eastern creek business hub - major projects

Eastern Creek Business Hub -Supplementary Report

Eastern Creek Business Hub

Supplementary Report:

Economic Considerations

PREPARED FOR

Western Sydney Parklands Trust

April 2014

Eastern Creek Business Hub Supplementary Report

ABN 52 003 963 755

Sydney

Level 3, 234 George Street

Sydney NSW 2000

GPO Box 2748 Sydney NSW 2001

t. +61 2 9252 8777

f. +61 2 9252 6077

e. [email protected]

Melbourne

Suite 114, 838 Collins Street

Docklands VIC 3008

GPO Box 3424 Melbourne VIC 3001

t. +61 3 9629 1842

f. +61 3 9629 6315

e. [email protected]

www.hillpda.com

Liability limited by a scheme approved under the Professional Standards Legislation

http://www.hillpda.com/


Ref: C13263 P a g e | 3 Hill PDA

QUALITY ASSURANCE

REPORT CONTACTS:

Tom Duncan Associate Property Economics MA Prop Dev (candidate) MA Town Plan, BA (Hons), MRTPI Email: [email protected]

Adrian Hack Principal Property Economics M. Land Econ.B.Town Planning (Hons).MPIA Email: [email protected] Sarah Hill Practice Manager and Principal Planner BSc, MURP (Hons) PHD Candidate, MAPI, RTPI Email: [email protected] QUALITY CONTROL: This document is for discussion purposes only unless signed and dated by a Principal of Hill PDA. REVIEWED BY:

Sarah Hill Practice Manager and Principal BSc, MURP (Hons) PHD Candidate, MAPI, RTPI Email: [email protected]

Date: April 2014

REPORT DETAILS: Job Ref No: C13263 Version: Final Date Printed: 10/04/2014 3:12:00 PM File Name: C13263 - Eastern Creek Supplementary Report F10.04.14.docx



CONTENTS

1. PREFACE .............................................................................................................................. 7

1.2 Economic Impact .................................................................................................................... 8

1.3 The CBA and the Base Case ............................................................................................... 12

1.4 Other Matters ....................................................................................................................... 14

2. FORWARD ........................................................................................................................... 15

3. EXECUTIVE SUMMARY .......................................................................................................... 16

3.1 Demand for Retail Floorspace .............................................................................................. 18

3.2 Appropriate Locations to Accommodate Need ..................................................................... 19

3.3 Relevance of Financial Viability ............................................................................................ 22

3.4 Strategic Justification ........................................................................................................... 25

4. INTRODUCTION ..................................................................................................................... 26

4.1 Background to the Proposal ................................................................................................. 26

4.2 Purpose of the Supplementary Report ................................................................................. 28

4.3 Documents and Sources ...................................................................................................... 29

5. RETAIL DEMAND AND REDIRECTION OF TURNOVER................................................................. 31

5.1 Validation of Assumptions .................................................................................................... 31

5.2 Need and Demand for Retail Floor Space ............................................................................ 38

5.3 Turnover Impact of Proposed Retail Premises ..................................................................... 44

6. CAPACITY OF EXISTING CENTRES TO ACCOMMODATE GROWTH .............................................. 50

6.1 What Influences the Capacity of Centres to Accommodate Growth? ................................... 50

6.2 How do we Assess the Ability of Centres to Accommodate Growth? ................................... 53

6.3 How do we Identify Centres to Assess? ............................................................................... 57

6.4 Sequential Test Assessment ................................................................................................ 62

6.5 The Subject Site ................................................................................................................... 96

6.6 Conclusion............................................................................................................................ 97

7. THE RELEVANCE OF FINANCIAL VIABILITY ............................................................................. 99

7.1 Why is Financial Viability Important? .................................................................................... 99

7.2 Recent Market Trends ........................................................................................................ 101

7.3 Financial Viability of the Proposal on Alternative Sites ....................................................... 108

8. STRATEGIC PLANNING FRAMEWORK ................................................................................... 112

8.1 Strategic Justification ......................................................................................................... 112

Appendix 1 - Response to SGS July/ August 2013 Peer Review

Appendix 2 - Eastern Creek Business Hub, Economic Impact Assessment, Hill PDA (2012) - Extract

Appendix 3 - Sites 4-6 and Sites 8-13 in the Minchinbury Precinct – Bulky Goods Redevelopment Testing

Appendix 4 - Findings of Hill PDA’s Site Visit March 2014



LIST OF FIGURES

Figure 1 - Proposed Retail Premises Trade Area ............................................................................... 38

Figure 2 - Proposed Bulky Goods Premises Trade Area (Hill PDA’s Adjusted Trade Area) ................ 40

Figure 3 - Westfield Mt Druitt Trade Areas ......................................................................................... 42

Figure 4 - Blacktown CBD Structure Plan .......................................................................................... 96

Figure 5 - Retail Trade in Australia February 2008 to February 2012 ............................................... 102

Figure 6 - Real Retail Growth: Trend and Average Growth 1986-2012 ($2010) ............................... 106

LIST OF TABLES

Table 1 - Clarification of Proposed Land Use Mix ................................................................................ 8

Table 2 - Estimated Impacts as of 2016 ............................................................................................. 10

Table 3 - Summary of CBA Results: Options 1 to 6 ........................................................................... 13

Table 4 - Clarification of Proposed Land Use Mix .............................................................................. 17

Table 5 - Eastern Creek Sequential Sites Assessment ...................................................................... 21

Table 6 - Eastern Creek Business Hub Proposed Uses ..................................................................... 27

Table 7 - MacroPlan Dimasi Retail Premises Assumption Review ..................................................... 33

Table 8 - MacroPlan Dimasi Bulky Goods Premises Assumption Review .......................................... 35

Table 9 - Eastern Creek Business Hub Proposed Uses ..................................................................... 44

Table 10 - Mt Druitt Centre Turnover Impacts with and without Proposal (estimated 2011-2016) ....... 45

Table 11 - Sequential Test Site Criteria ............................................................................................. 54

Table 12 - Eastern Creek Business Hub Proposed Uses ................................................................... 56

Table 13 - Mt Druitt Sequential Test Sites ......................................................................................... 63

Table 14 - Mt Druitt Sequential Test Assessment .............................................................................. 68

Table 15 - Rooty Hill Master Plan Precinct Characteristics ................................................................ 72

Table 16 - Rooty Hill Sequential Test Sites ........................................................................................ 72

Table 17 - Rooty Hill Sequential Test Assessment............................................................................. 78

Table 18 - Minchinbury Sequential Test Sites .................................................................................... 82

Table 19 - Minchinbury Sequential Test Assessment ......................................................................... 88

Table 20 - Blacktown City Centre Master Plan Precinct Strategies .................................................... 95

Table 21 - Estimated Construction Costs of the Eastern Creek Business Hub Proposal .................. 108

Table 22 - Estimated Construction Costs of Westfield Mt Druitt Option ............................................ 110

Table 23 - Estimated Construction Costs of Rooty Hill Depot Option ............................................... 111

Table 24 - Planning Policy Considerations ....................................................................................... 114



LIST OF ABBREVIATIONS

Australian Bureau of Statistics ABS

Bureau of Transport Statistics BTS

Crime Prevention through Environmental Design CPTED

Development Application DA

Economic Impact Assessment EIA

Ecologically Sustainable Development ESD

Environmental Impact Statement EIS

Floor Space Ratio FSR

Gross Floor Area GFA

Gross Lettable Area GLA

Local Environmental Plan LEP

Large Format Retail LFR

Local Government Area LGA

Main Trade Area MTA

MacroPlan Dimasi MPD

Net Community Benefit Test NCBT

NSW Planning and Infrastructure P&I

Property Council of Australia PCA

Primary Trade Area PTA

Roads & Maritime Services RMS

State Environmental Planning Policy SEPP

Shopping Centre News SCN

Statistical Division SD

Statistical Subdivisions SSDs

Square Metre sqm

Secondary Trade Area STA

State Significant Development SSD

Transport Management and Accessibility Plan TMAP

Western Sydney Parklands Trust WSPT

DEFINITION OF TERMS

Accessibility – Refers to the extent to which people have access to employment, goods and services, either through

proximity or transport links to places.

Bulky Goods Premises – As defined under the Local Environmental Plan Standard Instrument Land Use Terms/

Definitions.

Gross Floor Area –Gross Floor Area (GFA) is Gross Lettable Area plus common mall spaces (including amenities),

centre management area and plant rooms. In a typical indoor centre with at least one department store and

supermarket the GLA makes up around 72% to 75% of the GFA.

Gross Lettable Area –Gross Lettable Area (GLA) is the common measure used for lease and for other descriptive

purposes in retail centres and shops. It is usually defined as the total area of the lease and includes back of house,

storage, offices and mezzanine levels but usually excludes loading docks and common mall spaces. GLA is more

commonly used in the industry because it defines the area of the lease. Shopping centre owners report rents and

turnover figures on the leased area and benchmarking is usually made on the GLA. For the purpose of Hill PDA’s

demand modelling all floor areas expressed are in GLA.

Large Format Retail – There is no universal definition of large format retail and the term is somewhat ambiguous. For

the purposes of this report we have understood the term to mean a retail unit of greater than 10,000sqm.

Local Centres – These are centres of a small scale. They consist of Town Centres, Villages and Neighbourhood

Centres.

Primary Trade Area – The geographical area where residents spend the majority of their shopping for that particular

item or items at the subject centre.

Retail Premises – As defined under the Local Environmental Plan Standard Instrument Land Use Terms/ Definitions.

Secondary Trade Area – The area from which the retail store would account for a sizeable proportion of expenditure by

residents but is not the primary destination for such expenditure.



1. PREFACE This ‘Eastern Creek Business Hub: Supplementary Report: Economic Considerations’ and accompanying ‘Eastern

Creek Business Hub: Cost Benefit Analysis’ have been prepared in response to submissions from the September

2012 application and subsequent dialogue with NSW Planning and Infrastructure and based on a peer review

conducted by SGS Economics and Planning dated August 2013 (the SGS review). This Chapter 1 – Preface,

summarises the two key issues in that August 2013 peer review.

Based on the SGS review and correspondence with the Department, we understand that there were two key

issues remaining at August 2013 in positively determining this planning proposal:

1. Economic impact to centres; and

2. The appropriate base case.

This preface summarises how the applicant has addressed both of these matters since August 2013, and in the

interest of resolution and to clarify some other more minor matters raised in the SGS August 2013 peer review.

Hill PDA originally completed a Net Community Benefit Test (NCBT) to assess the proposed Business Hub at the

request of the Department. Subsequent to completing and issuing the NCBT to the Department, a more

quantitative Cost Benefit Analysis (CBA) approach was requested and has been completed by Hill PDA in the

accompanying CBA report. Note that this CBA report replaces the NCBT previously submitted with the planning

proposal1. Also note that our detailed response to the SGS August 2013 peer review of the draft ‘Supplementary

Report: Economic Considerations’ is included in Appendix 1 of this report. The existence of demand for the

proposed development is agreed by SGS and Hill PDA.

Clarification of the proposal in the current submission comparative to the previous submission is provided in Table

1 over the page.

1 The draft Centres Policy requires an NCBT or a CBA to assess the impacts of a proposal. Accordingly Hill PDA’s CBA has been provided

in replace of the prior NCBT for the purposes of assessment. Hill PDA previously provided a NCBT in response to the strategic justification

queries raised by the Department in Schedule 1 (Strategic Justification) of their letter to WSPT (dated November 2012) but this has now

been superseded.



Table 1 - Clarification of Proposed Land Use Mix Proposal as Submitted (September 2012) Current Submission (January 2014)

‘Proposal as Submitted’ ‘Preferred Option’

What is being applied for Consent sought for a rnage of employment related land

uses (52,800sqm GFA). Consent sought for ‘retail premises’ and ‘business premises’ up to 52,800sqm GFA. [Land use/ total

f’space]

GFA (sqm) TOTAL [Indicative floorspace breakdown by use]

Land Use Type Land Use Term F’space (sqm GFA)


Bulky Goods Premises2

Bulky goods premises; Retail premises3

29,300 Bulky Goods Premises

Bulky goods premises; Retail premises

29,300

Large Format Retail (Costco type retailer)

Retail premises 14,000 Large Format Retail (Costco type retailer)

Retail premises 14,000

Convenience Retail Retail premises 9,500*

Other retail & business premises

Retail premises; Business premises

9,500* Other retail &

business premises Retail premises; Business premises

Total 52,800 Total 52,800

What was Modelled in Economic Impact Assessment

Hill PDA Gravity model premised on floorspace breakdown in above table - the large format retailer being occupied by a ‘Costco-like’ retailer (refer to Table 2 on page 10 in the Supplementary Economic Impact Report). Under this scenario all impacts on centres were found to be within the competitive range and local centres were found to be trading at above average levels currently.

Hill PDA Gravity model premised on floorspace breakdown in above table. This scenario is equivalent to the 2012 model because it includes a Costco type large format retailer (refer to Table 2 on page 10 of Supplementary Economic Impact Report). The Costco type retailer would sell a component of non-bulky goods and is in addition to the 4,000sqm anchor tenant (food and beverage) in the 9,500sqm of ‘Other retail premises’. In effect this scenario is comparable to the 2012 ‘Proposal as Submitted’ gravity model which included business premises use in the 9,500sqm.

* Includes 4,000sqm food and beverage anchor tenant

1.2 ECONOMIC IMPACT

The SGS review concluded that “impacts for the floorspace split proposed in the supplementary report

would unlikely be at levels where centre viability is threatened”4. We agree with this conclusion and set out

below a summary of our key findings in relation to the scenario that assumes a Costco like retailer operates on the

Eastern Creek Business Hub site from 2016. Whilst SGS agrees that this is an unlikely scenario5, in the interests

of the precautionary approach we have provided this scenario as the worst case with respect to economic impact.

2 Note: Under the Standard LEP template bulky goods premises as follows: bulky goods premises means a building or place the principal purpose of which is the sale, hire or display of bulky goods, being goods that are of such size or weight as to require: (a) a large area for handling, display or storage, and (b) direct vehicular access to the site of the building or place by members of the public for the purpose of loading or unloading such goods into or from their vehicles after purchase or hire, and including goods such as floor and window supplies, furniture, household electrical goods, equestrian supplies and swimming pools, but does not include a building or place used for the sale of foodstuffs or clothing unless their sale is ancillary to the sale or hire or display of bulky goods. Note. Bulky goods premises are a type of retail premises

3 Note: Under the Standard LEP template retail premises is defined as follows: retail premises means a building or place used for the purpose of selling items by retail, or hiring or displaying items for the purpose of selling them or hiring them out, whether the items are goods or materials (or whether also sold by wholesale), and includes any of the following: a) bulky goods premises b) cellar door premises c) food and drink premises d) garden centres e) hardware and building supplies f) kiosks g) landscaping material supplies h) markets i) plant nurseries j) roadside stalls k) rural supplies l) shops m) timber yards n) vehicle sales or hire premises. but does not include highway service centres, service stations, industrial retail outlets or restricted premises

4 Page 5, SGS Peer Review Summary

5 Page 11, Peer Review of EIA for Eastern Creek Business Hub, SGS (2013)



How to Define Impact

Retail experts agree that a loss in trade or an ‘impact’ to a commercial centre of up to 10% is within the normal

competitive range. That is, if a centre is trading at a reasonable level, impacts of less than 10% can usually be

absorbed without their vitality or viability being threatened. This point is not disputed by SGS6.

Planning policy guidance is also clear that it is the impact on the role and function of an existing or proposed

centre within the retail hierarchy that is important, not the impact on individual retailers. The latter is a matter of

competition only7. Land and Environment Court judgements have confirmed this view as follows:

“…the mere threat of competition to existing businesses if not accompanied by a prospect of a resultant overall

adverse effect upon the extent and adequacy of facilities available to the local community if the development

be proceeded with, will not be a relevant town planning consideration”8.

How to Measure Impact

A series of steps are undertaken to measure the likely impact of a retail proposal to existing centres in a given

locality. This ‘Supplementary Report: Economic Considerations’ sets out these steps in detail however for the

purposes of this preface we have provided a summarised table of results. The last column in Table 1 is of particular

relevance as it quantifies the likely impact of the proposal to each centre in question at the earliest possible point of

trading i.e. 2016.

The last column includes the population growth that is forecast to occur in the locality between 2011 and 2016

(the earliest point in time when Phase 1 of the development is expected to start trading). Whilst we have taken a

more conservative approach towards forecasting population growth than SGS, the impacts estimated by both

companies broadly align at this point.

The NSW Draft Centres Policy9 identifies that impacts should only be assessed for centres defined within the

retail hierarchy. Accordingly we have shown in Table 1 which centres are recognised by State Government Policy

and which retail clusters are considered ‘out of centre’.

Table 2 shows that under the Preferred Scenario only four centres in the hierarchy would experience a

negative impact as a result of the proposal at the earliest possible point of its trading (2016). Furthermore

all of these impacts would be under the 10% range which is considered within the normal competitive

range.

6 Page 15, Peer Review of EIA for Eastern Creek Business Hub, SGS (2013)

7 Page 2, NSW Draft Centres Policy, NSW Planning and Infrastructure (2009)

8 Kentucky Fried Chicken Pty Ltd v Gantidis (1979) 140 CLR 675 at 687

9 NSW Draft Centres Policy, NSW Planning and Infrastructure (2009). Note that we were advised to consider the content of this document in preparing our economic studies by P&I at the inception of the project.



Table 2 - Estimated Impacts as of 2016

Turnover in 2016 without Proposal ($m)

Turnover in 2016 with Proposal ($m)

Shift in turnover ($m) from 2011 to 2016

% Shift in turnover from 2011 to 2016

Centres within the Retail Hierarchy

Stage 1 Proposal - 175.3 - -

Blacktown 759.9 734.6 +29.6 +4.2%

Mount Druitt 526.6 484.2 +14.2 +3.0%

St Marys 288.8 276.8 +19.0 +7.4%

Plumpton Marketplace 160.9 149.8 +6.2 +4.3%

Rooty Hill 54.5 48.2 -0.4 -0.9%

Doonside 10.4 9.6 +0.4 +4.0%

Myrtle Street, Prospect 36.5 31.1 -1.4 -4.4%

Holbeche Road, Arndell Park 24.7 21.8 -0.3 -1.3%

Minchin Drive, Minchinbury 18.8 17.3 +0.6 +3.4%

Evans Road, Rooty Hill 10.2 9.1 0.0 0.0%

Rainbow Shopping Centre 39.4 32.7 -2.4 -7.0%

Out of Centre Retail Clusters

Homebase Prospect 84.3 79.1 -11.2 -12.4%

Minchinbury Precinct 199.1 185.4 +52.4 +39.4%

Seven Hills (Bulky Goods) 50.7 48.7 -2.8 -5.4%

Wetherill Park 100.0 95.8 +27.1 +39.4%

TOTAL 2,364.7 2,399.7 +306.2 +14.6%

Based on: Phase 1 of development comprising a mix of retail premises including a large food and beverage operator (9,500sqm gross floor

area or GFA), bulky goods premises (10,000sqm GFA) and a large format Costco like retailer (14,000sqm GFA).

Impact to Centre Trading Levels

Whilst an impact under 10% is generally considered within the competitive range, a centre that is performing

poorly has a lesser ability to absorb adverse trading impacts. Conversely a centre that is performing well may

have more capacity to absorb a higher proportional impact to trading levels. Bearing these factors in mind, we

consider the trading levels of the centres that will experience some loss in 2016 in greater detail below.

