2 generating 864 residential lots Approximately 26 hectares of land (gross) in Precinct 3 generating 284 residential lots. Concurrent permit applications for precincts 1 and 2 (total 1,160 dwellings) will be lodged with the PSP, with permits anticipated to be issued by the end of 2014. The remaining subdivision for Precinct 3 (284 dwellings) will occur at a later stage. Table 1: Staging and lot yield by product type Precinct/product type Lot yield S96A applications Precinct 1 Medium density 55 Entry market 50 Mid market 170 Premium market 21 Total 296 Precinct 2 Medium density 86 Entry market 244 Mid market 422 Premium market 112 Total 864 Sub-total initial stages 1,160 Later stages Precinct 3 Medium density 9 Entry market 119 Mid market 145 Premium market 11 Total 284 Total Amex site Medium density 150 Entry market 413 Mid market 737 Premium market 144 Total 1,444 A feature of the plan of subdivision for Precinct 2 is the proposed co-location of child care and residents amenities at the entry to the estate on Tarneit Road. Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 4
Figure 1: Precinct 1 proposed plan of subdivision Source: Proposed Plan of Subdivision, Tract Consultants Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 5
Figure 2: Precinct 2 proposed plan of subdivision Source: Proposed Plan of Subdivision, Tract Consultants Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 6
Figure 3: Precinct 3 proposed plan of subdivision Source: Proposed Plan of Subdivision, Tract Consultants Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 7
3. Activity centre planning Clause 22.05 to the City of Wyndham Planning Scheme presents relevant activity centre planning policy and is applicable to the development of existing and future commercial activity centres. The policy objective is to ensure that the development of commercial centres: Is planned for well in advance of anticipated urban growth Provides for a range of retail and supporting activities and functions within a defined hierarchy of centres Recognises an existing network of centres and projected future centres as population grows Maximises choice and satisfies community needs Provides a focus for community interaction (Cl 22.05-02) The most recent strategic planning for activity centres has been undertaken by Essential Economics, with a draft of the Wyndham Activity Centres Strategy 2012 made available during Amendment C137 (relating to the Featherbrook Activity Centre). Map 3 provides an excerpt from the draft Wyndham Activity Centre Strategy 2012. The Melbourne West Growth Corridor Plan (June 2012) was prepared by the GAA to guide future land use planning in new urban growth areas in the municipalities of Wyndham and Melton. The Plan identifies a Major Town Centre at Tarneit in association with the planned railway station (and opposite Rose Grange) and a future Major Town Centre at Tarneit West. More recently, GAA have prepared a draft urban structure for the combined Wyndham North area, with Map 4 presenting an excerpt as at December 2012. The plan identifies the locations of proposed Local Town Centres providing neighbourhood-level shopping, business and community services, in addition to the major centre at Tarneit. In summary, people living within the Amex land would be served by the following existing and planned new centres: Existing centres Tarneit West (3.3km from Tarneit Rd/Leakes Rd intersection) contains a Coles supermarket and small range of specialty stores Wyndham Village (4.9km from Tarneit Rd/Leakes Rd) contains Coles and Aldi supermarkets, a range of specialty retailers, medical centre and other non-retail uses Hogans Corner (5.3km from Tarneit Rd/Leakes Rd) contains a Woolworths supermarket and small range of specialty retailers Werribee Plaza (6.5km from Tarneit Rd/Leakes Rd) is a regional shopping centre containing Myer, Kmart, Big W, Coles, and Safeway, with a wide range of specialty retailers and non-retail elements including library, cinema and health services Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 8
Planned or under construction Tarneit Gardens (900m from Tarneit Rd/Leakes Rd), currently under construction, is a neighbourhood centre with supermarket, specialty stores and a medical centre Rose Grange (1.8km from Tarneit Rd/Leakes Rd intersection) is planned as the first stage of the Tarneit major town centre. A permit is sought for a centre containing a discount department store, supermarket and specialty stores. In the longer term the area around the Tarneit railway station is anticipated to be developed for a mix of retail, commercial and residential uses Davis Rd/Leakes Rd on the adjoining land to the west of the Amex site is planned as a local town centre with supermarket, specialty retailing and non-retail uses to be located close to a potential future railway station. The location of the centre is understood to be close to Davis Road A local town centre is identified for a site on Tarneit Road adjoining the intersection