Rooty Hill – it is estimated that this Centre would experience an insignificant decline in trade (less than 1%)

at the point of the proposed development’s opening in 2016 as a result of the proposed development. The

Blacktown Commercial Centres Study10 found that Rooty Hill North, which accommodates the majority of

floorspace in this Centre, is trading at 23% above the benchmark level for equivalent centres. This means that

the Centre is trading strongly and would therefore be able to absorb such an insignificant impact. Hill PDA

visited this centre in March 2014 which confirmed that it is in good health and performing well as evidenced

by a low vacancy rate, a broad range of retail and other services, the presence of a variety of anchors

including IGA, Lone Pine Tavern and the rail station and a diversified shopper base which includes both

local residents and commuters. The evidence from the site visit this is provided in Appendix 4 of this Study;

Myrtle Street, Prospect – it is projected that this Centre would experience a 4.4% loss of trade following

the proposed development. It is anchored by a full-line Woolworths supermarket which accounts for the

vast majority of total floorspace provided in this centre. It is expected to be able to accommodate this level

of impact without its role or function being jeopardised. Hill PDA’s March 2013 confirm the centre performs a

dual role serving passing motorists through two petrol filling stations and serving the convenience needs of

10 Page 79 Blacktown Commercial Centres Study, SGS (2007)



residents through the full-line Woolworths supermarket, medical centre and associated specialities. It

appeared to be trading well with just 1 recently vacated tenancy and given the busy nature of the centre

car park. The evidence from the site visit this is provided in Appendix 4 of this Study;

Holbeche Road, Arndell Park – it is estimated that this Centre would experience an insignificant loss of

trade in 2016 ($0.3m or 1.3%) following the proposed development. The Blacktown Commercial Centres

Study indicates that this Centre is trading above average levels (i.e. a retail turnover density of 121%)11

allowing it to sustain the impact forecast. Hill PDA visited this centre in March 2014 and found that is serves

both local residents and local workers and is popular with high car parking usage observed. The centre had

no vacant ground level tenancies and provides two distinct offers comprising an ALDI supermarket and a

convenience and catering based specialty offer. The thus appears to be performing well . The evidence from

the site visit this is provided in Appendix 4 of this Study;

Rainbow Shopping Centre – it is estimated that this Centre would experience a decline in trade of 7% as

of 2016. The Blacktown Commercial Centres Strategy states that the trading level of this Centre shows a

‘good performance’ as a result of low vacancies, the presence of a ‘buoyant’ retail anchor and a high retail

turnover density12. On this basis it is believed to be trading well and therefore able to absorb the estimated

impact. Hill PDA visited this centre in March 2014 and established that it is performing well with just 1 vacant

tenancy, a diverse retail offer, a busy car park and dual anchors of a Supa IGA and a petrol filling station/

Coles Express. The evidence from the site visit this is provided in Appendix 4 of this Study; and

Homebase Prospect – this is an out-of-centre bulky goods cluster. Any adverse impact on this location

may therefore be considered a matter of competition only and not an impact to a centre within the retail

hierarchy as defined by Government Policy.

In addition, we consider the potential impact to two other key centres in the locality below.

Blacktown CBD – it is forecast that even with the opening of the proposed development in 2016, the level

of trade would increase in this Centre by at least 4%. Furthermore industry sources identify Westpoint

Blacktown as the 43rd highest grossing shopping centre in Australia as of 201313.

Mt Druitt – in keeping with Blacktown CBD, it is forecast that this Centre would experience a growth in

trade as of 2016 even with the opening of the proposed development. Westfield Mt Druitt is also trading at

above average levels for a centre of its size and is performing at 10% above the median14.

It is also important to reiterate that these impacts are at the point of opening in 2016 and that any potential adverse

impacts would be further ameliorated each year as the population continues to grow in the relevant trade areas.

11 Source: Page 79-80, Blacktown Commercial Centres Study, SGS (2007)

12 Page 89, Blacktown Commercial Centres Study, SGS (2007)

13 Source: Big Guns, Shopping Centre News (2013)

14 ibid



1.3 THE CBA AND THE BASE CASE

The CBA is considered in this Section as it was one of the outstanding issues identified by SGS in the August

2013 Peer Review. The CBA comprises a separate report which should be read in conjunction with this

Supplementary Report.

In our experience the vast majority of major retail developments in NSW are assessed in conjunction with an

economic impact assessment and a NCBT. To exemplify this point we provide some examples of new centres (i.e.

those not previously identified by NSW Government Policy) that were recently approved by P&I with such

information. Examples include: the Orange Grove Brand Outlet Centre in Liverpool, the Cronulla Sharks

Neighbourhood Centre, the Bunning’s and bulky goods cluster in Gladesville and the Harold Park Village Centre.

CBA Methodology

The exception that we are aware of to this practice is the CBA undertaken by Hill PDA to assist Penrith City

Council and P&I in the assessment of the $850m mixed use Penrith Panthers Planning Proposal. Owing to the

unusual requirement for this assessment, throughout its preparation we had due regard for the Department of

Finance and Administration 2006 Handbook of Cost Benefit Analysis and consulted with the Commonwealth

Department of Finance and Administration.

Building on this experience we prepared a CBA for the Eastern Creek Business Hub to assess the likely net

impacts of the development to the economy (as distinct from potential transfer impacts) under various scenarios.

This is in line with the methodology applied for Penrith Panthers and was further to our correspondence with P&I

in September 2013 regarding methodology. We honed the CBA approach further following meetings with P&I,

SGS and (separately) the NSW Treasury.

Relevance of the Base Case

With respect to the NCBT, the SGS review disagreed with Hill PDA’s Base Case as the No Change Scenario15.

Rather SGS purported that a more appropriate base case would be the “Most Likely Future Outcome”.

Notwithstanding the difference in the titles, in practice we do not believe that there is a substantial difference

between these two options as we believe the no change scenario is the most likely outcome should the

development not be approved. This scenario is evidenced by the existing and widening gap between retail supply

and demand in Blacktown LGA that is not disputed by both parties.

In any case for the purposes of the CBA we have assessed a variety of different options covering a multitude of

development scenarios identified by SGS and P&I during discussions. As each of the options is cross compared

in the CBA, the stipulation of a Base Case is a far less critical matter in the CBA than for the NCBT.

Options and CBA Results

Six development scenarios or options were identified for testing as summarised below:

15The no change scenario assumes no bulky goods development occurs on the Subject Site and no major development of 43,300sqm of bulky goods and large format retail occurs on an alternative site in the locality. As discussed on page 46 of Hill PDA’s Supp lementary Report the No Change Scenario does not preclude smaller bulky goods or major retail development occurring on other sites in the locality.



Option 1 – The proposed Business Hub is developed on the Eastern Creek Business Hub site;

Option 2 – The entire Business Hub is accommodated on the Westfield Mt Druitt site;

Option 3 – The entire Business Hub is accommodated on the Rooty Hill Council Depot site;

Option 4 – Half of the Business Hub is accommodated on the Westfield Mt Druitt site and half on the Rooty

Hill site;

Option 5 – The proposed amount of floor space is accommodated evenly on the Eastern Creek Business Hub

site, the Westfield Mt Druitt site and the Rooty Hill site; and

Option 6 – No development occurs on the Eastern Creek Business Hub site but an equivalent development

occurs on an alternative (hypothetical) out of centre site.

It is important to reiterate that the options listed above were identified via discussions with P&I and SGS. They

were not all identified however as commercially viable development options as in many cases it is estimated that

the costs of such options would outweigh the potential returns16. The financial viability of a commercial

development is a relevant factor as identified by the draft Centres “acquiring appropriately zoned sites within

existing centres may not always be practical or feasible particularly if large format sites are required”.

Results

A summary of the CBA results against the CBA Key Performance Indicators (KPIs) are provided in Table 3.

Table 3 - Summary of CBA Results: Options 1 to 6

Option 1 Option 2 Option 3 Option 4 Option 5 Option 6

Financially Viable Viable Not

Viable Not

Viable Not

Viable Not

Viable Potentially

Viable

CBA Net Benefit ($m) +64.5 -154.9 -102.5 -126.2 -89.3 -66.1

Economic Viability*

NPV ($millions) 64.5 -154.9 -102.5 -126.2 -89.3 -66.1

BCR 1.56 0.24 0.33 0.28 0.51 0.43

NPV/$ 0.56 -0.76 -0.67 -0.72 -0.49 -0.57

IRR +12.5% -6.8% -3.7% -5.3% +0.2% -1.6%

Positive WSPT Finance Impact * at 7% discount rate scenario

The overall CBA and unquantifiable costs and benefits assessment undertaken for the 6 Options conclude that:

Option 1 is the best performing based on all of the KPIs and the only one which delivers a positive NPV, a

positive NPV/$ and a BCR of greater than 1. Option 1 is the only option that achieves the hurdle rate of 7%

IRR. The other options are not economically viable; and

Option 1 achieved the highest overall unquantifiable benefits versus costs because it would promote retail

competition and choice and bring new economic land into the system whilst causing the least disruption to

existing tenants.

Option 1 is the preferred Option based in both the qualitative and quantitative assessment.

16 Hill PDA’s Supplementary Report provided a detailed review of the likely feasibility of acquiring and developing sites in existing centres for the large format retail proposed by the development.



1.4 OTHER MATTERS

In addition to the two key matters discussed above, two additional issues were identified by the SGS review that

are clarified below.

Sequential Test – Weight Attributed to Viability

SGS “broadly agree with the criteria chosen by Hill PDA in the sequential test (availability, suitability and

viability)”17. However SGS sought clarification as to the weight accorded to financial viability in the assessment.

In response, this ‘Supplementary Report: Economic Considerations’ establishes that all three criteria must be

satisfied for a site to be considered available for the proposed development18. If just one of these aspects is

absent or fails, the site in question is not considered a realistic prospect for accommodating the proposed

development.

Strict Approach to the Sequential Test

SGS also identifies that Hill PDA’s application of criteria for the Sequential Test is ‘quite strict’ with regard to the

size of the sites tested. Furthermore SGS infers that sites capable of accommodating less than a third of the

development should be considered.

In response, owing to the commercial requirements of large format retailers we have assumed that the smallest

likely site area required by a freestanding operator would equate to one third of the floorspace proposed by the

development. This size is necessary to create sufficient critical mass to attract shoppers from a commercial

viability perspective. An example of such an operator would be a Masters or Bunning’s store.

We also note that the sequential assessment considers all potential sites including those under 4ha which is

considered to be the minimum feasible site size. It all cases except for two (for sites of less than 0.2ha) all sites

failed on multiple criteria not just site suitability which includes site size. As such, lowering the threshold of sites

would make no difference to the findings of the sequential sites assessment which ascertained that there were no

sequentially preferable sites.

17 Page 2, SGS Peer Review Summary (2013)

18 Page 51, Supplementary Report: Economic Considerations, Hill PDA (2013)



2. FORWARD By 2031 the North West Subregion of Sydney will welcome a new population comparable to the scale of

Canberra. With this growth comes demand for additional goods and services of a scale that are commensurate

with the needs of a city. This substantial growth in demand must not only support the needs of the new population

but those of the existing to ensure an improved quality of life, equity, convenience, choice and sustainability.

Despite this need, our research shows that the retail trade areas defined by this Study for the proposed Eastern

Creek Business Hub are already undersupplied with respect to retail floor space. This means existing local supply

is not sufficient to meet the needs of the existing resident population. Our analysis shows that the quantum of

existing undersupply, together with the forecast growth in demand, will be so significant that a multitude of

locations will need to be encouraged to help meet the forecast level of need.

Our research also shows that not all types of retail floor space are the same. Different types of retail require

varying site characteristics, commercial parameters and geographic locations. Whilst retail premises can cluster in

smaller footprints in centres and in close proximity to the customers it serves, bulky goods premises need specific

commercial and geographic requirements to make it work. More specifically, bulky goods premises requires a

critical mass of land with good vehicle access, a cluster of ‘like’ industries and a lower land value / lease

arrangements comparative to other retail premises. Combined these factors make the use attractive not only from

a planning perspective, but also from a commercial one.

In this respect, for retail matters, it is important to note that it is not simply a case of zone it and they will come. Bulky

goods premises in the Local Government Area of Blacktown may be permitted in a number of locations, however

owing to factors such as: competition from ‘higher and better uses’19; land ownership constraints; poor geographic

and commercial characteristics, in practice many sites are not likely to be developed in the foreseeable future. In this

respect a site’s vacancy may lead to the false assumption that it is available and viable for development.

Bearing these factors in mind, this Study has undertaken a thorough and detailed analysis of why many of the

seemingly available sites for retail premises in the defined trade area are not conducive to realising a suitable scale

of retail development in the short to medium term. To do this, the Study has brought together the planning vision for

many of the centres and sites discussed with the economic and financial realities of incentivising development to

provide additional justification for the proposed Eastern Creek Business Hub. In doing this, we have sought to

recognise many of the Transformative Elements enshrined in of the ‘NSW White Paper – A New Planning System for

NSW’20.

The Study builds on the analysis explored in the Economic Impact Assessment to find that the quantum of growth

in demand is so significant that even with the complete development of the Eastern Creek Business Hub in the

manner proposed, there would be sufficient demand left to support the development of a multitude of sites within

Blacktown’s Centres. As a consequence the development of the Eastern Creek Business Hub would not preclude

growth in existing centres. Rather the Eastern Creek Business Hub presents a viable and available piece of the

solution for North Western Sydney that is demonstrated by this Study as having a net community benefit.

19 Note this term is used in a financial context

20 For example, please refer to Page 80 of the NSW White Paper – A New Planning System for NSW



3. EXECUTIVE SUMMARY In September 2012 an Environmental Impact Statement (EIS)21 was lodged with the NSW Planning and

Infrastructure (P&I) by Western Sydney Parklands Trust (WSPT) for a proposed Business Hub at Eastern Creek.

The EIS and accompanying application sought consent for:

The concept proposal which provides a development structure including site layout, land uses, building

envelopes and design guidelines; and

Stage 1 approval for super lot subdivision for retail uses and early works including construction of an

access road, stormwater management, civil engineering works and woodland planting.

The Eastern Creek site comprises 34ha of land of which 16ha would be developed for the Eastern Creek

Business Hub.

More specifically the concept plan in the EIS proposed 52,800sqm gross floor space area (GFA)22 as follows:

9,500sqm (GFA) of retail premises (a large food and beverage operator and specialty shops); and

43,300sqm (GFA) of bulky goods premises including large format retail premises.

Stage 1 of the concept plan would accommodate 33,500sqm (GFA) of retail premises, bulky goods premises and

large format retail, with Stage 2 accommodating 19,300sqm (GFA) of bulky goods premises.

The purpose of this supplementary report is to address economic concerns raised through submissions and

following correspondence with P&I having particular regard to the sequential sites test.

Note that the description of the development for which consent is being sought has been modified since the EIS to

accommodate changes to the scope of the development, to make clearer the intended use of the land, and to

make it clear that Staged Development is being sought in accordance with Section 83b of the Environmental

Planning and Assessment Act 1979.

Staged development consent is sought for:

a) Concept Proposal including development structure, site layout, land uses, building envelopes and design

guidelines to accommodate ‘retail premises’ use, ‘bulky goods premises’ use, and ‘business premises’

use (up to 52,800sqm Gross Floor Area), landscaping, ‘environmental protection works’, roads and

stormwater infrastructure;

b) Superlot subdivision; and

c) Stage 1 Early works comprising:

21Source: Eastern Creek Business Hub, Environmental Impact Statement, State Significant Development (SSD 5175) , Architectus (September 2012) 22 Note: Gross Floor space Area or GFA is Gross Lettable Area (GLA) plus common mall spaces (including amenities), centre management area and plant rooms. In a typical indoor centre with at least one department store and supermarket the GLA makes up around 72% to 75% of the GFA



Bulk and detailed earthworks;

New access road (staged construction);

Estate infrastructure;

Estate landscaping; and

Rehabilitation of existing woodland in areas identified for open space/conservation.

The site is proposed to accommodate up to 52,800sqm of floorspace, indicatively comprising bulky goods

premises (29,300sqm), large format retail (14,000sqm) and retail premises / business premises (9,500sqm) as

shown on the Structure Plan.

Table 4 - Clarification of Proposed Land Use Mix Proposal as Submitted (September 2012) Current Submission (January 2014)

‘Proposal as Submitted’ ‘Preferred Option’

What is being applied for Consent sought for a rnage of employment related land

uses (52,800sqm GFA). Consent sought for ‘retail premises’ and ‘business premises’ up to 52,800sqm GFA. [Land use/ total

f’space]

GFA (sqm) TOTAL [Indicative floorspace breakdown by use]


Land Use Type Land Use Term

F’space (sqm GFA)

Bulky Goods Premises23

Bulky goods premises; Retail premises24

29,300 Bulky Goods Premises

Bulky goods premises; Retail premises

29,300

Large Format Retail (Costco type retailer)

Retail premises 14,000 Large Format Retail (Costco type retailer)

Retail premises 14,000

Convenience Retail Retail premises 9,500*

Other retail & business premises

Retail premises; Business premises

9,500* Other retail &

business premises Retail premises; Business premises

Total 52,800 Total 52,800

23 Note: Under the Standard LEP template bulky goods premises as follows: bulky goods premises means a building or place the principal purpose of which is the sale, hire or display of bulky goods, being goods that are of such size or weight as to require: (a) a large area for handling, display or storage, and (b) direct vehicular access to the site of the building or place by members of the public for the purpose of loading or unloading such goods into or from their vehicles after purchase or hire, and including goods such as floor and window supplies, furniture, household electrical goods, equestrian supplies and swimming pools, but does not include a building or place used for the sale of foodstuffs or clothing unless their sale is ancillary to the sale or h ire or display of bulky goods. Note. Bulky goods premises are a type of retail premises

24 Note: Under the Standard LEP template retail premises is defined as follows: retail premises means a building or place used for the purpose of selling items by retail, or hiring or displaying items for the purpose of selling them or hiring them out, whether the items are goods or materials (or whether also sold by wholesale), and includes any of the following: a) bulky goods premises b) cellar door premises c) food and drink premises d) garden centres e) hardware and building supplies f) kiosks g) landscaping material supplies h) markets i) plant nurseries j) roadside stalls k) rural supplies l) shops m) timber yards n) vehicle sales or hire premises. but does not include highway service centres, service stations, industrial retail outlets or restricted premises



What was Modelled in Economic Impact Assessment

Hill PDA Gravity model premised on floorspace breakdown in above table - the large format retailer being occupied by a ‘Costco-like’ retailer (refer to Table 2 on page 10 in the Supplementary Economic Impact Report). Under this scenario all impacts on centres were found to be within the competitive range and local centres were found to be trading at above average levels currently.

Hill PDA Gravity model premised on floorspace breakdown in above table. This scenario is equivalent to the 2012 model because it includes a Costco type large format retailer (refer to Table 2 on page 10 of Supplementary Economic Impact Report). The Costco type retailer would sell a component of non-bulky goods and is in addition to the 4,000sqm anchor tenant (food and beverage) in the 9,500sqm of ‘Other retail premises’. In effect this scenario is comparable to the 2012 ‘Proposal as Submitted’ gravity model which included business premises use in the 9,500sqm.

* Includes 4,000sqm food and beverage anchor tenant

3.1 DEMAND FOR RETAIL FLOORSPACE

The first step in identifying the extent to which the proposal can be justified is to ascertain the level of demand for

the retail premises floor space proposed in the context of existing and planned supply. The Hill PDA Economic

Impact Assessment established that the proposal to identify current and project future demand to 2026. The

findings of the Economic Impact Assessment, which have been validated by another specialist consultant25 are

summarised as follows. In peer reviewing the proposal on behalf of P&I, SGS agrees with the quantum of demand

identified.

Retail Premises

The primary trade area defined for retail premise sat the Business Hub currently lacks a full-line supermarket

within it despite containing over 15,000 residents in 2011. Based on expenditure demand modelling, a large food

and beverage operator of 4,000sqm GLA26 and further specialty retail shops is required to meet the needs of

these residents by 2016. This would serve a localised need. There is therefore sufficient demand in the defined

retail premises trade area to support the retail premises and large food and beverage operator proposed.

Bulky Goods Premises

Demand for bulky goods premises in the defined trade area for this component of the proposed business hub was

modelled. This included an allowance for permitted or planned bulky goods premises in the planning pipeline.

By 2016 there will be bulky goods premises floor space undersupply of over 30,000sqm GLA in the defined bulky

goods premises trade area. This is projected to increase to nearly 42,000sqm GLA by 2021 and to over 53,000sqm

GLA by 2026. The proposed business hub would assist in meeting this unmet need. Note that supply increases

would be provided in line with population and demand growth and consistent within planning principles should be

provided ahead of demand.

As the proposal is responding to existing unmet demand and future growth, even with the proposal, there would remain

unmet demand sufficient to increasing bulky goods premises in other centres and destinations. As such there is a need

for the business hub and it would not be at the expense of development elsewhere, it would be in addition to it.

25 Note: MacroPlan Dimasi first established demand for convenience retail and bulky goods floor space on the Subject Site. 26 Note: Gross Lettable Area (GLA) is the common measure used for lease and for other descriptive purposes in retail centres and sho ps. It is usually defined as the total area of the lease and includes back of house, storage, offices and mezzanine levels but us ually excludes loading docks and common mall spaces.



3.2 APPROPRIATE LOCATIONS TO ACCOMMODATE NEED

Having established demand for the proposed business hub uses, the following section describes Hill PDA’s

analysis of a suitable location.

Land and Development Site Requirements

Retail Premises:

The proposed retail premises (i.e. food and beverage retailing) are in response to localised retail need in the

defined retail premises trade area. This trade area is separate and unrelated to that for the bulky goods premises.

The unmet demand within the retail premises trade area is based on the attributes of its location, proximity to

other surrounding centres and its retail mix and offer. It is therefore specific to this location.

If the proposed retail premises were accommodated in a larger centre, such as Westfield Mt Druitt, it would not

meet this localised need and its role would differ given the higher order shopping role provided by Westfield Mt

Druitt. Even if it were accommodated in Rooty Hill, should sufficient sites be available, the trade area which it

would serve would differ from that identified.

The analysis of potential sites within the trade area identified that the Subject Site is the only site in the trade area

capable of accommodating the proposed retail premises due to issues of land fragmentation in Rooty Hill.

Bulky Goods Premises:

The requirements for successful bulky goods premises locations are as follows:

Having a large and extensive trade area;

Being in a central position in the trade area or near the main entry point of a large trade area;

Cheap and plentiful land to enable plentiful parking, loading and unloading facilities; and

Being located on a major road with high visibility and accessibility.

Bulky goods premises are suited to locations close to major and town centres rather than smaller neighbourhood

centres due to site requirements and the large volume of traffic which they attract27. In this context Rooty Hill is

not an appropriate location for this bulky goods premises to be accommodated given that it is a relatively small

centre located within a residential area and with restricted access by car due to the presence of the railway line. In

any case this location is unlikely to be commercially viable to bulky good operators in view of the required

attributes of bulky goods locations as set out above.

However in view of the extent of the defined bulky goods premises trade area for the bulky goods premises

proposed on the Business Hub there is some flexibility regarding the location at which this need could be met.

Westfield Mt Druitt, Blacktown and the out-of-centre Minchinbury precinct are appropriate locations to

accommodate the bulky goods premises proposed. The challenge relates to the availability of sites

27 Source: NSW Draft Centres Policy, NSW Planning and Infrastructure(2009)



An important characteristic of bulky goods premises is their need to cluster with other similar uses to increase the

attractiveness of the destination to potential shoppers. Conversely, the clustering of bulky goods premises is

attractive to shoppers as it allows easy price comparison between different businesses offering similar products. It

is also beneficial from a planning perspective as it reduces the need for shoppers to travel consistent with

ecologically sustainable development and reduces demand on transport infrastructure. As such, bulky goods

premises provision normally increases in sizable floor space additions such as that envisaged at Eastern Creek to

ensure that a critical mass of floor space is achieved, rather than on a slower business by business basis.

Sequential Test Assessment

Planning policy objectives seek to concentrate new retail and bulky goods premises development on centres but

recognise that this is not always possible. A sequential sites assessment is used to determine whether edge or

out-of-centre sites appropriate locations to accommodate floor space demand.

For the purposes of this assessment the presence of sequentially preferable sites within Westfield Mt Druitt,

Blacktown, Rooty Hill and Minchinbury was assessed. The presence of sites potentially capable of

accommodating some or all of the bulky goods premises only was considered, not for accommodating the retail

premises. This is in recognition that the localised role envisaged for the retail premises would not be served on a

different site as discussed above.

This is a robust approach towards undertaking the sequential approach because:

We do not consider that Rooty Hill is an appropriate location at which to satisfy a notable proportion of

future bulky goods premises demand as result of the high volume of traffic such retailers would attract

into this residential area, notwithstanding that it is unlikely to be commercially viable for bulky goods

operators. This is because it does not offer the site attributes bulky goods operators require to be

commercial viable including visibility to passing traffic and unproblematic vehicular accessibility to a

large trade area; and

Minchinbury does not constitute an in-centre or edge-of-centre location. It is able to offer clustering of

bulky goods premises with existing uses under an existing zoning but has no other advantages over the

Subject Site in terms of the sequential approach.

Sequential sites have been assessed based on whether they are available, suitable, commercially viable and

financially viable for accommodating all or part of the proposed business hub. For the development to be capable

of proceeding on a site all of the criteria must be satisfied - if just one criterion is not fulfilled then development

may not occur. The potential for Blacktown CBD to accommodate some or the entire proposal was considered but

dismissed given Blacktown Council’s Blacktown CBD Planning Proposal and Masterplan (2010) and Blacktown

LEP (Central Business District) 2012. In this context we do not consider bulky goods premises to be realistic due

to issues of viability or indeed an appropriate prospect in Blacktown CBD in light policy objectives.

In reference to site suitability we have assumed a minimum site requirement of 4ha to accommodate a

disaggregated component of the bulky goods premises. This includes provision for sales area, storage area,

servicing, access and car parking. It also reflects the requirement for a successful free-standing bulky goods



premises operator(s) to offer a minimum floor space area of around 20,000sqm GLA28. It would not be

commercially viable for bulky goods businesses to develop in isolation or be “salt-and-peppered” between

different small sites across the trade area and thus not financially viable either, as commercial viability is a

prerequisite for financial viability. As such this the idea of such development eventuating on sites of less than 4ha

has been dismissed.

The following table presents a summary of the sequential test results.

Table 5 - Eastern Creek Sequential Sites Assessment Address Size (ha) Availability Suitability Commercial

Viability Financial Viability

Sequentially Preferable

Mt Druitt

2 Aryers Grove 0.2 N

Westfield Mt Druitt 15.7 N

Tavern Car Park 0.8 N

Courthouse Car Park 0.3 N

Rooty Hill*

Premier Lane 0.1 N

67 Rooty Hill Road North 0.2 N

73 Rooty Hill Road North 0.2 N

Station Street 0.6 N

3 Rooty Hill Road South 0.7 N

Amalgamated Lots Rooty Hill 1.5 N

Mavis Street 1.3 N

Minchinbury

1189 Great Western Highway 0.5 N

Cnr Great Western Hwy/ Carlisle Ave 8.1 N

John Hines Avenue 2.1 N

Zeleny Road Minchinbury 0.8 N

3 Zeleny Road 1.2 N

1 Zeleny Road 0.8 N

42 Sargents Road 2.0 N

22 Sargents Road & 46 Eddie Road 0.5 N

6 Archbold Road 2.2 N

8 Archbold Road 2.2 N




1/7 Eddie Road 4.0 N

Proposed Business Hub

Subject Site 34

Source: Hill PDA (2014). See Chapter 6 of this report

28 Note: It is recognised that Bunnings and Masters stores are provided on smaller plots of typically 3ha for a large store. How ever these retailers are attractors in their own right and not so heavily reliant on the presence of other bulky goods retailers adjacent in order to attract trade. Notwithstanding this they still prefer to be located adjacent to other bulky goods retailers and competitors. In any c ase both Bunnings and Masters are already located close to the Subject Site and are not expected to be re-provided within it.



Based on the results, we conclude that there are no sequentially preferable sites which are available, suitable,

and commercially viable or financially viable for accommodating the proposed business hub even in a reduced

form. No site except the Subject Site meets all of the criteria.

The analysis has found that:

Available sites located within Mt Druitt and Rooty Hill, are small infill retail redevelopment opportunities apart

from redevelopment of the Westfield Mt Druitt shopping centre which would be a significant undertaking. The

redevelopment of Westfield Mt Druitt to accommodate a significant amount of bulky goods premises over and

above other retail, commercial and mixed use developments is also questioned;

In most instances these small or fine grain lots are in multiple ownerships which can make redevelopment

impractical or very long term;

Given the higher-order shopping, civic and cultural role of larger centres such as Mt Druitt and Blacktown

CBD, the viability of bulky goods premises development in these locations will be limited, given the higher

land values attributed to these centres compared to the low rents achieved by bulky goods premises and

large format retail tenants; and

The Minchinbury bulky goods precinct has several vacant lots but these are fragmented and subject to

different ownerships which makes site amalgamation potentially unviable and risky. The configuration

and shape of some lots (i.e. long and narrow or triangular) are not favourable to bulky goods premises

development in isolation. Some lots are located to the rear of the precinct and suffer from being

surrounded by industrial warehouses and a lack of visibility and passing trade.

In the context of the above the Subject Site constitutes an appropriate site at which to meet identified need given

that it satisfies all of the criteria which allow it to be successfully delivered to the market. It is able to offer the site

attributes demanded by bulky goods premises businesses, is under single ownerships by a land owner with

sufficient financial backing capable of delivering it to the market in a viable manner.

3.3 RELEVANCE OF FINANCIAL VIABILITY

The potential to redevelopment many of the sequential sites assessed above to accommodate all or part of the

proposed business hub hinges on issues of financial viability which are considered in detail here. Essentially

financially viability reflects the extent to which all the costs of the development, inclusive of profi t for the

developer, outweigh the return on investment which can be expected. Only when return outweighs the cost will

development occur. Achieving financial viability in bulky goods premises development is challenging given that the

end sale value or rental return is much lower than for other types of development (e.g. retail or residential) and

risk is often higher. It is therefore infrequent for bulky goods premises to offer the highest and best use of land.

To illustrate this point further and in response the submissions to P&I, it is useful at this juncture to examine the

capability of a number of sites to accommodate the proposed business hub in more detail. These sites are:

Westfield Mt Druitt, the Council depot in Rooty Hill and Minchinbury.



The Subject Site

The construction costs associated with the proposed business hub are calculated for the purposes of this exercise

at $97m29 compared to an estimated end value of around $160m. For development to be viable the total project

costs (including land, contingencies, design, statutory fees, leasing incentives, interest and finance, etc) must be

below the end value with a sufficient profit margin to cover risk (say 15% to 20% of costs). Whilst we have not

undertaken a full feasibility test we believe that the subject proposal with a construction cost of $97m (net of

construction contingency) at around 60% of the end value is sufficiently cost-effective to achieve financial

feasibility on the Subject Site.

Westfield Mt Druitt

Westfield Mount Druitt comprises a building which is close to 8ha on a site of 15ha. At face value the site may appear to

be underutilised both in social planning and economic/valuation terms given that it comprises single storey built form

and extensive at grade car parking. However, even a scaled-down version of an Eastern Creek Business Hub on the

Westfield Mount Druitt site is likely to be financially challenging although it may be physically possible.

Any redevelopment of the Westfield site is likely to require part of the site to continue trading throughout the

construction period. With this in mind, the only practical way to achieve a proposal such as the Eastern Creek

Business Hub on the Westfield site is likely to include demolition of the western building (including Kmart and

Harvey Norman stores) together with much of the car park immediately to the north. This will enable the main

building to continue trading.

Estimated construction costs associated with this development are$210m, more than double the Eastern Creek

Business Hub proposal. This excludes additional costs that will occur with this option such as loss of trading

during the construction process, the loss of car parking spaces, the impacts of construction on the operations of

the Westfield, compensation to existing tenants, and so forth. There are also higher risks with these more complex

projects that generally translate to higher contingency allowances or costs for mitigation measures.

The estimated construction cost is already higher than the end value of the building – or the added value to

Westfield. After allowing for construction contingencies, project contingencies, compensation to existing tenants /

loss of trade during construction, tenant incentives, design costs and statutory fees and interest costs, it is

considered that the viability of development would be significantly challenged. At the very least, the loss would be

in the order of $100m and could be even higher.

Rooty Hill Council Depot

The Rooty Hill Depot has a site area of around 4.4ha – almost a quarter the size of the Eastern Creek Business

Hub site. However given its location within a residential area and with no direct vehicular access from the south

or east, it would need to accommodate a sizable proportion of bulky goods premises floor space in order to

become a destination for bulky goods shopping. This means development would again need to be multi-storey

29 Note: This figure relates to constructions costs (including contingency) based on the current scheme only and excludes design costs, application fees, project management fees and project contingencies



which results in a significant increase in construction costs to $157m. This relates to the development only and

does not allow for the additional cost of relocating existing uses on the site to an alternative location.

We consider the construction costs are too high to provide financial viable. Once allowances are made for

contingencies at around 10% of construction cost, design and statutory fees at around 10%, incentives, finance,

and so on, total project cost would well exceed the end value of the project and that is without the land cost and a

profit/risk margin being included.

In any case as we do not consider that Rooty Hill offers a viable location for the bulky goods premises floor space

and would lead to significant adverse traffic impacts locally, this site is not an appropriate location to meet

identified need. Furthermore in order to facilitate the development in this location a rezoning of the land would be

required because bulky goods premises use is currently not a permissible use on the land. This would establish it as a

new out-of-centre location

Minchinbury Home Town

It may seem counter-intuitive that the there is strong demand forecast for bulky goods premises floor space in the

trade area but that Minchinbury Home Town is performing poorly. The answer lies in financial viability.

From discussions with agents and through our sites visits Minchinbury Home Town comprises poor quality and

older floor space stock provided which is not attractive to modern bulky goods businesses. The position of this

facility is also not ideal for bulky goods businesses having limited passing traffic due to the operation of the

Westlink M7 and M4 Motorways which carries the majority of commuter traffic between the far wes t suburbs

(Penrith, Mt Druitt), the middle suburbs (Parramatta) and the Sydney CBD.

In order for the stock to be brought up to standard demolition and reconstruction would be required. However as

some units are occupied this would involve the ceasing of existing leases and associated decline in rental income.

This leads to higher construction costs which are not offset by the rental value which the new units would

achieved given the relatively low rental return from bulky goods businesses. Furthermore, given the suboptimum

location of Minchinbury Home Town for bulky goods premises the potential uplift in land value following

redevelopment would be constrained. As such there is no financial incentive to redevelopment Minchinbury in the

current market and the potential profit to be gained from doing so would not be offset by the costs.

Because financial viability fluctuates over time reflective of the market, demand increases resulting from

population and real expenditure growth which supports demand for the Eastern Creek Business Hub proposal

may also allow Minchinbury Home Town to be redeveloped for bulky goods premises in the future. The proposal

does not preclude this from happening given the extent of demand growth and the quantum of bulky goods

premises which this would support both the Eastern Creek proposal and a redeveloped/ expanded Minchinbury.

We should note that supply increases/ redevelopment at Minchinbury and the proposed on the Subject Site would

occur in the future once there is additional population and expenditure growth in the catchment to support

development (i.e. to justify financial viability). We are not assuming that this additional floor space would be

provided tomorrow. Development will thus coincide with population increases but as population growth is

happening quickly planning enables approvals to be in place to proceed within this timeframe. This is also true of

the proposed Business Hub.



In any case Minchinbury constitutes an out-of-centre destination and although bulky goods premises is

permissible based on the draft LEP, provision of part of the proposed development in this location even if it were

possible would make no difference in terms of impact on existing centres. However given the extent of unmet

demand locally and the attributes of the Subject Site for bulky goods premises, we believe that it is advantageous

opportunity which should be supported. It would promote land price competition, choice to potential businesses

and operators and assist in preventing land banking.

3.4 STRATEGIC JUSTIFICATION

The proposed Eastern Creek Business Hub comprises two distinct components:

A Village Centre30 comprising 9,500sqm GFA of retail premises. This would meet the daily and some

weekly convenience shopping needs of residents in the local area; and

An adjacent freestanding bulky goods/ large format “out of centre” retail cluster serving a significantly larger

trade area and used on a more infrequent basis by trade area residents for a narrow range of higher order

shopping.

The proposed Eastern Creek Business Hub is not identified within an adopted or proposed Metropolitan or

Subregional planning policy document for these uses. Notwithstanding this, these policy documents were not

informed by a retail floorspace supply and demand assessment to determine the extent additional supply should

be planned31. Accordingly Hill PDA’s assessment has identified latent demand that exceeds the capacity of the

centres in the locality identified in the existing hierarchy.

The economic analysis undertaken by Hill PDA has established that:

There is sufficient unmet demand to support the Village Centre and freestanding bulky goods/ large format

retail cluster in the locality as a result of existing undersupply and continuing population and real

expenditure growth;

There are no sites within or adjacent to existing centres capable of accommodating the proposal even in a

scaled-down form. This has been demonstrated through a sequential approach analysis. The site of the

proposal is considered to be the only realistic option for the floorspace demand identified to be met in the

locality. Without the proposal proceeding the demand it would accommodate would not otherwise be met

within the trade area; and

Given that the proposal is responding to unmet demand, it would not lead to trading impacts on existing

centres which would jeopardise their vitality or viability or cause any centres to cease trading. Impacts

would all be within the normal competitive range.

On this basis strategic justification for the proposal has been demonstrated in the context of the centres hierarchy

and relevant planning policy requirements.

30 Note: As defined in the Metropolitan Plan for Sydney 2036 and the Draft Metropolitan Strategy to 2031

31 Note: Planning policy advocates the use of Subregional floorspace supply and demand assessments to identify appropriate locations t o meet demand, including new centres or retail clusters. See Draft Centres Policy (DoPI, 2009) and Metropolitan Plan for Sydney 2036 DoPI, 2010).



4. INTRODUCTION

4.1 BACKGROUND TO THE PROPOSAL

The Western Sydney Parklands Plan of Management (2010) permits up to 2% of the Parklands for commercial

use to fund the works in the remaining Parklands. In considering the initial concept of Business Hubs as a

revenue generating activity for the Parklands, Blacktown Council (Council) met with Western Sydney Parklands

Trust (WSPT) in July 2011 to assess possible sites within the Parklands that lie within the City of Blacktown. The

selection of appropriate site(s) considered:

Areas of low environmental and recreational value; and

Attributes of site(s) that would be attractive to the property market (i.e. location in relation to potential

markets and the trade area, accessibility and so on).

Eleven sites were identified as possible business hubs during a workshop with Blacktown Council officers on 8

July 2011. At the time, some were clearly identified as preferable to others, with some better suited to different

kinds of land use including recreation, retail, business, and tourism (etc). Based on the two abovementioned

criteria, the Rooty Hill Precinct within the Parklands was selected as a site which was appropriate for a Business

Hub given that it:

is isolated from the remainder of the Parklands by the M7;

has low environmental value;

has low recreational value;

is close to existing residential; and

has good access from a main road, being Rooty Hill Road South.

In September 2012 an Environmental Impact Statement (EIS)32 was lodged with NSW Planning & Infrastructure

(P&I) by WSPT for the proposed Eastern Creek Business Hub.

The EIS and accompanying application sought consent for:

The concept proposal which provides a development structure including site layout, land uses, building

envelopes and design guidelines; and

Stage 1 approval for super lot subdivision for retail uses and early works including construction of an

access road, stormwater management, civil engineering works and woodland planting.

The Eastern Creek site comprises 34ha of land and the EIS proposed to develop 15.77ha for the Eastern Creek

Business Hub as identified in the following table.

32 Source: Eastern Creek Business Hub, Environmental Impact Statement, State Significant Development (SSD 5175) , Architectus (September 2012)



Table 6 - Eastern Creek Business Hub Proposed Uses

Stage Proposes Uses Floor Space (sqm GFA)

Land Area (ha)

Stage 1 - South of Beggs Street Lot 2 - Retail Premises

Lot 2 – Bulky Goods Retail

9,500

6,500

4.19

Lot 1 - Large Format Retail Premises 14,000 4.76

Lot 1 - Bulky Goods Retail 3,500

Stage 2 - North of Beggs Street: Lot 3 - Bulky Goods Retail 19,300 6.82

Total 52,800 15.77

Source: Architectus (April 2014) Notes:

The 10,000sqm of Bulky Goods Retail previously shown in Lot 1 is distributed between Lot 1 and Lot 2 as per the GFA shown above.

Lot 3 - Land Area of 6.82ha is the size of the superlot (not including the access road extension). It is assumed the 6.82ha would go to market as one land parcel and the required length of the access road will depend on the preferred building arrangement on the future developer. Our indicative design shows the maximum length of the access road required to service all l ots.

Only land areas have been revised in the above table. Floorspace areas have not been adjusted.

As submitted with the EIS, Hill PDA was engaged by WSPT to undertake an Economic Impact Assessment

(August 2012) of proposed uses. The primary objective of Hill PDA’s engagement was to prepare a gravity model

to understand the redirection of turnover to the proposal from surrounding centres and to quantify other economic

benefits such as employment generation.

The Economic Impact Assessment by Hill PDA followed previous economic and land use demand advice provided

to WSPT by MacroPlan Dimasi (MPD) in March 201233. The MPD report assessed demand for a retail premises

and bulky goods premises on the site and drew on previous research prepared by MPD for WSPT in August 2008,

July 2009 and March 2010.

The description of the development for which consent is being sought has been modified to accommodate

changes to the scope of the development, to make clearer the intended use of the land, and to make it clear that

Staged Development is being sought in accordance with Section 83B of the Environmental Planning and

Assessment Act 1979.

Staged development consent is sought for:

a) Concept Proposal including development structure, site layout, land uses, building envelopes and design

guidelines to accommodate ‘retail premises’ use, ‘bulky goods premises’ use, and ‘business premises’

use (up to 52,800sqm Gross Floor Area), landscaping, ‘environmental protection works’, roads and

stormwater infrastructure;

b) Superlot subdivision; and

c) Stage 1 Early works comprising:

Bulk and detailed earthworks;

New access road (staged construction);

Estate infrastructure;

33 Source: Convenience Centre and Bulky Goods Retail – Development Potential, MacroPlan Dimasi (March 2012)



Estate landscaping; and

Rehabilitation of existing woodland in areas identified for open space/conservation.

The site is proposed to accommodate up to 52,800sqm of floorspace, indicatively comprising bulky goods

premises (29,300sqm), large format retail (14,000sqm) and retail premises / business premises (9,500sqm) as

shown on the Structure Plan.

The concept proposal for the Business Hub remains largely unchanged from the EIS although there are some

minor changes to site boundaries in the subdivision plan. These are attributable to the need to facility future road

widening of Rooty Hill South Road for future dedication of this land to the RMS.