with Kenning Road (approximately 800m north of the subject land), but the location of this centre is yet to be finalized The north-west corner of the Heartlands Estate is designated for mixed use development according to the estate s Masterplan, and is likely to accommodate local level retailing. In summary, the following commentary can be made regarding activity centre provision surrounding the subject land: In the long term the local community living within the subject land will be well served by a network of neighbourhood and higher order activity centres in the surrounding region, with most residents within 1-1½km of the nearest supermarket-based centre, and within 2½-3km of sub-regional shopping facilities at Rose Grange. Residents within Precinct 1 of the Amex site will be well served in the short-term, with Tarneit Gardens providing convenient supermarket-based retailing and other business and community services. The construction of a local town centre on Davis Road will provide convenient neighbourhood level shopping, business and community services for residents living within Precincts 2 and 3. However, this centre is unlikely to be constructed until residential development proceeds northwards along Davis Road to Doehertys Road and beyond, particularly as the Regional Rail Link will inhibit the extent to which the centre might serve communities to the south. Our view is that construction of this centre is unlikely to occur until approximately 2021. In the very long term additional neighbourhood-level retailing and other services will be provided to the north of the subject land, associated with the local town centre that is provisionally located at the intersection of Tarneit Road and Kenning Road. The conclusion is that an appropriate network of activity centres will provide good access to neighbourhood-level retail and other local business and community services for residents in the Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 9
subject land in the long term, but that residents north of the Regional Rail Link will have relatively poorer access to local services until the Davis Road centre is constructed, likely to be 2021 at the earliest. Map 3: Draft Wyndham Activity Centres Strategy 2012 Source: Deep End Services; MapInfo; Ausway; Wyndham Activity Centres Strategy (draft), Essential Economics, Jan 2012 Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 10
Map 4: Draft urban structure (December 2012) Source: Deep End Services; Growth Areas Authority Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 11
4. Retail demand analysis A total of 1,444 residential lots will be created across the subject land according to proposed plans of subdivision for each precinct, with 1,160 lots created to the north of the Regional Rail Link. The residential population is forecast to be approximately 4,075 persons at full development, including 825 persons living within Precinct 1, and a total of 3,275 persons living in Precincts 2 and 3 to the north of the railway line. These estimates are based on the application of typical average household sizes for each type of housing product located within each precinct. The population base is insufficient to support the construction of a local town centre providing neighbourhood level retailing and other business and community services. In any case, residents in the northern part of the subject land will have access to planned neighbourhood centres at Davis Road and Tarneit Road/Kenning Road in the longer term. However, the opportunity to provide local retail services needs to be explored, especially as early residents in Precincts 2 and 3 will not have convenient access to local retail services until the construction of the Davis Road centre, probably after 2021. Analysis of the opportunity for local retailing can be prepared with reference to total retail floorspace demand projections, and by estimating the share that may be retained at the local level within the subject land. Total retail floorspace demand generated by residents within the subject land is estimated at 9,375 sqm at full development, consisting of: 1,900 sqm retail floorspace demand generated by residents in Precinct 1 7,475 sqm retail floorspace demand generated to the north of the railway line This estimate is based on retail demand of 2.3 sqm per person, which is slightly above current levels and incorporates expected growth in average retail provision. The majority of retail demand is directed to neighbourhood and higher-order retail centres that provide weekly grocery and specialty retail shopping, and to other locations such as homemaker precincts, entertainment/dining precincts, and centres/shops that are located close to the workplace. A diminishing share of retail spending is directed to local retail shops, as evidenced by the general decline in the role of local centres and individual general stores/milk bars. For the purpose of our analysis, an estimated 5% of total retail demand would potentially be retained at local retail facilities within the subject land. On this basis, the subject land could potentially support up to 470 sqm in local retail provision, as shown in Table 2. However, retail demand generated by residents in Precinct 1 would not support Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 12