4.2 PURPOSE OF THE SUPPLEMENTARY REPORT

The purpose of this supplementary report is to address economic concerns raised by submissions and P&I (in

their letter to WSPT dated 23 November 2012 and in the subsequent meetings). As a result, to address key

concerns, this supplementary report considers:

MPD’s previous advice to WSPT which informed both the Concept Plan and the assumptions in Hill

PDA’s Economic Impact Assessment. This includes clarification and justification of the proposal by way

of retail demand, expenditure growth and the severity of economic impacts. In particular, this is in

response to the economic impact queries raised by P&I in Schedule 2 (Other Key Issues to be

Addressed) in their letter to WSPT (dated November 2012).

The principles of financial feasibility and its relevance to considering matters pertinent to this proposal,

in particular the sequential test assessment as raised by P&I in a meeting with Hill PDA on 30th May

2013.

The sequential test as required under the NSW Draft Centres Policy (2009). Whilst the proposal is not a

rezoning, a sequential test has been requested to address concerns regarding the out-of-centre nature

of the proposal and the potential availability of land within surrounding centres to accommodate the

development. The sequential test within this report has also had input from Architectus to ensure

planning and urban design considerations have been recognised. The provision of the sequential test is

in response to the strategic justification queries raised by P&I in Schedule 1 (Strategic Justification) of

their letter to WSPT.

The justification for the proposal as addressed through a Net Community Benefit Test. The NSW Draft

Centres Policy (2009) provides in part that the Net Community Benefit Test should be used to assess

the merits of rezoning when proposals occur in out-of-centre locations. Whilst not a rezoning, a Net

Community Benefit Test (NCBT) was been requested by P&I in Schedule 1 (Strategic Justification) of

their letter to WSPT, so that the public benefits associated with the proposal can be weighed against the

impacts to existing centres in the locality. Hill PDA prepared and submitted a NCBT to P&I, following

which P&I requested that a more quantitative Cost Benefit Analysis (CBA) approach be applied to

assess the proposed development. Hill PDA subsequently prepared a CBA which accompanies this

planning proposal and replaces the NCBT which was previously completed.



Based on the above, the structure of this supplementary report is as follows:

Chapter 5 addresses queries regarding the validation of MPD’s advice to WSPT and concerns regarding

demand and the level of impact of the proposal on surrounding centres.

Chapter 6 addresses the Sequential Test as applied to the proposal.

Chapter 7 explains issues of financial viability which are crucial to consideration of the proposal; and

Chapter 8 explores the strategic justification for the proposal in the context of the strategic planning

framework.

As stated above the CBA replaces the NCBT which was previously provided and forms part of this planning

proposal package under a separate cover. Note that our detailed response to the SGS peer review of the draft

‘Supplementary Report: Economic Considerations’ is included in Appendix 1 of this report.

4.3 DOCUMENTS AND SOURCES

Submissions received from the following stakeholders were reviewed for the purpose of this supplementary report:

City of Blacktown (October 2012)

Westfield Limited (November 2012)

DEXUS Property Group (November 2012)

It is also informed by discussions with P&I and their economic consultants on this project, SGS, including the

content of the SGS peer review dated August 2013.

The following documents were reviewed within Hill PDA’s Economic Impact Assessment (August 2012) and this

supplementary report:

Western Sydney Parklands Plan of Management (2010)

Eastern Creek Business Hub, Environmental Impact Statement, State Significant Development (SSD

5175), Architectus (September 2012)

Convenience Centre and Bulky Goods Retail – Development Potential , MacroPlan Dimasi (March 2012)

Eastern Creek Business Hub Review of Land Use Options – Preliminary Draft Findings, Hill PDA (March

2012)

Eastern Creek Business Hub Economic Impact Assessment, Hill PDA (August 2012)

Blacktown Commercial Centres Strategy, SGS Economics & Planning (2007)

Blacktown CBD Planning Proposal and Masterplan (2010)

Blacktown Planning Strategy Economic and Employment Input, Hill PDA (2010)

Blacktown LEP (1988)



Blacktown LEP Central Business District) (2012)

Plan of Management 2020 Supplement (2013)

Draft Blacktown LEP (2013)



5. RETAIL DEMAND AND REDIRECTION OF

TURNOVER This Chapter is in response to the economic impact queries raised by P&I in Schedule 2 (Other Key Issues to

be Addressed) of their letter to WSPT (dated November 2012). In particular, P&I requested:

Detail on the sources of data relied upon within Hill PDA’s Economic Impact Assessment submitted with

the EIS; and

Further detail on the expenditure captured by the proposal, the impact this would have on other centres,

and further explanation of the impact of the proposal through the use of the Hill PDA gravity model.

Submissions received by P&I also criticised the lack of documentation demonstrating the need (or demand) for

the uses proposed. This has also been addressed within this Chapter.

5.1 VALIDATION OF ASSUMPTIONS

Hill PDA’s Economic Impact Assessment of the proposed uses followed previous economic and land use demand

advice to WSPT by MPD in March 201234. The MPD report assessed the potential and demand for a convenience/

neighbourhood centre and bulky goods retail development on the Subject Site. The outcomes of the MPD report

informed the land use options examined by Architectus during the development of the site’s Concept Plan.

As requested by WSPT, Hill PDA reviewed the MPD report to determine the reasonableness of assumptions and

where appropriate adopt the assumptions within the subsequent Hill PDA Economic Impact Assessment. As

neither the MPD report nor Hill PDA’s review of the MPD report were submitted with the EIS, some sections of Hill

PDA’s Economic Impact Assessment may have been misinterpreted.

A summary of Hill PDA’s key findings with regards to MPD’s advice are provided in the following tables. In summary:

Hill PDA agreed with MPD that the provision of up to 9,500sqm (gross floor area or GFA35) of retail

premises to accommodate a large food and beverage operator and specialty shops to service the

immediate local community is reasonable and sustainable in the context of retail expenditure generated

within the local trade area. This would still allow the majority of retail expenditure to be captured by

higher order centres such as Mt Druitt even with the proposed business hub.

For bulky goods premises, the main difference between the MPD analysis and that of Hill PDA is the

assumed extent of the trade area. Due to existing and planned bulky goods premises provision in the

North West and South West Growth Centres, to remain conservative Hill PDA reduced the size of the

bulky goods premises trade area.

34 Source: Convenience Centre and Bulky Goods Retail – Development Potential, MacroPlan Dimasi (March 2012) 35 Note: Gross Floor Area (GFA) is Gross Lettable Area plus common mall spaces (including amenities), centre management area and plant rooms. In a typical indoor centre with at least one department store and supermarket the GLA makes up around 72% to 75% of the GFA



Notwithstanding this difference, the Hill PDA analysis still indicates there was a significant undersupply

of bulky goods premises in 2011 of almost 70,000sqm. Whilst planned bulky goods premises

developments may reduce the level of undersupply in 2014, without any further development,

undersupply will increase again to over 50,000sqm by 2026. Hill PDA agreed with MPD that there was a

demonstrated need for bulky goods premises from the adjusted trade area in 2014 and beyond.

Therefore 30,000sqm of bulky goods premises as proposed in the MPD Report for the Eastern Creek

Business Hub would be supportable and would reduce the level of undersupply.

Further analysis and explanation of the economic impact of the proposed business hub is provided in the following

sections of this Chapter.



Table 7 - MacroPlan Dimasi Retail Premises Assumption Review

Item MPD Assumptions Hill PDA Comments

Trade Area The primary trade area (PTA) is defined as comprising parts of Minchinbury and Rooty Hill, straddling the Great Western Highway and is limited to the north by the alignment of the railway.

A secondary trade area (STA) is defined to be bounded to the north by the railway line, to the east by Reservoir Road, to the south by the Western Motorway and to the west by the Westlink M7. This STA encompasses the suburbs of Eastern Creek and Doonside and parts of Arndell Park and Huntingwood.

Combined these trade areas are identified as the Main Trade Area (MTA).

Based on the nature of the retail premises considered in the MPD Report, we agree with the extent of the trade area (Primary and Secondary Trade Area) defined.

Population Projections Current and future population projections were based on:

Australian Bureau of Statistics (ABS) Census Data and dwelling approvals;

P&I household and population projections;

Department of Health & Ageing Population Projections; and

Proposed development of the Bunya residential estate by Landcom which falls into the STA and is equivalent to 2,200 additional persons over the next 6-7 years.

Based on the above assumptions the PTA had a population of 15,245 persons in 2011 increasing to 16,395 persons by 2026. Similarly, the STA had a population of 15,280 persons in 2011, and is forecast to increase to 17,830 by 2026.

This MTA is forecast to include a total resident population of 34,225 persons by 2026, equivalent to average annual growth of 1% per annum between 2006 and 2026.

To validate the reasonableness of population projections used by MPD, Hill PDA considered population projections from Blacktown City Council and the NSW Bureau of Transport Statistics (BTS October 2009).

Whilst the BTS MTA forecasts (28,980 persons in 2006 increasing to 31,260 persons in 2026) are slightly less than the MPD Report, it appears this is due to the addition of 2,200 residents in the proposed Bunya residential estate.

The MPD growth rates are in line with Council projections and are considered reasonable.

Resident Expenditure Resident expenditure is sourced from Marketinfo data. The MPD Report indicates retail expenditure per capita of $10,862 in the defined Main Trade Area (MTA) in 2010/11.

This equates to retail expenditure of $329m in 2011 increasing to $425m by 2026.

Retail expenditure per capita assumptions in the MPD Report are largely in-line with Hill PDA’s Marketinfo 2009 data for surrounding suburbs ($10,510 per capita for Eastern Creek, $12,194 per capita for Minchinbury, $10,087 per capita for Mt Druitt) and are therefore considered reasonable.




Capture of Resident Retail Expenditure

The MPD Report assumes:

65% capture of food and grocery expenditure from the MTA (PTA and STA combined); and

Supermarket turnover of $9,000/sqm which remains constant into the future.

Whilst the 65% capture of total food and grocery expenditure from residents in the MTA is reasonable, Hill PDA would argue that the proportion of capture from the PTA would differ to the STA.

An ALDI supermarket is located on the eastern edge of the STA and a full line Woolworths supermarket is located in Prospect just outside the eastern boundary of the STA.

As a result, Hill PDA would assume capture of supermarket expenditure at around 70% from the PTA (assuming the provision of a large food and beverage operator on the Subject Site), however much less from the STA.

Those residents in the STA who work in the likes of Minchinbury and travel east along the Great Western Highway during afternoon and evening peak times are more likely to use retail provision on the Subject Site due to ease of access. This is as compared to residents of the STA who work in the likes of the Huntingwood, Arndell Park or elsewhere.

Capture of Expenditure from Workers and Others

In addition to resident expenditure, the Subject Site is likely to capture additional retail expenditure from local workers, likely to be around 10% of turnover.

Hill PDA agrees it is likely that retail premises on the Subject Site could capture some additional retail expenditure from workers in surrounding employment land precincts. Workers spend on average $2,800 per annum on retail goods and services close to their place of work. This will add further turnover to retail premises provision on the Subject Site and assist in its sustainability and viability.

Dependent on its final design, it is also likely that the Subject Site may capture some turnover from passing trade.

Demand for Floor Space The trade area will demand 9,426sqm of supermarket floor space in 2010/11, increasing to 12,329sqm of floor space in 2025/26.

Given the current provision of supermarket floor space within the trade area of 5,050sqm, there will be an estimated gap in the order of 4,400-4,800sqm over the next two years.

This market gap increases to about 5,400sqm by 2015/16. By 2015/16 the MTA could support a full-line supermarket (i.e. greater than 4,000sqm) as well as an additional smaller supermarket such as an ALDI or IGA (i.e. 1,000 – 1,500sqm).

A larger supermarket anchor could support about 2,000-2,500sqm of specialty floor space, while additional anchors could support a greater quantum of specialty floor space, up to 3,500sqm.

Whilst Hill PDA’s assumptions would differ slightly to the MPD Report, the outcomes are unlikely to change considerably. Hill PDA agrees that the trade area could sustain a 4,000sqm (NLA) food and beverage operator on the Subject Site.

The demand for a second smaller food and beverage as suggested by the MPD Report is likely to be very long term. A second food and beverage will also change the role of the centre again.

To support the food and beverage operator a range of specialty shops and services are appropriate. Again it is likely that the capture of expenditure by the specialty shops will be different from the PTA as compared to the STA.

For the Subject Site, assuming the provision of a large food and beverage operator as proposed, Hill PDA would assume specialty shops of around 2,500sqm to 3,500sqm (NLA).

As a rule of thumb an additional 10% to 15% of specialty shops should be provided to accommodate non-retail commercial users (real estate agents, medical services, travel




agents, banks) with a further 3% to 4% of specialty stores assumed to be vacant at any one time.

Including an allowance for vacancies and non-retail commercial users would increase floor space to between 7,700sqm and 8,900sqm (NLA) in 2015/2016. This would be equivalent to around 9,500sqm (GFA).

Source: Convenience Centre and Bulky Goods Retail – Development Potential, MacroPlan Dimasi (March 2012) and Eastern Creek Business Hub Review of Land Use Options – Preliminary Draft Findings, Hill PDA (March 2012)

Table 8 - MacroPlan Dimasi Bulky Goods Premises Assumption Review


Trade Area The trade areas for bulky goods premises development in the MPD Report are based on the provision of a homemaker sized centre. The assumed trade areas include:

Primary - southern part of the Blacktown LGA including the suburbs of Eastern Creek, Minchinbury, Huntingwood, Doonside and extending to Oakhurst and Hassall Grove in the north.

Secondary North - extends 8-9km north and includes the northern part of Blacktown and parts of Penrith LGAs. This trade area extends to Colebee to the north and Riverstone to the south (in the North West Growth Centre), Llandilo to the west and Stanhope Gardens to the east.

Secondary East - extends 5km to the east and includes the suburbs of Greystanes, Kings Langley, Lalor Park, Seven Hills, Toongabbie, Girraween, Pendle Hill, Pemulwuy and parts of Smithfield.

Secondary South – comprising the western portion of Fairfield LGA including the suburbs of Wetherill Park and Horsley Park.

Secondary West - comprising the eastern side of the Penrith LGA including the suburbs of St Clair, Claremont Meadows, Werrington, St Marys and Erskine Park.

Tertiary - extends 15-17km south and incorporates the growing suburbs of Rossmore, Austral, Leppington, Edmondson Park, Catherine Fields and Oran Park in the South West Growth Centre.

Assuming that a homemaker centre can include a variety of bulky goods premises tenants, Hill PDA would assume a slightly different trade area to that of MPD for the following reasons:

The potential to attract expenditure from the Secondary North Trade Area is likely to be limited particularly due to the 50,000sqm of bulky goods premises planned at Marsden Park36 which will include a Bunnings and possibly an IKEA. This will be located adjacent to Richmond Road and residents of the Secondary North Trade Area would need to drive past this to travel the 9km to reach the Subject Site. Furthermore, whilst not mentioned in the MPD Report, there is considerable existing bulky goods premises provision in the likes Castle Hill, Rouse Hill Major Centre and Baulkham Hills which are meeting the immediate needs of these residents.

The potential to attract bulky goods premises expenditure from residents in the Tertiary Trade Area is likely to be limited given the distances involved and the extent of existing and planned future bulky goods premises in this area.

Significant bulky goods premises are planned as part of the South West Growth Centre (e.g. Leppington Major Centre and Crossroads), and therefore the extent to which residents would be prepared to travel from this area to the Subject Site to purchase bulky goods is likely to be extremely limited.

36 Source: Cordells Construction Data (2012)




Existing provision of bulky goods premises in the Tertiary Trade Area is estimated within the MPD Report at over 86,000sqm, which is a considerable amount of provision. As a result, it is unlikely residents of this trade area will need to travel much further for bulky goods shopping – particularly given provision on the Subject Site and surrounding precincts in Minchinbury and Prospect, are unlikely to rival the extent of businesses in the Tertiary Trade Area.

As a result of the above, Hill PDA’s trade area would be sim ilar to that of the MPD report with the exclusion of the Secondary North Trade Area and the Tertiary Trade Area. The implications of this on demand are discussed further below.

Population Projections MPD current and future population projections were based on:

Australian Bureau of Statistics (ABS) Census Data and Dwelling Approvals;

NSW Planning and Infrastructure Household and Population projections;

Department of Health and Ageing Population Projections;

Proposed developments including the Bunya residential estate, Doonside Pipeworks, Nelson’s Ridge, Greystanes Estate, the WELL Precinct, St Mary’s ADI site; and

Planned dwelling growth targets for the North West and South West Growth Centres.

Based on the above assumptions the bulky goods premises Main Trade Area (MTA) in the MPD Report (inclusive of the PTA and STAs) had a population of 485,170 persons in 2011 increasing to 667,020 persons by 2026.

When the Tertiary Trade Area was added this increased to 656,980 persons in 2011 and 943,070 persons by 2026.

To check the reasonableness of population projections, Hill PDA considered population projections from Blacktown City Council and the NSW Bureau of Transport Statistics (October 2009). The comparison indicates the MPD forecasts are considered reasonable.

In order to re-evaluate demand for bulky goods premises based on an adjusted trade area, Hill PDA adjusted the MPD population projections by removing the Tertiary Trade Area and the Secondary North Trade Area.

In doing so, the adjusted MTA has a population of 460,080 persons in 2011which would increase to 500,230 persons by 2026.

Resident Expenditure The MPD Report sources resident expenditure from Marketinfo data. The MPD Report indicates homemaker retail expenditure per capita of $1,882 in the Main Trade Area (which excludes the Tertiary Trade Area) in 2010/11.

According to the MPD Report this equates to total available homemaker expenditure of $1,019m in the MTA in 2011, increasing to $1,390m by 2026.

Using data from the MPD Report, total available homemaker expenditure from Hill PDA’s adjusted trade area is $830m in 2011, increasing to $1,033m by 2026. This equates to average homemaker expenditure per capita of $1,551 in 2010/11.

The reason for the lower average expenditure per capita is largely due to the higher affluence of residents in the likes of the Hills Shire which are in the Secondary North Trade Area and which were removed.




Retail expenditure per capita assumptions in the MPD Report are largely in-line with Hill PDA’s Marketinfo 2009 bulky goods premises data and are considered reasonable.

Turnover Rate The MPD report uses a constant bulky goods premises turnover benchmark of $3,500/sqm.

The turnover benchmark of $3,500/sqm is reasonable for 2011, but should be escalated over time to account for growth in real retail expenditure. In Hill PDA’s revised assessment the assumed bulky goods premises turnover has been increased by 0.65% per annum.

Demand for Floor Space Rather than assume capture of bulky goods premises expenditure from the trade areas, the MPD Report compares total demand for bulky goods premises to total supply (including planned supply) in the trade areas. This results in under or over supply of floor space.

MPD determined that the level of demand for bulky goods premises throughout the MTA is currently around 380,700sqm. This is projected to increase to 539,600sqm over the period to 2026, a total increase of 158,900sqm.

This represents demand for an additional 9,950sqm of bulky goods premises each year (applying a simple straight line average).

MPD suggests that there is currently an undersupply of bulky goods premises in the order of 128,000sqm in 2011 which will decrease to 109,800sqm in 2014, 86,700sqm in 2016, but increase again to 132,500sqm by 2026.

Given the adjusted trade area, Hill PDA recalibrated the results of the expenditure modelling.

Based on Hill PDA’s adjusted assumptions, there is undersupply of 69,600sqm of bulky goods premises in 2011, decreasing to 25,600sqm in 2014. By 2026, this undersupply will increase to 53,250sqm of bulky goods premises.

Source: Convenience Centre and Bulky Goods Retail – Development Potential, MacroPlan Dimasi (March 2012), Eastern Creek Business Hub Review of Land Use Options – Preliminary Draft Findings, Hill PDA (March 2012)


Ref: C13115 P a g e | 38

Hill PDA

5.2 NEED AND DEMAND FOR RETAIL FLOOR SPACE

Whilst the assumptions behind the MPD assessment of demand for the retail premises in the proposal have been

addressed already, this Section discusses the ability of the trade areas to accommodate the proposed business

hub and also examines the current performance of surrounding centres, together with retail growth within the City

of Blacktown.

5.2.1 EXPENDITURE IN THE TRADE AREAS

The MPD report assessed demand for retail premises at the Eastern Creek Business Hub based on defined trade

areas and household retail expenditure demand modelling, which in turn informed the quantum of floor space

proposed in the Concept Plan. The key trade area and expenditure outcomes of the MPD report with regards to

the retail premises component of the proposal were:

The trade area for the retail premises component is a localised catchment largely consisting of residents

of Rooty Hill and Arndell Park. The trade area consisted of 30,525 persons in 2011 which would

increase to 32,225 persons by 2016.

This trade area would generate $329m in total household expenditure in 2011 of which $152m is

associated with food and liquor expenditure. By 2016 expenditure would increase to $361m of which

$168m would be associated with food and liquor expenditure.

Figure 1 - Proposed Retail Premises Trade Area

Source: Map produced by Hill PDA using MapInfo 11.0 software and Microsoft Bing © 2011 Microsoft Corporation

Hill PDA estimated that the retail premises component which is included in Stage 1 of the proposal will achieve a turnover

of $62.5m in its first full year of operation, which for the purpose of assessing impact was assumed to be in 2016.



This indicates that the retail premises component of the proposal represents only 17.3% of total household

expenditure in the trade areas in 2016 ($361m), with the remaining 82.7% of expenditure captured by other and

higher order centres such as Mt Druitt, Rooty Hill, Rainbow Shopping Centre, Blacktown CBD and Penrith CBD.

Furthermore, the calculations excluded any additional expenditure the proposed business hub may capture from

local workers (either on site or from surrounding employment precincts) and passing trade given the sites location

on the Great Western Highway. This additional expenditure would further sustain the proposal.

The key trade area and expenditure outcomes with regards to the bulky goods premises component of the

proposal were that:

Hill PDA’s adjusted bulky goods premises trade area is an extensive area consisting of 460,080 persons

in 2011, increasing to 500,230 persons by 2022.

This trade area would generate $830m of bulky goods premises expenditure in 2011, increasing to

$884m in 2016 and $1,033m by 2026.

Hill PDA estimated that Stage 1 bulky goods premises will achieve a turnover of $32.5m in 2016, which will

increase to $65.4m in 2022 with the addition of Stage 2. This indicates that the bulky goods premises component

of the proposal represents only 4% of total expenditure available in the trade area in 2016 ($830m) and 6% of

total trade area expenditure in 2026 ($1,033m). The proposal would account for only a very small proportion of

overall bulky goods premises expenditure generated by the trade area and the majority would still be captured by

other centres within the trade areas.

Further impacts related to the turnover of the proposal are discussed in Section 3.3 of this report.

Outside of the retail and bulky goods premises components of the proposal, Hill PDA’s review of the MPD report and

subsequent Economic Impact Assessment indicated that large format retail may also be appropriate for the Subject

Site, particularly given its scale and location on the Great Western Highway. Dependent on the final tenant, large format

retail may compete with surrounding supermarket based centres and/or bulky goods precincts to some extent.

The trade area of large format retail at the Subject Site would be large and extensive, similar to the trade area of the

bulky goods premises component of the proposal. Their scale, type of product and car based nature, means residents

will travel much further afield to visit them, but will do so less frequently than their local centres. A 13,638sqm Costco

store is proceeding at Crossroads in Liverpool LGA. There are no IKEA stores within the surrounding area at the current

time, although we are aware that IKEA have acquired a site at 840 Richmond Road, Marsden Park and we understand

that Costco may be seeking to locate at Marsden Park.

If the site could not attract large format retail, other bulky goods premises could be an alternative option dependent

upon market demand.



Figure 2 - Proposed Bulky Goods Premises Trade Area (Hill PDA’s Adjusted Trade Area)

Source: Map produced by Hill PDA using MapInfo 11.0 software and Microsoft Bing © 2011 Microsoft Corporation

5.2.2 PERFORMANCE OF CENTRES AND GROWTH IN DEMAND FOR PREMISES IN THE

CITY OF BLACKTOWN

Two simple measures of centre performance are the level of vacancies within a centre and the trading levels of

existing retail premises provision. These two measures also provide insight into the ability of centres to

accommodate growth and absorb the impact of any new retail provision.

City of Blacktown Retail Performance

In 2010 Hill PDA undertook an assessment of retail and employment floor space demand in the City of Blacktown

to 203637. The assessment noted that the City of Blacktown accommodated over 510,000sqm of retail premises in

37 Source: Blacktown Planning Strategy Economic and Employment Input, Hill PDA (2010)



2004. Of total provision, at the time of survey approximately 6% was vacant which is considered a reasonably low

proportion and is indicative of the healthy demand for retail premises in the City as generated by its many family

households and reasonable scale of population.

The assessment noted that centres like Plumpton Marketplace and Westfield Mt Druitt were trading extremely well

largely as they drew trade from both their local catchment as well as from areas outside the City such as Penrith (e.g. St

Marys), Holroyd and Fairfield LGAs. The City is also likely to retain a reasonable proportion of its trade on account of its

regional sized shopping centres such as Westpoint (84,900sqm) and Westfield Mt Druitt (52,000sqm).

Whilst the successful centres within the City have extensive trade areas and retain expenditure within the municipal

boundary, the City also experiences adverse impacts from large and well performing centres located just outside the

local government boundary. This results in a notable amount of escape expenditure from the City to the likes of Rouse

Hill Town Centre, Wrights Road in Kellyville, Castle Towers, and the Sydney and Parramatta CBD’s.

Another contributing factor to escape expenditure is the fact the City of Blacktown has a net loss of jobs – 41,000

more people leave the City for work than enter it38 and with workers goes a proportion of retail expenditure

(around 20-25% of personal expenditure is spent close to the place of work).

However, retail expenditure capture and escape also varies with respect to retail store type. Whilst the majority of

supermarket related retail expenditure tends to be directed towards local shopping facilities and is retained, more

discretionary related stores such as bulky goods premises and clothing can attract shoppers from further afield

who are willing to travel to compare goods and prices.

Hill PDA’s 2010 assessment indicates that in the case of bulky goods premises the City of Blacktown is likely to

benefit from a net gain in expenditure on account of bulky goods clusters in Prospect, Minchinbury and East

Blacktown. The contrasting undersupply of this type of provision in neighbouring LGAs such as Holroyd and

Fairfield are likely to result in the draw of some trade from these areas.

Hill PDA’s assessment indicated the City of Blacktown will generate demand for an additional 620,000sqm of total

retail premises between 2007 and 203639. This figure is equivalent to an additional 5 Blacktown CBDs (including

Westpoint Shopping Centre) or an additional 7 Westfield Mt Druitt’s. It is important to note that this figure relates

to growth from the resident population only. In addition to this will be demand for retail from the likes of workers

and visitors. Of total growth, around 100,000sqm of floor space demand is associated with supermarket and

grocery stores and 155,000sqm is associated with bulky goods premises.

This growth in demand represents more than a doubling of all existing retail provision in the City. Accordingly the

assessment noted that this growth in demand will necessitate the expansion of existing centres and the

development of new centres across the LGA over the period to 2036. Whilst it is recognised that a proportion of

this demand will be met by centres outside the City, accommodating additional retail premises within the City

would ensure it recaptures retail dollars currently lost to destinations outside the LGA boundary.

38 Source: Blacktown Planning Strategy Economic and Employment Input, Hill PDA (2010) 39ibid



Individual Centre Performance

At the suburban level, Blacktown City Council’s 2007 Commercial Centres Strategy noted the Mt Druitt centre

accommodated 108,834sqm of occupied premises, with no vacant premises identified at the time of the study

further supporting the centres strong performance.

Westfield reports that its Mt Druitt shopping centre trade area accounts for almost 165,000 persons and as indicated in

the following trade area map largely includes an area bounded by: Erskine Park in the south; Rooty Hill in the east;

Dean Park, Hassell Grove and Wilmot in the north; and, Dunheved, St Marys and St Clair in the west40.

Figure 3 - Westfield Mt Druitt Trade Areas

Source: http://www.westfield.com/corporate/images/property_portfolio/trade_area_maps/mtdruitt.pdf (December 2012)

Westfield Mt Druitt will capture a significant amount of food and grocery expenditure from the trade area; however

those that visit Westfield Mt Druitt from further afield will do so largely for comparative goods shopping and

discretionary spending (e.g. clothes, electronics, and discount department store items). That said, they may

undertake dual shopping trips whilst there, whether within Westfield Mt Druitt or at other retailers and services

40 Source: http://www.westfield.com/corporate/property-portfolio/australia/mtdruitt.html (December 2012)

http://www.westfield.com/corporate/images/property_portfolio/trade_area_maps/mtdruitt.pdf

http://www.westfield.com/corporate/property-portfolio/australia/mtdruitt.html



within the Mt Druitt centre. For example, a shopper may visit Westfield Mt Druitt primarily for clothing outlets, but

may also do food and grocery shopping at ALDI (located outside of Westfield) and visit the library or medical

centre. However, it is likely that their local shopping centre will still retain a large proportion of their regular chore

shopping expenditure.

Westfield reports that its Mt Druitt trade area generates total retail expenditure equivalent to $1.7billion 41.

However, Westfield Mt Druitt is capturing only 23% of total retail expenditure available in its trade area, given it

recorded turnover of $385.7m for the year to December 201242.

This indicates there is a significant amount of retail expenditure generated by the trade area which is available to

other retailers within the Mt Druitt centre, as well as other centres either within the trade area or elsewhere. The

next largest centre within the Westfield Mt Druitt trade areas is St Marys Town Centre (63,600sqm of retail and

commercial premises) followed by Rooty Hill Village which is significantly smaller (around 16,700sqm of floor

space). Outside of the trade areas it is likely that centres such as Penrith CBD and Blacktown CBD are capturing

a large proportion of expenditure.

Westfield Mt Druitt’s sales turnover in 2012 of $385.7m equates to an overall turnover rate of $7,355/sqm. This

was 10% above the 2012 median of $6,681/sqm43 and ranks the centre 20 out of the 88 similar sized centres in

Australia (being greater than 45,000sqm). These results indicate the centre’s superior performance compared to

surrounding and comparable centres (Westpoint Blacktown had a turnover of $4,910/sqm and was ranked 80 in

201244) and supports the notion that the centre could sustain additional floor space growth.

The quantum of expenditure generated by Westfield Mt Druitt’s trade area a lso suggests that with additional

dwellings planned and proposed for centres such as Rooty Hill and Mt Druitt (either through Council master plans

or development approvals), expenditure growth will only increase the ability of the trade areas to accommodate

and sustain growth.

Blacktown City Council’s submission to P&I on the Eastern Creek Business Hub indicated that Council was

currently undertaking a range of Master Plans for existing centres such as Mt Druitt and Rooty Hill. It is

understood Council's Master Plans have been prepared based on principles such as45:

Constraints and opportunities of the precinct, including environmental, social and economic factors as

well as existing characteristics of the area or neighbourhood;

Opportunities for increasing housing and employment;

Financial feasibility;

Access to appropriate transport and service infrastructure;

Infrastructure growth requirements; and

Appropriate land uses and proposed zonings, permitted land uses and development controls.

41 Source: http://www.westfield.com/corporate/property-portfolio/australia/mtdruitt.html (December 2012) 42 Source: Shopping Centre News Big Guns 2013 43 ibid 44 ibid 45 Source: Blacktown City Council Submission to P&I regarding exhibition of UAP Guidelines (July 2012)

http://www.westfield.com/corporate/property-portfolio/australia/mtdruitt.html



New jobs and dwellings within nominated Master Plan centres such as Mt Druitt and Rooty Hill will improve the

sustainability of existing centres and will improve their ability to accommodate and absorb impacts as a result of

the Eastern Creek Business Hub proposal.

5.3 TURNOVER IMPACT OF PROPOSED RETAIL PREMISES

Hill PDA’s Economic Impact Assessment (August 2012) utilised a gravity model to assess the level of turnover

impact of the proposal, which is based on the premise that the level of redirected expenditure from a proposal is

directly proportional to the turnover of the retail premises and indirectly proportional to the distance from the

Subject Site. The level of redirected expenditure is also dependent on the similarities of retail store types (the

degree of competitiveness).

There are no universal measures of significance of economic impact. There are references in various consultancy

reports and statements in the Land & Environment Court which suggest that a loss of trade below 5% is

considered insignificant, 5% to 10% is low to moderate, 10% to 15% is moderate to high, and above 15% is a

strong or significant impact.

This Section discusses the results of Hill PDA’s gravity model within the Economic Impact Assessment for the

proposal and discusses the impact of alternative staging and retail mix options.

5.3.1 TURNOVER IMPACT OF PROPOSAL AS SUBMITTED

Hill PDA’s gravity model was based on the Eastern Creek Business Hub accommodating 52,800sqm of floor

space.



Land Area (ha)



9,500

6,500

4.19




Total 52,800 15.77





On this basis and for the purpose of assessing impact, Hill PDA made various assumptions to do with retail

premises mix and the staging of development.

Hill PDA estimated that Stage 1 of the proposal would achieve sales turnover of $175.3m in its first full year of

operation, assumed to be in 2016. This turnover is attributed to all Stage 1 retail uses and the gravity model

therefore assessed the combined impact of these uses.



A key outcome of the gravity model from the Economic Impact Assessment was that the $175.3m in Stage 1

turnover in 2016 would be redirected from a range of centres. In absolute dollar terms, the largest redirection from

centres will be from Mount Druitt (-$42.4m), followed by Blacktown (-$25.3m) and St Marys (-$12.0m). However,

as an immediate percentage shift in sales, these 2016 impacts are all less than 10% (Mt Druitt -8.1%, Blacktown -

3.3% and St Marys -4.2%). These are also direct or immediate point in time impacts, being the difference in

2016 centre sales turnover with and without the proposal. All centres will experience increases in population and

growth in real retail expenditure over time which will significantly lessen the impact.

To explain this further, we have used the impacts on Mt Druitt as an example. Assuming Stage 1 of the proposal

did not proceed, it was estimated that the total sales turnover of the Mt Druitt centre in 2011 was $470m. This was

estimated to increase to $526.6m by 2016 due to general population growth and growth in real retail expenditure

(being growth in retail expenditure per capita due to increasing affluence etc.). This is an increase of $56.6m in

total centre sales turnover over the period.

If Stage 1 of the Eastern Creek Business Hub did proceed in 2016 as proposed, the gravity model indicated

$42.4m of the Hub’s $175.3m in turnover would be redirected from the Mt Druitt centre to the Subject Site, with

the remainder drawn from other surrounding centres. Therefore the direct or point in time impact of the proposal

on the Mt Druitt centre would be a reduction in total potential retail sales from $526.6m to $484.2m in 2016 ( -

$42.4m or -8.1%).

However, Mt Druitt (like all centres) will enjoy growth in real retail expenditure and population growth between

2011 and 2016. Hence the difference between Mt Druitt total estimated sales in 2016 with the proposal ($484.2m)

and the turnover of the centre in 2011 ($470m) is $14.2m. Therefore, even with the proposal, the centre will still

enjoy growth in total centre sales between 2011 and 2016 (+$14.2m or sales growth of +3%). This is further

demonstrated in the following table.

Table 10 - Mt Druitt Centre Turnover Impacts with and without Proposal (estimated 2011-2016)

If Stage 1 Proposal Did Not Proceed: ($m)

Total Centre Turnover in 2011 470.0


Growth in Total Centre Turnover 2011-2016 56.6

If Stage 1 Proposal Did Proceed: ($m)


Plus: Growth in Total Centre Turnover 2011-2016 56.6

Less: Proposal Stage 1 Turnover in 2016 (direct impact) -42.4


Growth in Total Centre Turnover 2011-2016 14.2

With the above explanation in mind, all centres within the gravity model will experience sales growth between

2011 and 2016 and therefore immediate point in time impacts will lessen over time:

The direct and immediate point in time impact on Rainbow Shopping Centre (anchored by an IGA

supermarket of 3,000sqm) of -$6.7m is reduced to -$2.4m (-7.0%) once growth is considered.

The direct impact on Evans Road in Rooty Hill of –$1.1m is reduced to -$0m (0%).

The direct impact on Myrtle Street in Prospect which is anchored by a Woolworths supermarket

decreases from -$5.4m to -$1.4m (-4.4%).



Over time these economic impacts would be lessened further as a result of expenditure and population growth in

the trade areas. Even with the implementation of the Stage 2 of bulky goods premises, all centres and retail

destinations will experience a real (non-inflated) increase in trading levels from 2016 to 2022. Hence such impacts

could be absorbed without jeopardising the viability of these centres.

Hill PDA visited the four centres which would experience some decline in trade in 2016 comparative to their 2011,

being the centres of Myrtle Street, Holbeche Road (Arndell Park), Rainbow Shopping Centre and Rooty Hill.

Evans Road was also visited although the trading level of this centre is forecast to remain unchanged in 2016

compared to 2011 as a result of the proposal. The findings of these site visits are detailed in Appendix 4 of this

Study. The site visits ascertained that these centres appear to be trading well with a strong and diversified retail

offer, low vacant floorspace and a multi-faceted trade area. The identified adverse impacts on these centres would

not threaten their financial viability. The spatial distribution of the impacted centres is depicted in the following

map.



By 2022 it is estimated that the Mt Druitt centre will achieve estimated sales of $552.9m with the proposal

implemented. This is equivalent to growth of $67.9m or a 14% increase in trade since 2016.

The direct impact on other centres such as Rainbow Shopping Centre, Myrtle Street and Evans Road as a result

of Stage 2 will be zero given its focus on bulky goods premises expansion only. These centres will all have

experienced sales growth in excess of 13% between 2016 and 2022 and are anticipated to be trading at levels

that well exceeded their 2011 levels if the proposal did not exist. For example by 2022 Rainbow Shopp ing Centre

is anticipated to be achieving sales of $37.8m which is a $2.7m increase on its 2011 turnover ($35.1m).

Note that the gravity model was premised on a large food and beverage operator of 4,000sqm GLA being provided.

This is only a possible scenario. An alternative scenario could be that a smaller 2,000sqm GLA food and beverage

operator is provided to anchor the retail premises component, and the residual retail premises floor space would be

used for specialty shops and non-retail shopfront uses.

Furthermore the gravity model assumes that the large format retailer is tenanted by a Costco-type tenant which is

unlikely. A more realistic scenario is that the large format retailer is occupied by a bulky goods type tenant who would

have a significant lower turnover by comparison and thus trade diversion from other localities would be lower.

With particular regard to bulky goods premises it should be noted that the gravity model assumes pipeline or

mooted development will proceed with proposed expansions in Minchinbury (approvals granted for Minchinbury

Masters Home Improvement Store) and Wetherill Park (approval granted for a new bulky goods premises)

realised prior to 2016 – hence why there is considerable variation in impacts between these centres.

For example $5.1m in turnover is expected to be redirected from Homebase Prospect to bulky goods premises on the

Subject Site as a result of Stage 1 of the proposal. This is a direct or immediate point in time impact of -6.1% which is

considered low to modest. However, once the proposed bulky goods premises expansions at Minchinbury are included

together with growth in population and real retail expenditure, the overall impact of planned bulky goods premises

development on Homebase Prospect increases to -$11.3m or a -12.4%. Hence the overall impact on Homebase

Prospect would be lessened if any of these mooted developments did not proceed.

Note that, as recognised in Hill PDA’s Economic Impact Assessment, the older bulky goods premises in

Minchinbury (i.e. Minchinbury Home Town) are likely to be under trading. This reflects the older nature of existing

buildings, their location in relation to passing traffic, and competition. It thus reflects the individual characteristics

of buildings within the cluster and is not indicative of bulky goods premises demand in the locality.

5.3.2 TURNOVER IMPACT OF ALTERNATIVE RETAIL MIX

The greatest relative turnover impacts of the proposal relate predominately to the impacts on food and beverage

type floor space. This is based on the assumption that large format retail which sells a proportion of food and

beverage items would be accommodated in the Hub.

Using Costco as an indicative example only of large format retail selling a component of such food and beverage

goods, Hill PDA’s Economic Impact Assessment indicated that almost 70% of total store sales of such a retailer

are related to food and beverage (65% of which are household sales as opposed to business trade). These sales

would be redirected from surrounding supermarket based retail centres.



Combined, the food and beverage components of the retail premises and large format retail (i.e. Stage 1 of the

proposal) are estimated to account for over $100m turnover in 2016. The retail premises component of this is

$46m with $54m attributed to large format retail.

The Hill PDA gravity model is likely to over-emphasise the economic impacts of the food and beverage component

accommodated at the business hub given it has assumed large format retail redirects turnover only from a certain

number of surrounding centres. In reality, large format retail will attract trade from a much larger trade area.

Therefore its impacts and redirection of turnover would be spread thinly across a larger number of centres than

those listed in the gravity model.

It should also be noted that for the purpose the assessing impact that Hill PDA assumed large format retail sold a

component of food and beverage items. There is no Standard Instrument LEP definition or universal definition of

large format retail and the term is usually just grouped under ‘retail premises’ although it can be understood as

referring to a physically large retailer. At a large scale such retail premises could include single warehouse type

retail stores typically greater than 10,000sqm and drawing from a large catchment.

If large format retail that sells food and beverage items is not secured at the business hub, which Hill PDA and

SGS (P&I’s economic consultant) agree is an unlikely scenario, the large format retail tenancy may well be

occupied by another non-food related bulky goods premises operator. Should this occur, the turnover of the food

and beverage component of Stage 1 of the proposal would almost halve. The impact on centres such as Mt Druitt,

Blacktown and Rooty Hill will decrease significantly due to less food and beverage turnover being redirected from

these centres to the business hub.