retail development to the north of the railway line, with this spending directed to Tarneit Gardens or other centres. The total supportable retail floorspace generated to the north of the railway line is estimated at approximately 375 sqm, with the core residential market consisting of residents within Precinct 2 generated support for 285 sqm of retail floorspace provision. Table 2: Supportable local retail floorspace provision Retail demand calculations Precinct 1 Precinct 2 Precinct 3 Total site Dwelling yield 296 864 284 1,444 Average household size (persons per dwelling) 2.8 2.8 2.8 Residential population 825 2,450 800 4,075 Total retail demand (@2.3 sqm/person) - sqm 1,900 5,635 1,840 9,375 Retail demand at local centre (@5%) - sqm 95 285 90 470 Source: Deep End Services The implications from this analysis are that there is insufficient retail demand to warrant a local centre of the type envisaged by GAA in most PSPs, where the centre is anticipated to accommodate 1,000 sqm of retail floorspace and include a small supermarket of 400-750 sqm. Importantly, a small supermarket would be under significant competitive threat when the neighbourhood centre on Davis Road is constructed. The demand generated by residents in Precinct 1 would not assist in supporting the provision of local retail services to the north of the railway line. Total supportable retail provision is therefore in the order of 375 sqm. There are few successful models for the provision of local retailing in growth areas. The traditional model of one or a cluster of small shops will generally fail to prosper in today s retail environment. New innovative models are needed for these shops to survive. One of the best examples of such an innovation is the 240 sqm Parkview general store combined with café/deli at the corner of Hanson Road and Grand Boulevard within Delfin s Parkview Village residential estate in Craigieburn. This two-level model incorporates a residence (mostly located on the upper level) and a mixed business of a convenience store and café/deli on the lower level. The business shares a car park with a childcare centre and is well located within a local community hub. Another similar example is the general store/café on Redding Rise in the Aurora development in Epping North. This store, of approximately 250 sqm, is located adjoining a community hall/multipurpose centre and a child care centre, and opposite a primary school. A similar model is recommended for the subject land, with the incorporation of a small mixed business café/general store (up to approximately 250 sqm) within or adjoining the proposed residents amenities, and close to the proposed child care centre. Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 13
5. Conclusions and recommendations The subject land consists of 120 ha located on either side of the Regional Rail Link, with potential to generate a total of 1,444 housing lots when fully developed, and a residential population of approximately 4,000 people. The local community will be well served by a network of existing and planned neighbourhood-level shopping and community facilities, and is within approximately 3km of the proposed major centre at Tarneit. However the closest neighbourhood centre, on Davis Road immediately west of the Amex land, is unlikely to be constructed until approximately 2021 at the earliest. Residents in the northern part of the subject land (total 3,250 persons) will therefore have relatively poor access to local retailing and other services. The opportunity to develop local retailing is limited because of the size of the future catchment, the effect of the railway line to the south inhibiting north-south movement, and the strong future competition from the neighbourhood centre on Davis Road. Analysis shows that up to approximately 375 sqm of local retail provision could be supported by the residential population north of the railway line. This is insufficient to support a local centre of the type normally described in PSPs. An appropriate model for local retail provision would be a small mixed business café/general store of up to approximately 250 sqm, incorporated into the community precinct along Tarneit Road where a child care centre and residents amenities are planned to be located. A number of similar developments elsewhere in Melbourne have been successful a common theme is the co-location of these businesses with a community hub (and typically including child care) to maximise visitation. I trust that this satisfies your requirements at this stage. DEEP END SERVICES PTY LTD Matthew Lee Principal Amex Corporation memorandum - Economic Statement Tarneit North PSP - 12 Jun 13.docx 14