Whilst we note this Alternative Scenario which is considered to be more likely and would considerably reduce the

trade redirection calculated comparative to the Preferred Option, we have not included a detailed gravity model

depicting this option in this Report. This is because trade redirection from the Preferred Option is well within

acceptable parameters in economic impact terms. As such, testing the impacts of this Alternative Scenario which

would be lesser is not necessary.



6. CAPACITY OF EXISTING CENTRES TO

ACCOMMODATE GROWTH Given the level of demand for retail floorspace identified in the trade areas, the next question is where this

demand can be accommodated. This Chapter is in response to the strategic justification queries raised by P&I

in Schedule 1 (Strategic Justification) of their letter to WSPT (dated November 2012). In particular, P&I raised

the need for a Sequential Test to justify retail premises being located on the Subject Site given its location outside

of existing centres.

The NSW Draft Centres Policy (2009) establishes that a sequential approach should be adopted when assessing

rezonings which would facilitate retail or commercial premises. This is in the context of centres being the preferred

choice for this type of new development. As a result, the purpose of this Chapter is to review the availability of

land within or on the fringe of relevant centres for accommodating a development such as that proposed at the

Eastern Creek Business Hub.

6.1 WHAT INFLUENCES THE CAPACITY OF CENTRES TO

ACCOMMODATE GROWTH?

Hill PDA’s own analysis shows that whilst the City of Blacktown is a popular place to live, a large proportion of

residents leave the area to work. A key challenge is to provide adequate land and developable sites within centres

to provide jobs.

Since the preparation of the Draft North West Subregional Strategy in 2007, challenges for councils have altered

with pressures to not only intensify uses but to zone additional land in order to facilitate viable development

opportunities for retail premises and new businesses. The Draft Centres Policy (2009) requires all councils to

actively identify suitable sites and opportunities for development in order to enhance competition and consumer

access to goods and services.

Whilst the NSW Draft Centres Policy identifies centres as the preferred locations for growth, it recognises that

demand for retail and commercial premises may be so substantial that it cannot be entirely accommodated in

these locations. The NSW Draft Centres Policy therefore advocates a sequential approach for the selection of

suitable locations outside of centres as follows:

Land adjacent to centres;

Employment lands;

Land adjacent to stand alone centres and busy roads; and

Residential areas.

Key factors which influence the capacity of centres to accommodate growth include geographic desirability and

land and site suitability. These are discussed further below.



6.1.1 GEOGRAPHIC DESIRABILITY

The geographic location of a centre is imperative to its success. This is because the locations of centres directly

influence the nature of the centre’s trade area, the ability for workers and customers to access the centre as well

as the effective operation of the centre. The following section explains the relationship between these factors and

how they influence the desirability of centre locations.

Trade Area

Not all centres are alike. Centres have different roles in the centres hierarchy, providing different service and retail

offerings and therefore have different geographic or trade area requirements. For example, smaller centres such

as villages (e.g. Rooty Hill), require locations that are convenient to the local trade area they serve and therefore

are more localised and in a greater number of locations. These centres generally provide supermarkets, specialty

stores and small non-retail / commercial services. The catchment area of a supermarket is ideally within a 3km to

5km radius of its population base of 10,000 residents. Supply is therefore better spread geographically in smaller

centres to match those catchment areas.

Larger centres such as Mt Druitt require a location that is central to the broad trade area they serve. This is

because these centres generally provide more than 1 supermarket and often larger department stores (such as

Myer or David Jones) that require a broader catchment area of 20km or more and a population base of 150,000+

people. To cater to this large trade base, these centres need to be serviced by highly patronised public transport

routes and main roads.

Likewise business parks tend to be more regionally focused, while small office space for professional uses and

local amenity are better suited to the smaller centres discussed above. Bulky goods premises favour clustering

along highway frontage locations with visual exposure being a high priority. Smaller specialty retailing and

professional services feed off anchor tenants such as supermarkets, department stores and commercial centres

where passing foot traffic is the key determinant.

As discussed above, the desirability of locations for retailers and centres varies according to the use being

considered. To this extent, Mt Druitt (including the Westfield shopping centre) is in a strong location to capture

trade across the entire City. Although it enjoys relatively low competition from other major centres, it also enjoys a

strong location in the middle of its trade area and adjacent to a train station.

Whilst Rooty Hill is well situated to serve its trade area, compared to Mt Druitt it is not likely to be a sustainable

location to serve the wider City. This is largely due to competition with Mt Druitt, but also due to its position away

from major arterial roads whilst also being constrained by the M7 corridor. This location means that the centre is

located further away from the entry points into the trade area.

Access, Traffic and Transport

The ease and efficiency of access, to and within, a centre is another important factor in the geographic desirability

of its location. As discussed above, large centres such as Mt Druitt require excellent access to major highways

and a number of access/egress points to the surrounding area in order to cater to the significant number of

shopper movements.



In the interests of urban sustainability, major centres should also be located on well serviced transport routes in

order to minimise the number of trips undertaken by private vehicles and to allow for convenience shopping wh ilst

travelling to/from destinations. Large parts of the City are well served by public transport with a number of railway

lines with stations in most centres.

Access to smaller centres is also a key factor as these centres rely on quick and efficient shopping trips for

convenience. Available and visually prominent car parking spaces, ideally out the front of retail stores, is also a

desirable factor in the success of town, village and neighbourhood centres.

Smaller centres should also be centrally located in a trade area with limited barriers to pedestrian access to

encourage walking to and within the centre. Walking as a mode of transport can be encouraged in smaller centres

as the nature of shopping generally relates to smaller goods and therefore can be carried with greater ease.

Efficient access to centres of all sizes is also important for their servicing. Centres require regular deliveries of

goods and the removal of rubbish. This places a burden on the surrounding road network. It also requires

additional land to the retail store footprint and customer car parking in order to undertake these activities away

from main road thoroughfares.

Economic Efficiencies – Agglomeration

The success of centres and their ability to grow is supported by the economic efficiencies gained by co-location.

Referred to as business clustering or agglomeration, the benefits of businesses locating together are now widely

understood46.

Centres facilitate the realignment of businesses making it possible for similar types of businesses to locate in proximity

to each other. This tendency appears to run counter to the usual expectations of competitive relationships between rival

companies but recognises the underlying human realities that there are similarities in organisational and occupational

cultures that are nurtured by firms locating amongst other firms engaged in similar pursuits.

Emerging employment centres (such as bulky goods retail clusters) should be conscious of the benefits of

agglomeration and target specific business specialties or attributes in order to foster the clustered location of

related businesses. Existing and proposed specialised activities should be identified and used as seed activities

for the formulation of a local business identity. A sufficient scale should be considered to achieve agglomeration

benefits. This would also entail the provision of ancillary suite of services sufficient to support and attract a large

specialist business core.

6.1.2 LAND AND SITE AVAILABILITY

The physical availability of undeveloped or underdeveloped land is only part of the challenge of identifying

suitable land or sites for new development. This challenge can be exacerbated when reviewing site availability

within established built urban areas, when trying to identify large sites suitable for retailers or major investors and

when trying to find sites that can be effectively amalgamated in a reasonable period of time. The Draft Centres

46Source: John West, 2006, A Strategy to Accelerate Innovation in NSW, Outline in Policy Development Australian Innovation Research Centre, p. 9; also: Johansson, Börje & Forslund, Ulla, 2006, The Analysis Of Location, Co-Location And Urbanisation Economies, Electronic Working Paper Series No. 67



Policy (2009) recognises that these challenges may mean that the acquisition of appropriate sites within existing

centres may not always be practical or feasible, particularly if large sites are required47.

The following section reviews the various constraints to identifying and acquiring suitable development sites in

centres for retail and commercial uses. The constraints to the availability of land and sites for redevelopment

discussed include site fragmentation and site size and suitability for various uses.

Fragmentation and Site Acquisition

A common constraint to the growth of traditional retail strip centres relates to the high level of site ownership

fragmentation. One such centre may have hundreds of different landowners, strata titles and tenants exacerbating

the complexity of centre management, site acquisition, expansion, marketing and redevelopment. It is important to

note that this is where major indoor centres (such as Westfield Mt Druitt) can have the management and

operational advantage over traditional centres that are in multiple ownerships.

The dispersed range and number of private land owners within the majority of traditional centres also hinders the

ability to effectively acquire a number of sites to form a larger site for redevelopment. Challenges are faced by the

willingness of land owners to sell their land, the period of time required to undertake the negotiation and

purchasing transaction and the risk that all required land owners will cooperate. The associated time and risk can

translate into significant costs for the prospective developer.

The acquisition of a number of sites within a centre can also result in the prospective developer paying a higher

purchase price than the sum of the individual land values. This premium often results when multiple acquisitions

are required within a set period of time to ensure site consolidation and redevelopment can be realised.

In light of the above factors, the fragmentation of sites in centres can severely limit the accessibility of land and

sites by creating significant time constraints for development, costs and risks thus rendering prospective

development within centres unattractive, unviable or unworkable.

Site Requirements

Site requirements for retail space within centres will vary depending upon a number of factors and in turn directly

influences the ability to acquire suitable sites within a centre. The two most important factors relate to the location

and the proposed size and mix of retail space. Location attributes include at grade car parking, ground floor

pedestrian access, visibility, provision of public transport and good road access.

6.2 HOW DO WE ASSESS THE ABILITY OF CENTRES TO

ACCOMMODATE GROWTH?

The NSW Draft Centres Policy (2009) indicates that the following sequential approach should be undertaken when

considering fringe or out-of-centre proposals:

It must first be demonstrated that there are no suitably zoned sites within centres. Where the zoning is

flexible – such as a mixed use zone – there will be more options available to proponents. It is recognised

47 Source: Draft NSW Centres Policy, Page 24, Chapter 8



that acquiring appropriately zoned sites within existing centres may not always be practical or feasible

particularly if large format sites are required.

If there are no suitably zoned sites in centres, it must then be demonstrated that there are no suitable

sites in an edge-of-centre location. Where available, edge-of-centre sites will generally be supported

particularly if good connections can be established with the existing centre.

Out-of-centre stand-alone sites will not be supported unless it has been demonstrated that there are no

suitable in-centre or edge-of-centre sites and there is a demonstrated net community benefit.

6.2.1 SEQUENTIAL TEST SITE CRITERIA

The assessment of potential sites within this Sequential Test was based on the following criteria together with site

inspections, desktop research, aerial photographs and other sources at Hill PDA’s disposal.

Table 11 - Sequential Test Site Criteria

Ava

ilab

ility

Owner Identification of the land owner.

Current Use Understanding of current uses on site and the potential for redevelopment based on site inspections (December 2012) and a review of 2012 aerial mapping.

Current Approvals Review of any development applications (either lodged or approved) to understand the likelihood of redevelopment for retail premises to the extent proposed.

Su

itab

ility

Lot Size The size of the lot to accommodate the proposal is an important consideration particularly given the design requirements of the proposal and viability considerations (e.g. scale of development to ensure viability).

Land Use Zone Identification of the sites current and proposed zoning controls under Blacktown LEP (1988) and Draft Blacktown LEP (2013) and the permissibility of retail premises and bulky goods premises within the zone.

Via

bil

ity

Co

mm

erci

al Site Attributes Access and exposure to main arterial roads an internal access for large vehicles, as well

as the precincts location to available infrastructure, public transport and services, is a key factor in determining the viability of a site to accommodate the proposal.

Surrounding Development

Identification of surrounding land uses, ensuring they are not incompatible. Also identifies potential of adjacent lots either for amalgamation or future expansion.

Fin

anci

al

Commercially Viability

The commercial viability of a site is a prerequisite to the financial viability of a site.

Value of Existing Uses

The extent to which the existing uses generate economic value (directly or indirectly) and constitute a higher and better use relative to bulky goods uses.

Highest and Best Use

The extent to which bulky goods premises constitute the highest and best use of the site under the existing or proposed future zoning.

Cost of Redevelopment

The cost of development relative to the existing role and function of the site and any factors which would increase this cost (e.g. demolition, impacts on the operations of nearby businesses etc).

Source: Hill PDA (2013)

Note that a site must achieve all of the listed criteria above if it is capable of accommodating the proposal - it must

be available, suitable and commercially and financially viability. The absence of one of these aspects indicates

that the proposal is unlikely to be accommodated on the site and thus does not represent a sequentially preferable

site to the proposed Eastern Creek Business Hub.



6.2.2 RETAIL PREMISES

There is an opportunity based on demand modelling and the distribution of retail premises for a large food and

beverage operator to be accommodated in the trade area. As already discussed the trade area of the retail

premises component would be localised, based on the attributes of its location, proximity to other surrounding

centres and its retail mix and offer. If the proposed retail premises component were to be located in another

centre or location, it may well be larger or smaller than that proposed, however the trade area would also differ.

As such relocating the facility in for example, Mount Druitt, would mean that it would have a different trade area

and a different role and function, given the higher order nature of the Mount Druitt centre. It would therefore not

address identified need.

6.2.3 BULKY GOODS PREMISES

Availability

A site is considered available for bulky goods premises if it is:

Vacant, underutilised or subject to a low intensity of use;

In use for a purpose which is soon to cease; and

Is not the subject of planning proposals or approvals for alternative use.

Unless a site which provides a public car park (in support of an adjacent facility or centre) is of a significant scale

to accommodate the proposal or has been pre-determined by Council as surplus to centre needs, the site is not

considered available.

Suitability

A site is considered suitable to accommodate the proposed development if it is:

Of a sufficient size to accommodate the proposed uses in their entirety or in a disaggregated form;

Subject to an existing or proposed zoning which would allow bulky goods premises;

Potentially capable of being rezoned to accommodate the proposed uses;

Located within or adjacent to a centre in a location appropriate to serving a wide trade area; and

Has suitable transportation and access.

The proposed Eastern Creek Business Hub is accommodated on a 15.77ha site as identified in the following

table.





Land Area (ha)



9,500

6,500

4.19




Total 52,800 15.77





Whilst the components of the proposal in terms of individual bulky goods premises could be developed in

separate and detached locations, from a market perspective the viability and sustainability of the proposal is

improved when they are developed together given:

A large food and beverage shop requires the support of a range of specialty shops due to the low rents

and long lease term associated with a large tenancy of this nature. There are also synergies due to co-

location, with the clustering of uses further supporting the ongoing sustainability and viability.

There are advantages to a retail premises being co-located with other types of retail tenancies. The

retail premises component would have a localised trade area (i.e. walkable catchment) but benefit from

additional but infrequent expenditure capture from bulky goods premises shoppers who live well beyond

the defined localised trade area.

The market for bulky goods premises sited adjacent to retail premises is significantly stronger than the

market for stand-alone ad hoc bulky goods premises. This is due to the benefits of co-location, dual

shopping trips, shared parking etc.

The success of employment precincts, whether bulky goods premises, commercial premises or industrial

uses, improves when they provide retail premises for their local workforce. The proposed retail premises

component would benefit from both its localised residential trade area and the capture of expenditure

from workers on site, particularly during lunch time trade.

It is recognised that bulky goods premises are generally encouraged within existing centres which helps ensure

centre vitality, viability and a sustainable form of development that will not ‘crowd out’ industrial users from

industrial land. However, there may be circumstances where the location of bulky goods premises may be

considered outside of town centres such as where a site with good highway/main road frontage, where existing

land uses are prohibiting the viability of such uses, or where the highest and best use o f land within centres is for

higher order retail, residential and employment uses.

As a result we have assessed the ability of centres to accommodate between 4ha and 16ha of retail premises

regardless of their retail store types.

Commercial Viability

A site is deemed to be commercially viable for the proposed uses if it is likely to be desirable by virtue of:



Site size;

In single ownership or capable of being amalgamated;

Proximity to existing and/ or planned bulky goods premises;

Ability to access a large trade area;

Proximity to major vehicular routes;

Visibility to passing traffic;

Degree of planning risk (e.g. whether it is subject to a preferential zoning for bulky goods premises); and

Potential for land use conflicts with adjoining uses (e.g. residential uses).

Financial Viability

A site is deemed to be financially viable for the proposed uses if:

The proposed uses would constitute the highest and best use of the site under the existing or planned

zoning and relative to existing uses;

The site is deemed to be attractive to bulky goods premises from a commercial perspective (see

Commercial Viability above);

The site is considered to be attractive for development from a financially viability perspective (e.g. large

sites in single ownership, which are affordable and do not requiring amalgamation);

If present existing uses could either be relocated, are not required or could be retained through

redevelopment; and

The loss of existing uses would not lead to a significant adverse economic impact on adjacent land uses

such as the operations of business, civic functions and so on.

Note that our assessment of financial viability constitutes a high level assessment based on prevailing land uses only. It

is not a detailed development financial or feasibility cash-flow assessment based on detailed market research etc.

Whilst the proposal seeks approval for 43,300sqm (GFA) of bulky goods premises including large format retail , we

consider that a third of this floorspace is the minimum threshold to assess for the purpose of the sequential test,

equivalent to around 14,400sqm (GFA).

6.3 HOW DO WE IDENTIFY CENTRES TO ASSESS?

Whilst the NSW Draft Centres Policy (2009) establishes the need for the sequential approach and the overall

methodology that should be adopted, there are no guidelines as to how to determine which centres are to be

examined (e.g. measure of distance from the proposal, the number of centres to be examined etc.).

As a result, the identification of existing centres and individual sites to examine as part o f the sequential test for

this report was determined through an examination of:

Identification of the attributes of land uses proposed at the Hub and the site characteristics they require;



Land use zones which permit retail premises and bulky goods premises;

Identification of surrounding retail centres and bulky goods premises; and

Submissions received by P&I on the proposal which identified particular centres (e.g. Mt Druitt) which

were evaluated as being able to accommodate the proposal.

6.3.1 LAND USE ZONES PERMITTING RETAIL USES

There are two local environmental plans (LEPs) that currently apply to the Blacktown LGA. These are:

Blacktown LEP 1998; and

Blacktown LEP (Central Business District) 2012.

The Draft Blacktown LEP 2013 was exhibited in 2013. Council officers completed a review of the LEP which was

presented in Council in December 2013. Council resolved at this meeting to adopt the Draft LEP with the

recommended changes with some exceptions. This means it will be a statutory consideration for development

applications as a draft LEP. It was submitted to the P&I for gazettal on 31st March 2014.

Blacktown LEP 1998

Under Blacktown LEP (1988) bulky goods premises were referred to as ‘bulky goods retail establishments’. Under

this LEP, the following zones permit or prohibit retail, and bulky goods retail establishments:

3(a) General Business Zone – encourages development which accommodates and meets the retail, commercial

and social needs of the community and encourages the expansion of business activities for the benefit

of the City. Through development control plans, the zone ensures the size and function of retail and

commercial uses are established within the preferred centres hierarchy of the City and sets aside specific

areas for provision of car parking, community uses, recreation areas and the like.

3(b) Special Business Zone –caters for the expansion of centres by providing sufficient land for required

expansion and ancillary development in line with the preferred centres hierarchy of the City. The zone

provides land adjoining centres and in close proximity of centres, for the purpose of bulky goods

retail and commercial office development. Within the zone, shops other than those which service the

daily convenience needs of the locality are prohibited.

4(a) General Industrial Zone – enables retail development only where it is associated with or ancillary to

manufacturing purposes on the same land or where it serves the daily convenience needs of the local

workforce. The zone enables commercial development only where it is associated with or ancillary to

industrial, warehousing or like purposes on the same land or where it serves the daily convenience needs of

the local workforce. Bulky goods retail establishments are prohibited.

4(b) Light Industrial Zone – like the 4(a) General Industrial Zone, enables retail and commercial development only

where it is associated with or ancillary to manufacturing, industrial, warehousing or like purposes on the

same land or where it serves the daily convenience needs of the local workforce. Bulky goods retail

establishments are prohibited.

4(c) Special Industrial Zone - as well as accommodating both traditional and modern forms of light industrial,

warehousing and like purposes, the zone accommodates development for the purposes of bulky goods



retail establishments. The zone enables retail development only where it is bulky goods, is associated with

or ancillary to light industrial purposes on the same land, or where it serves the daily convenience needs of

the local workforce. The zone enables commercial offices where it is associated with or ancillary to other

permitted uses on the same land or where it serves the daily convenience needs of the local workforce.

Clause 34 within LEP 1998 relates specifically to bulky goods retail establishments and in particular indicates that

Council may consent to bulky goods retail in the 3(b) Special Business Zone and 4(c) Special Industrial Zone only

if:

a) the proposed development will not have an adverse impact on the viability of business centres, and

b) the gross floor area of the part of the premises used for the sale, storage or display of a type of good

listed in the first column of the table to this clause is not less than the minimum floor area shown in

relation to that type of good in the second column of the table.

Permitted retail uses: Minimum floor area (sqm):

Furniture 500

Electrical goods 500

Outdoor products 500

Office supplies 500

Automotive parts/accessories 500

Kit homes 500

Floor coverings 250

Lighting 250

Antiques/second-hand goods 250

Kitchen/bathroom showrooms 150

Tiles (floors, ceiling or walls) 150

Blacktown LEP (Central Business District) 2012

Blacktown Local Environmental Plan (Central Business District) 2012 applies to the Blacktown central business

district. The centre is subject to zones B3 Commercial Core and B4 Mixed Use. These zones permit ‘bulky

goods premises’ with development consent under the group term ‘commercial premises’.

The B4 zone also permits ‘shop top housing’ and ‘seniors housing’ with development consent. As residential use

has a higher land value than bulky goods premises, the land is more likely to be redeveloped for finer grain retail,

retail/residential (mixed use) or residential use.

Draft Blacktown LEP 2013

When Draft Blacktown LEP 2013 is gazetted and comes into effect it will repeal Blacktown LEP 1998 and the

Blacktown CBD LEP. The provisions of Blacktown CBD LEP will be incorporated into Blacktown LEP 2013.

Blacktown LEP 1998 is not a Standard Instrument LEP, and so within the Draft Blacktown LEP 2013 there are

some changes to the zones and permissible uses applicable to identified centres, including out of centre

development.

The Draft LEP 2013 which was submitted to public consultation sought to change the zoning of the Minchinbury

retail and industrial precinct from zone 4(c) Special Industrial to B5 Business Development and IN2 Light

Industrial. The IN2 Light Industrial zone across part of the precinct would prohibit bulky goods premises.



As previously indicated, Council officers have completed a review of the Draft LEP 2013 which was presented to

Council in December 2013. Their assessment proposed a number of amendments to the Draft LEP 2013. These

included applying the B5 Business Development zone to the entire Minchinbury Precinct which was subject to an

IN2 Light Industrial zoning under the Draft LEP 2013. The B5 Business Development zone permits bulky goods

uses within consent. Council resolved at this meeting to adopt the Draft LEP with the recommended changes with

some exceptions. This means it will be a statutory consideration for development applications as a draft LEP. The

Draft LEP 2013 was submitted to the P&I for gazettal on 31st March 2014

6.3.2 IDENTIFICATION OF SURROUNDING RETAIL CENTRES AND BULKY GOODS

CLUSTERS

Hill PDA’s Economic Impact Assessment (August 2012) identified a range of existing centres and bulky goods

clusters which surround or are within relative proximity of the proposed Eastern Creek Business Hub. These

centres were identified from examination of the centres hierarchy’s nominated within both the Draft North West

Subregional Strategy (2007) and Council’s Commercial Centres Strategy (2007).

6.3.3 CENTRES IDENTIFIED IN SUBMISSIONS

The submission received from Westfield Limited argued there is sufficient land within the Mt Druitt to accommodate

additional retail development.

The submission received from Blacktown City Council indicated they owned various car park sites across the Mt

Druitt centre which would be capable of being redeveloped to accommodate additional retail floor space.

The submission received from DEXUS Property Group argued there was sufficient land within the existing

Minchinbury bulky goods precinct to accommodate additional bulky goods premises development.

6.3.4 SELECTED CENTRES FOR TESTING

Based on the above rationale, Hill PDA determined that the key centres and bulky goods precincts to be

examined as part of the Sequential Test would be:

Mt Druitt retail centre;

Rooty Hill retail centre;

Minchinbury bulky goods retail precinct; and

Blacktown bulky goods retail precinct (in Blacktown CBD).

The location of these centres in relation to the proposed Eastern Creek Business Hub is identified on the following map.



6.4 SEQUENTIAL TEST ASSESSMENT

6.4.1 MT DRUITT RETAIL CENTRE

Mt Druitt is identified as a Potential Major Centre in the Draft North West Subregional Strategy(2007) and a Town Centre in

Council’s Commercial Centres Strategy (2007). The centre is approximately 3km north-west of the Subject Site.

The centre lies north of the Mt Druitt Railway Station along North Parade, with the key retail anchor being the Westfield

Shopping Centre which is also the largest private land holding within the centre. Whilst Council’s Commercial Centres

Strategy did not define the boundary of the Mt Druitt centre. Based on an understanding of its role and function Hill PDA

would suggest that the boundary of the centre is fairly well defined by land use zones and the road and rail system. If

the broader definition of centres is adopted (i.e. not purely being for retail premises but including a variety of retail,

commercial, education, civic and community uses) the centre could be identified as being that land bound by the railway

line (North Parade), Carlisle Avenue, Luxford Road and Railway Street.

Within this identified area, the retail core is focussed on the Westfield Shopping Centre and along Luxford Road as far east

as the ALDI. This land is predominately zoned 3(a) Business General. The retail component of Mt Druitt is supported by a

range of retail, commercial, civic, entertainment and community uses located on the fringe. This includes:

An education precinct which includes Mt Druitt College of Tafe, Chifley College and Loyola Senior

College and is zoned 5(a) General Special Uses and 2(a) Residential;

A health precinct which accommodates Mt Druitt Hospital and lies north-east of the retail uses in an area

bound by Railway Street and Luxford Road. This area is zoned 5(a) General Special Uses; and

A recreation and entertainment precinct, which lies to the east of the centre and includes the AMF

Bowling and Skermish Centre, Rooty Hill RSL Club and the Novotel Hotel. The precinct is zoned 5(a)

General Special Uses.

Mt Druitt Public School and the Mt Druitt industrial area lie west of the centre, with this land predominately zoned

4(a) Special Industrial Zone which prohibits retail as proposed in the Eastern Creek Business Hub. Mt Druitt

Village lies to the south-west (south of the railway line and west of Carlisle Avenue) and accommodates a mix of

higher density residential (4-5 levels), community and civic uses, specialty stores and local commercial services.

A commuter car park was recently constructed and commenced operation at 63 North Parade at the corner of

Mount Street, accommodating over 200 car spaces opposite Mt Druitt Railway Station. The site had been vacant

for a long period of time after a development application for residential high rise (8 levels) with ground floor retail

uses had lapsed.

Draft Blacktown LEP 2013 identifies the future zoning of the land in the western half of the centre as B3

Commercial Core and B4 Mixed Use. These zones permit bulky goods premises under the group term

‘commercial premises’ with development consent. They also permit community, educational, indoor recreation and

entertainment uses. In addition the B4 zone permits shop top housing and seniors housing.

The Mount Druitt Major Centre Master Plan was prepared to inform the Draft Blacktown LEP 2013. The key future

characteristics identified in the Master Plan for the Mount Druitt Major Centre are:



A vibrant retail shopping strip;

A large format shopping centre;

Upgraded and distinguished commercial core;

Active civic, cultural and entertainment opportunities and facilities;

Improved open space and recreation opportunities;

Mount Druitt Railway Station and Bus Interchange;

Connectivity with surrounding precincts;

Mixed use residential development; and

Improved internal road connectivity.

Whilst the centre had no vacant floor space as at the 2007 Commercial Centres Strategy, the Strategy noted that

Mt Druitt had 24ha of vacant land, which was primarily accommodating Council owned car parks and land to

accommodate residential purposes. Based on site inspections and a review of aerial mapping, Hill PDA examined

the following sites to ascertain their potential to accommodate retail development and expansion.

Table 13 - Mt Druitt Sequential Test Sites

Ref Location Zoning Lot Size (sqm)

1 2 Aryers Grove 3(a) Business General 1,653.0

2 Westfield Shopping Centre 3(a) Business General 15.7ha

3a Tavern Car Park 3(a) Business General 7,500sqm

3b Courthouse Car Park 3(a) Business General 2,600sqm

Source: Blacktown LEP (1998)

Whilst it is recognised there are various other public and Council or Government owned car parks within the

centre, these were viewed as critical to the ongoing use and support of civic and other uses and were therefore

excluded from the analysis.

There are potential infill development sites surrounding the recently developed AMF Bowling Centre and the

Rooty Hill RSL Club to the east of the retail core. However given their ownership structure, small infill lot sizes,

and recreation and entertainment themes, they were viewed as not being appropriate for redevelopment into the

type of retail uses proposed at the Eastern Creek Business Hub.

The following plans identify the assessment sites, together with key land uses within the centres, and zoning

controls of relevance to the centre. The table following the maps assesses the identified sites to understand their

potential to accommodate redevelopment such as that proposed at the Eastern Creek Business Hub.



Table 14 - Mt Druitt Sequential Test Assessment

Ref Location Zoning Lot Size Availability Suitability Commercial Viability Financial Viability

1 2 Aryers

Grove

3(a)

Business

General

1,653sqm The site is currently undeveloped.

The Sydney West Joint Regional Planning Panel approved a 9 storey residential flat building, inclusive of 641sqm commercial space and 60 residential units in March 2011. EPS Constructions are currently marketing the residential development on the site (‘The Meridian’) and are seeking presales.

Current and proposed zone permits bulky good premises.

The site is of insufficient size to accommodate the proposed development.

The proposed mixed use zone is unsuitable for bulky goods premises under the Mount Druitt Major Centre Structure Plan.

The site is well located for additional retail premises being ‘in-centre’.

However, the proposed development precludes the site from being developed for retail premises as proposed.

The approved development constitutes a higher and better use of the site than bulky goods premises.

2 Westfield

Shopping

Centre

3(a)

Business

General

15.7ha The shopping centre is owned by DEXUS Property Group, Westfield Group and Westfield Retail Trust.

Hill PDA is unaware of any plans for redevelopment of the site in the short to medium term.

The current layout of the centre does not necessarily allow for infill development unless there is a loss of car spaces, or basement car parking is considered.

Current and proposed zone permits bulky goods premises.

Reconfiguration of the site through complete redevelopment and consideration of a multiple story centre is likely to make more efficient use of the site which would allow it to accommodate additional retail premises.

Whilst multi storey retail development is a possibility, this is often difficult to achieve in locations outside of metropolitan areas.

The site is a commercially viable location given its position in-centre and its significantly large trade area.

The site has numerous frontages and is well located adjacent to civic and community uses as well as Mt Druitt Railway Station.

Should the site be redeveloped and reconfigured, it will attract additional retail tenants.

Considerations of financial viability as outlined later in this report (Chapter 5) demonstrates that the development of the Westfield site to include a significant quantum of bulky goods premises similar to the proposal would be challenging and such uses are unlikely to be the highest and best use of the site.

3a Tavern Car

Park

3(a)

Business

General

7,500sqm The land is privately owned and is used for at grade car parking.

The car park serves the existing St Patricks Tavern and would be considered a necessity to the


The individual lot size is insufficient.

It is unlikely the loss of public car

The site is within the centre and would be commercially attractive to new retail tenants. Sufficient frontage and access to sustain commercial viability.

Unlikely to be viable given the impact of the loss of the car park on the Tavern and the high capital cost of replacement.

The site is of insufficient size to




ongoing viability of the Tavern. spaces would be encouraged unless provided elsewhere.

be financially viable for the proposed development.

3b Courthouse

Car Park

3(a)

Business

General

2,600sqm The land is government owned and is used for at grade car parking.


The individual lot size is insufficient.

It is unlikely that the loss of public car spaces would be encouraged unless they were provided elsewhere.

The site is within the centre and would be commercially attractive to new retail tenants.

Sufficient frontage and access to sustain commercial viability.

The car park serves the existing Courthouse and would be considered a necessity to the ongoing operation of the Courthouse.

Development is unlikely to be financially viable given the impact the loss of the car park would have on the Courthouse and the high capital cost of replacement.

The site is of insufficient size to be commercially viable for the proposed development.



There are various public car park sites within the Mt Druitt retail centre core that would be appropriate for retail

redevelopment. However, they are generally less than 1ha in site area and will therefore require amalgamation

with surrounding sites in order to create a site of a suitable size to accommodate development such as that

proposed.

There are various other government owned land parcels within the centre, however these are largely

accommodating open space or various government, community and civic uses. Whilst consolidation of these uses

could occur, it is likely to be a long term outcome.

The only site of appropriate scale is developed for the Westfield Mt Druitt shopping centre. Westfield Mt Druitt is

spread across multiple single level buildings (occupying around half of the site area) and is interspersed with at

grade car parking. Whilst the efficiency of the site could be improved through complete redevelopment, the

likelihood of this occurring is unknown and may require basement car parking in order to retain the existing

quantum of car spaces. It is questionable as to whether the centre owners would redevelop the site to include a

significant amount of bulky goods premises over other types of retail development or mixed use residential. The

site could accommodate additional retail premises uses similar to that proposed, however the retail premises

proposed at the Eastern Creek Business Hub is meeting a localised need based on a small trade area. This is as

compared to the role and function of the Westfield shopping centre which has an extensive trade area covering

much of the western parts of the City of Blacktown (as discussed in Chapter 3 of this report). In any case, as

indicated in the following Chapter the redevelopment of the shopping centre to accommodate the proposed uses

is likely to be significantly challenged.

Based on the above analysis, there are no readily available or viable sites for retail development similar to the

proposal, either within or on the fringe of the Mt Druitt centre.

6.4.2 ROOTY HILL RETAIL CENTRE

Rooty Hill is nominated as a Village Centre within both the Draft North West Subregional Strategy (2007) and

Council’s Commercial Centres Strategy (2007). The centre is approximately 2km east of the Mt Druitt centre and

1.5km north of the Subject Site. Retail facilities are focused either side of Rooty Hill Railway Station in the

identified Rooty Hill North and Rooty Hill South precincts. The centre provides around 16,700sqm of total retail

floor space48.

Rooty Hill North contains around 10,000sqm of shopfront floor space of which 7,500sqm relates to retail uses. The

centre contains a Thrifty Link Hardware store of around 500sqm. Rooty Hill South contains around 6,700sqm and

includes an IGA supermarket of around 750sqm.The retail component of the Rooty Hill centre is supported by a

range of civic, entertainment and community uses including:

The Council depot site which is located east of Station Street in the Rooty Hill North precinct and is

bound by both the railway line and the M7;

Rooty Hill Public School which is located north-west of the Rooty Hill North precinct;

Rooty Hill High School which is located west of the Rooty Hill North precinct; and

48 Source: Blacktown Centres Strategy, SGS Economics & Planning (2007)



Namatjira Park to the south-east of the Rooty Hill South precinct.

Retail land is predominately zoned 3(a) Business General.

Draft Blacktown LEP 2013 identifies the future zoning of the Rooty Hill Town Centre as Zone B2 Local Centre.

This zone permits bulky goods premises with development consent under the group term ‘commercial premises’.

The zone also permits shop top housing, community, educational, indoor recreation and entertainment uses.

The zoning of the centre as a local centre with good local transport accessibility makes it suitable for higher

housing densities above finer grain retail, business and service uses that serve the daily and some weekly

shopping needs of the residential catchment. The lack of main road frontage will mean bulky goods premises are

unlikely to be successful.

The Rooty Hill Town Centre Master Plan was prepared to inform the draft Blacktown LEP 2013. The key future

characteristics identified for the Rooty Hill Town Centre in the Master Plan are:

A vibrant retail and business centre;

Improved connectivity to Western Sydney;

Rooty Hill Railway Station and commuter car park;

Parklands;

Mixed use residential development; and

Increased residential development close to retail and business activities.

The key future characteristics identified for the Rooty Hill North and South Precinct in the Master Plan are

identified in the following table.



Table 15 - Rooty Hill Master Plan Precinct Characteristics

Precinct Key Characteristics

Rooty Hill North Precinct Attractive mixed use development, accommodating retail, commercial and residential uses;

Enhanced connections in and around the centre paying special attention to the public domain;

Comprehensive pedestrian and cycle links to the railway station;

Enhanced landscaping along Rooty Hill Road North to reinforce its main street character;

Increased housing densities throughout the Precinct close to open space, retail and commercial uses;

Ground level retail uses with shop top housing along Rooty Hill Road North;

Quality public domain spaces for active and passive recreation;

Attractive and functional pedestrian bridge across the Western Railway Line; and

Implementation of Environmentally Sustainable Development principles for new development.

Rooty Hill South Precinct Attractive mixed use development, accommodating retail, commercial and residential uses;

New streets enhancing the movement network of the Precinct and providing access to key areas;

A comprehensive network of cycle and pedestrian paths;

Increased housing densities throughout the Precinct close to open space, retail and commercial uses;

Ground level retail uses with shop top housing along Rooty Hill Road South;

Quality public domain spaces for active and passive recreation;

Improved landscaped linear corridor connecting through Central and Namatjira Parks to the Western Sydney Parklands;

Consolidation and activation of existing open spaces; and

Implementation of Environmentally Sustainable Development principles for new development.

Source: Rooty Hill Town Centre Master Plan, Blacktown City Council

Council’s Commercial Centres Strategy (2007) indicated that at the time of survey the centre had less than

500sqm of vacant floor space and almost 4.85ha of vacant land. This vacant land is identified as including

7,000sqm of vacant land in the Rooty Hill South precinct (south east of rail station) and 7,000sqm to the east of

retail provision in the Rooty Hill North precinct.

Based on site inspections and a review of aerial mapping, the sites investigated as part of the sequential test are

shown in the following table.

Table 16 - Rooty Hill Sequential Test Sites

Ref Location Zoning Lot Size (sqm)

1 Premier Lane 3(a) Business – General 1,433

2 69 Rooty Hill Road North 3(a) Business – General 1,993

3 73 Rooty Hill Road North 3(a) Business – General 1,919

4 Station Street Car Parks 5(a) Special Use – Car Parking 6,400

5 3 Rooty Hill Road South 3(a) Business – General 7,436

6 Part Lots 1-3, DP135717, Lots 8-15 DP2570, Lot 2 DP624679, Lot 1 DP432025, Lot 1 DP537070 & Lot B DP394673

5(a) Special Use – Telecomm. 15,206

7 Mavis Street 5(a) Special Use – Corridor 12,640


Whilst it is a significant land holding on the fringe of the centre, Council’s depot site in the Rooty Hill North

precinct was not examined as part of the sequential test as it was viewed as being occupied and significantly



utilised. In order to facilitate the proposed development on the Council Depot site a rezoning of the land would be

required because bulky goods premises use is currently not a permissible use on the land. This would establish it

as a new out-of-centre location. In any case as established by the economic testing undertaken in the next

Chapter redevelopment of this site would be unlikely to be financially viable even if it were available.






Table 17 - Rooty Hill Sequential Test Assessment


1 Premier Lane

3(a)

Business

– General




The site may be amalgamated with existing lots fronting Rooty Hill Road North should those lots be redeveloped in the future.

However existing lots along Rooty Hill Road North are in multiple ownership and amalgamation may take some time.

By itself, the site has no frontage to main roads and would not be suitable for retail premises unless amalgamated with lots fronting Rooty Hill Road North.

The site is not commercially viable and thus is not financially viable either.

2 67 Rooty Hill

Road North

3(a)

Business

– General



The site is of insufficient size to accommodate the proposal.

Significant amalgamation would be required to accommodate retail or bulky goods premises.

The site has good exposure and frontage to Rooty Hill Road North.

The site would be appropriate for small retail infill development.

The site is of insufficient site to accommodate the proposal. Site amalgamation unlikely to be feasible.

3 73 Rooty Hill

Road North

3(a)

Business

– General



This site is of insufficient size to accommodate the proposal.

The site would require significant amalgamation with surrounding lots to enable a development site which was large enough to accommodate the proposal.

Fragmentation of ownership in this

The site is located between retail shops and a commercial building.

The site would represent a good location for further retail premises or mixed use intensification via shop top housing.

The site is of insufficient site to accommodate the proposal. Site amalgamation unlikely to be feasible.




location is an issue.

4 Station Street

5(a)

Special

Use – Car

Parking

6,400sqm The site includes 3 Council car parks adjacent to the Rooty Hill Railway Station.

The car parks are assumed to be used as commuter car parking. It is unlikely that the loss of public car spaces in this location would be encouraged.

Proposed zone prohibits bulky goods premises in BLEP2013.

Whilst this land would be appropriate for urban infill development to support the ongoing sustainability of the Rooty Hill centre, the site is not large enough to accommodate either the retail premises component or the large format retail/bulky goods premises component.

The site may be appropriate for transit oriented redevelopment (mixed use with higher density residential and ground floor active uses) as long as the commuter car parks are provided elsewhere.

The sites lack passing trade and exposure and would not be appropriate for a bulky goods premises.

The site is not commercially viable.

The adverse impacts of the loss of public car parking spaces on the Rooty Hill Railway Station would be substantial and would require replacement car parking to be provided immediately. This is would significantly increase financial costs.

5 3 Rooty Hill

Road South

3(a)

Business

– General


Bathla Group secured approval for a mixed use development on the site encompassing 108 residential units, 8 shops (610sqm) and 165 basement car parks49. The development would preclude this site from being redeveloped for additional retail development.



The site is well located between the existing IGA Supermarket and Lone Pine Tavern for retail expansion.

The permitted development constitutes a higher and better use of the site than bulky goods premises.

6 Part Lots 1-3,

DP135717, Lots

8-15 DP2570,

Lot 2 DP624679,

Lot 1 DP432025,

Lot 1 DP537070

& Lot B

5(a)

Special

Use –

Telecomm

.

1.52ha The site is currently undeveloped.

Bathla Group has lodged a rezoning application for this land (identified as 17-23 Mavis Street) to develop 9 residential flat buildings accommodating

Proposed zone prohibits bulky goods premises in BLEP2013.


The land would not be appropriate for retail premises similar to that proposed, given it has no exposure to passing trade and would lead to a high number of vehicle trips along

The proposed development constitutes a higher and better use of the site than bulky goods premises.





DP394673 127 units and 10 detached dwellings50. The proposal if approved will preclude this site from being redeveloped for additional retail development.

residential streets.

7 Mavis Street

5(a)

Special

Use –

Corridor

1.3ha The land is government owned. Proposed zone prohibits bulky goods use in BLEP2013.

The site appears to be of insufficient size to accommodate the proposed development.

The land would not be appropriate for retail premises similar to that proposed given it has no exposure to passing trade and would lead to a high number of vehicle trips along residential streets.

The proposed development would not be commercially viable.




Whilst that land within the Rooty Hill centre core area which is zoned 3(a) Business General provides various infill

redevelopment opportunities, lots along Rooty Hill Road North are small and highly fragmented where significant

amalgamation would be required. South of the railway line, 3 Rooty Hill Road South is zoned appropriately and provides

the greatest potential for retail expansion; however it is approved for mixed use development with limited provision of

retail uses (610sqm). The site (7,436sqm) is also not of a sufficient size to accommodate the proposal.

As a result, acquiring appropriately zoned sites within the existing Rooty Hill centre, which is of a scale that would allow

redevelopment as proposed at the Eastern Creek Business Hub would not be practical.

Outside of the retail core area and north of the railway line, the greatest potential for retail redevelopment north of the

railway station is either Council’s car park site or Council’s depot site. Both are on the fringe of the existing centre and

are zoned 5(a) Special Use. A rezoning of this land would be required because bulky goods premises use is currently

not a permissible use.

Council’s car park site is dissected by Station Street and Kalunga Lane. Even if the car park site that lies to the west of

Station Street could be redeveloped, the available parcel would be limited in size and would not be able to

accommodate retail premises similar to that proposed. It is unlikely to be able to accommodate the development and

requisite car parking unless it was amalgamated into a development site with adjacent lots. Adjacent lots are fine grain

and in multiple ownership. Furthermore the retention of commuter car parking around the station is desired and would

either need to be incorporated into any redevelopment of the site or would need to be provided close by.

Whilst Council’s depot site is significant in size it is bound on two sides by the railway line and the M7 and

together with Council’s car park site would not be appropriate for bulky goods premises. Bulky goods premises

require good passing trade and visual exposure and large lots for an abundance of car parking. Council’s depot

and car park sites lack these attributes. In any case as established in next Chapter the redevelopment of this site

to accommodate the proposed uses is not likely to be financially viable.

South of the railway line and outside of the centre core area, the greatest potential for retail expansion is that

vacant land along Mavis Street. However, a residential rezoning application has already been submitted for the

majority of this land which would preclude it from retail premises redevelopment.

Furthermore bulky goods premises such as that proposed would attract large volumes of traffic which would be

problematic based on the existing road layout and residential nature of the surrounding area. The NSW Draft

Centres Policy states that, given the high traffic generating nature of bulky goods premises they are typically

suited towards major or town centres.

Based on the above there are limited opportunities within the Rooty Hill centre or on the fringe of the centre for

retail premises similar to that proposed at the Eastern Creek Business Hub. In our view Rooty Hill would not be an

appropriate location for significant bulky goods premises even in the event that there are sequentially preferable

sites within it.



6.4.3 MINCHINBURY BULKY GOODS RETAIL PRECINCT

The Minchinbury bulky goods retail precinct fronts the Great Western Highway, around 5km from the Subject Site.

The precinct provides in the order of 46,000sqm of bulky goods premises51which includes a freestanding

Bunnings warehouse on Minchinbury Road (12,000sqm52) and Minchinbury Home Town (around 19,000sqm53).

The precinct was not examined in detail within Council’s Commercial Centres Strategy (2007) and was excluded

from the recommended retail hierarchy. That said, the Strategy recommended that a comprehensive demand and

supply analysis of large format (‘out-of-centre’) commercial and retail land in the City of Blacktown be undertaken.

The Strategy recommended that land in suitable locations is identified for bulky goods premises well ahead of

anticipated demand to ensure that the general direction of large format retail and commercial development is

appropriately contained within or on the periphery of Blacktown’s centres.

The entire precinct is zoned 4(c) Special Industrial Zone under Blacktown LEP (1988) which permits bulky goods

premises whilst other types of retail are excluded unless it is ancillary to light industrial purposes on the same land, or

where it serves the daily convenience needs of the local workforce. Under the porposed Zone B5 in the Draft LEP the

objectives include “To maintain the economic viability of centres by limiting general retailing and commercial activity”.

The exhibition version of the LEP prohibits commercial premises and permits food and drink premises and bulky goods

premises in the B5 zone. As such parts of the proposal may not be pemissible. Surrounding uses include residential to

the north and east, and general industrial (IN1 General Industrial) and environmental conservation (E2 Environmental

Conservation) zones to the south of the M4.

The Draft Blacktown LEP 2013 which was subjected to public consultation in early 2013 proposed splitting the precinct

into Zone B5 Business Development (western portion of the site around the existing Bunnings and proposed Masters)

and IN2 Light Industrial (eastern portion of the site). The B5 zone permits bulky goods premises on the land with

development consent. Zone IN2 prohibits bulky goods premises. Following a review of the submissions on the Draft

LEP 2013, the entirety of the Minchinbury precinct is now proposed to be zoned B5 Business Development.

Based on site inspections and a review of aerial mapping, the sites investigated as part of the sequential test are

shown in the following table.

Table 18 - Minchinbury Sequential Test Sites

Ref Location Zoning* Lot Size

1 1189 Great Western Highway 4(c) Industrial –Special 5,186sqm

2 Cnr Great Western Highway and Carlisle Avenue 4(c) Industrial –Special 8.09ha

3 John Hines Avenue 4(c) Industrial –Special 2.06ha

4 Zeleny Road Minchinbury 4(c) Industrial –Special 7,762sqm

5 3 Zeleny Road 4(c) Industrial –Special 1.195ha

6 1 Zeleny Road 4(c) Industrial –Special 7,904sqm

7 42 Sargents Road 4(c) Industrial –Special 2.02ha

8 22 Sargents Road and 46 Eddie Road 4(c) Industrial –Special 5,099sqm

9 6 Archbold Road 4(c) Industrial –Special 2.23ha

10 8Archbold Road 4(c) Industrial –Special 2.23ha

51 Source: Stockland Wetherill Park, Sydney Stage 4 expansion Economic Impact Assessment, Pitney Bowes (December 2010) 52 Source: BWP Trust Annual Report 2011 53 Source: Valad Opportunity Fund No. 11



Ref Location Zoning* Lot Size

11 1093 Great Western Highway 4(c) Industrial –Special 2.25ha









Table 19 - Minchinbury Sequential Test Assessment


1 1189 Great

Western

Highway

4(c) Industrial

–Special


The site was identified within DA 11-1028 as being utilised for the proposed expansion of the Bunnings hardware store located adjacent at 1 John Hines Avenue54. The application includes alterations and additions to the existing hardware warehouse involving increase in size and the addition of a customer café. Additional car parking spaces were also included. This proposal would preclude this site from being redeveloped for additional bulky goods premises.


This site is of insufficient size to accommodate the proposed development.

The site has good exposure to Great Western Highway and is strategically located next to the existing Bunnings hardware store.

Given the modest size of the site, redevelopment to provide a freestanding bulky goods premises not associated with an existing store like Bunnings would be unlikely to be financial viable.

2 Cnr Great

Western

Highway and

Carlisle Avenue

4(c) Industrial

–Special


In early 2011, the Sydney West Joint Regional Planning Panel approved an application to construct a Masters home improvement store of 13,451sqm on part of this land. The development site upon which the Masters will be located is 3.23ha55. It


Council is presently assessing DA-10-2765 for the amalgamation and re-subdivision of remaining land outside the Masters store site. This includes the extension of John Hines Avenue56. Whilst the remainder of the site

New lots to the rear of the Masters store fronting Carlisle Avenue would be appropriate for additional bulky goods premises given co-location synergies with the Bunnings and Masters stores. That said, they will likely be dissected by the John Hines Avenue extension.

Redevelopment of the site to accommodate some of the proposed uses could be financially viable.


55 Source: Report to Sydney West Joint Regional Planning Panel (February 2011). JRPP No: Item (2011SYW023) and DA No: JRPP-11-158

56 ibid




is unknown if remaining land will remain within the existing ownership or unsold is unknown. Construction is anticipated for early 2013.

The site is also subject to a previous DA for an 18,000sqm homemaker centre which was abandoned.

outside of the Masters is around 4.86ha, the final size of remaining lots is unknown and will be dependent on the location and amount of land required for the Johns Hine Avenue extension.

3 John Hines

Avenue

4(c) Industrial

–Special


A Construction Certificate was granted for redevelopment of the site into 6 x bulky goods premises (3,000sqm) and 27 factory/warehouse units of 250sqm each with mezzanine offices areas (30sqm each)57.



The site lacks a main road frontage and visibility to passing trade.

The site is located adjacent to two very strong hardware brands being Masters and Bunnings and could be considered a destination location which would be attractive to potential retail tenants.

Redevelopment of the site to accommodate some of the proposed uses could be financially viable.

4 Zeleny Road

Minchinbury

4(c) Industrial

–Special


This land is currently owned by Blacktown City Council.



The site is long and narrow (2 tandem lots) and would require amalgamation with adjacent lots to produce an appropriate development site.

Alone the site is not appropriate given its shape.

The site has limited frontage, with no passing trade or visibility.

In isolation the site is not commercially viable and thus not financially viable either.





5 3 Zeleny Road

4(c) Industrial

–Special




The site has no main road frontage and is located at the end of a cul-de-sac.

It is unlikely to attract bulky goods premises.

In isolation the site is not commercially viable and thus not financially viable.

6 1 Zeleny Road

4(c) Industrial

–Special


The site had development approval for construction of a new warehouse and office (3,500sqm) with 30 car parks58. The project was recently abandoned. The site was for sale at the end of 2011 and remains unsold.


The site is irregular in shape (triangle) and is of insufficient size to accommodate the proposed development.

The site has no main road frontage and is located at the end of a cul-de-sac. It is unlikely to attract bulky goods premises.


7 42 Sargents

Road

4(c) Industrial

–Special

2.02ha The site is currently undeveloped land owned by ALDI Foods Pty Ltd.

The potential for this site to be available for bulky goods premises is currently limited.



The site is surrounded by industrial warehouse development, is located to the rear of the precinct without main road frontage, and is unlikely to attract bulky goods premises.


8 22 Sargents

Road and 46

Eddie Road

4(c) Industrial

–Special


The site is owned by ALDI Foods Pty Ltd. ALDI also own and utilise the adjacent grade car park at 18 Sargents Road. The potential for this site to be available for bulky goods



The site would only be able to accommodate a single small bulky goods premises.

The site is unlikely to attract bulky goods premises given surrounding industrial buildings and lack of visibility and passing trade.






premises is currently limited.

9 6 Archbold

Road

4(c) Industrial

–Special



The site has minimal exposure to main road traffic and is of insufficient size to accommodate the proposed development.

The long and narrow lot configuration is unlikely to attract a significant bulky goods premises unless amalgamated with surrounding lots.


The proposed zoning prohibits bulky goods premises.

10 8 Archbold

Road

4(c) Industrial

–Special


The lot is advertised for sale with approval for subdivision into two lots (3,800sqm and 13,400sqm) plus a new entry road off Archbold Road.


The site has minimal exposure to main road traffic and is of insufficient size to accommodate the proposed development.



11 1093 Great

Western

Highway

4(c) Industrial

–Special


The site is owned by WJ Friend (Holdings) Pty Ltd which also owns various other lots across the broader precinct including 104 Sargents Road (Star Track Express) and 1 Zeleny Road.



The site has good main road exposure and visibility.

The long and narrow lot configuration is unlikely to attract a significant bulky goods premises, unless amalgamated with adjacent lots.


12 1087 Great

Western

Highway

4(c) Industrial

–Special

2.27ha The site is currently undeveloped but previously operated as a garden centre. The site is in private ownership.




The long and narrow lot configuration is unlikely to attract a significant bulky goods premises unless amalgamated with


https://rpp.rpdata.com/rpp/search/company/property/summary.html?view=property&qt=company&newSearch=true&q=W%20J%20FRIEND%20(HOLDINGS)%20PTY%20LTD







surrounding lots.

13 1079 Great

Western

Highway

4(c) Industrial

–Special


The site is in private ownership. The site has been on the market since 2010 but has not transacted. The site remains on the market as of December 2012.






14 1/7 Eddie Road 4(c) Industrial

–Special

3.95ha The site is currently occupied by Car City dealership.

The site is in private ownership.




The site in its current use is underutilised and is appropriate for bulky goods premises.

The site would be attractive to potential retailers given its strategic location opposite the proposed Masters.






Vacant land fronting the Great Western Highway near the intersection with Archbold Road is highly fragmented.

1079, 1087 and 1093 Great Western Highway (sites 11, 12 and 13) are all in separate ownership, as are the two

vacant lots to the rear (sites 9 and 10 fronting Archbold Road). Individually, these lots are all very long and narrow

which is not conducive to efficient bulky goods premises design.

If sites 8 to 13 could be amalgamated, this would create a larger plot of 12ha physically capable of

accommodating a sizeable quantum of the proposed development. However, these sites are subject to different

ownerships and amalgamation may be difficult and financially prohibitive. It also presents a riskier option than the

proposed Business Hub which is already under single ownership. A range of other development options are

available for these sites under the B5 Business Development zoning.

There is potential for additional bulky goods premises to be developed in the Minchinbury precinct is through the

redevelopment of existing lots fronting Great Western Highway, east of the existing Bunnings and proposed

Masters home improvement store. Bulky goods premises in this location are permissible under existing and

proposed controls.

Site 14 in is a strategically strong location opposite the proposed Masters and with a frontage to the Great

Western Highway. Whilst the site is underutilised, it is occupied by Car City (car sale yards) and whilst it could

redevelop in the future, the appetite of the existing owner to either sell or develop for bulky goods is unknown.

Hence, the only location where a vacant site was deemed suitable for accommodating bulky goods premises

development was site 4, 5 and 6, south of the proposed Masters and sites 8 to 13.

Testing for these potential sites was undertaken by Architectus (see Appendix 3) assuming the lots comprising

sites 4 to 6 and sites 8 to 13 could be amalgamated. The testing resulted in the following:

For sites 4 to 6 – a maximum gross floor area of 10,980sqm and 205 at-grade car parking spaces to

serve this floorspace on the amalgamated site. This floorspace represents 21% of the total bulky goods

premises proposed in the Eastern Creek Business Hub; and

For sites 8 to 13 – a maximum gross floor area of 42,680sqm and 950 at-grade car parking spaces to

serve this floorspace on the amalgamated site. Whilst the amalgamated sites would be physically

capable of accommodating the bulky goods/ LFR component of the proposed Eastern Creek Business

Hub, given the multi-ownerships across six different sites the potential to provide a facility of a

comparable nature proposed is unlikely. It presents a significantly greater risk of not eventuating. Lot 10

for example has approval for a subdivision and if this were to proceed, the potential for a comprehensive

development of the nature proposed at Eastern Creek would be removed. We do not consider the

amalgamated site is available to accommodate the proposal for this reason.

On this basis, it can be concluded that even the amalgamated sites are not sequentially preferable to

accommodate the proposal comparative to the Subject Site.

The existing Minchinbury Home Town is significantly underperforming with numerous vacant shopfronts which is

attributed to the age and nature of buildings. That said, the frontage to the Great Western Highway is highly

visible and the Masters store will strengthen the role of the precinct as a bulky goods destination.

Despite the above, it should be recognised that the Minchinbury precinct itself is an out-of-centre location and the

precinct is not recognised within Council’s existing hierarchy of centres in the Commercial Centres Strategy (2007).



6.4.4 BLACKTOWN MAJOR CENTRE

Blacktown Major Centre is located approximately 7.2km east of the Subject Site. The centre is subject to

Blacktown LEP (Central Business District) 2012, which was recently gazetted. The centre comprises some

138,510sqm of occupied floor space (retail, office and other uses)59. Blacktown Major Centre also has a significant

role in the provision of employment, administrative functions and education for its catchment population.

The CBD LEP zones the Blacktown City Centre for B3 Commercial Core and B4 Mixed Use. These zones permit bulky

goods premises use under the group term of ‘commercial premises’. They also permit community, educational, indoor

recreation and entertainment uses. In addition the B4 zone permits shop top housing and seniors housing.

The CBD LEP permits maximum building heights of between 26m and 72m and maximum Floor Space Ratios

(FSR) of between 3:1 and 8.5:1 across the CBD area. Bulky goods premises are typically not found in areas

subject to such high density controls.

Retail straddles Blacktown Railway Station and creates a north and south precinct. The MPD Report indicated

the centre accommodated some 37,000sqm of bulky goods premises, the majority of which is located in the north

precinct. Existing bulky goods premises in this location include Officeworks and Thrifty Link Hardware.

The Blacktown City Centre Master Plan (2012) identifies the future key characteristics of the Blacktown CBD as:

Blacktown Railway Station and Bus Interchange;

Inner Ring Road supporting the road network;

Vibrant retail strip shopping;

Large format shopping centre;

Formalised commercial core;

Civic, cultural and entertainment activities;

Increased open space and recreation opportunities;

Better connectivity with surrounding precincts; and

Mixed use residential development.

The CBD comprises 6 distinct sub-precincts that are characterised by their land use functions, built forms and

urban edges. The CBD Sub-precincts and the strategy for them as identified within the Master Plan are noted in

the following table.

59 Source: Blacktown City Commercial Centres Strategy (November 2007)



Table 20 - Blacktown City Centre Master Plan Precinct Strategies

Sub Precinct Strategy

Northern The Strategy for the Northern Sub-precinct is aimed at promoting a land use structure of business and service retail

uses closer to the Blacktown Railway Station, and mixed use development fronting Third Avenue. Redevelopment of

under-utilised sites will create a more urban CBD environment.

Station The Strategy for the Station Sub-precinct is primarily focused on improving the amenity and safety of pedestrian and

cycle access in and around the Sub precinct. With the future redevelopment of Francis Park/ Blacktown Showground

as a major regional recreation and cultural facility, pedestrian and cycle access between it and the CBD will need to

be improved. The land on the northern and southern sides of the railway marking the railway station entrances.

Retail Core The strategy for the Retail Core Sub-precinct is to encourage the externalisation and permeability of the shopping

centre so that it interacts and connects with the surrounding Sub-precincts.

Main Street The strategy for the Main Street Sub-precinct focuses on retaining and enhancing the inherent qualities of

complementary built form and active street frontages. New development opportunities exist on the Warrick Lane car

park site.

Civic The strategy for the Civic Sub-precinct focuses on promoting the Sub-precinct as an important location within the

CBD for business and civic functions, with Flushcombe Road becoming the primary business address for the CBD.

New built form is to provide a strong sense of active uses at street level.

Alpha Park The expansion of the park to Balmoral Street and Newton Road will provide good street frontage pedestrian access

links between the adjacent residential areas and the CBD.

Source: Blacktown City Centre Master Plan (2012)

Given the role of the Major Centre in the context of the broader City of Blacktown and its overall vision within the

Master Plan, it is therefore considered that the better use of underutilised or vacant land within the centre will be

for higher order retail, employment, civic, community and cultural activities as opposed to additional bulky goods

premises. As a result, whilst some vacant sites exist in the north precinct, they have not been examined in detail

as part of the Sequential Test. This includes vacant sites to the north of Second Avenue (i.e. 11, 15, 17, 29 and

31 Second Avenue) which fall within the B4 Mixed Use Zone.

It is also unlikely that bulky goods premises would be viable in the centre given the higher land values attributed to

land permitting higher densities and residential uses (in the B4 Mixed Use zone).

The land to the north of the Blacktown CBD is currently subject to an industrial zoning under Blacktown LEP 1998.

The land is proposed to be zoned B7 Business Park under Draft Blacktown LEP 2013. This zone will prohibit

bulky goods premises.



Figure 4 - Blacktown CBD Structure Plan

Source: Blacktown City Centre Master Plan (2012)

6.5 THE SUBJECT SITE

Applying the same sequential assessment test to the proposed Eastern Creek Business Hub site determines that

it is:

Available to accommodate the proposed uses given that it is vacant, it is in single ownership by the

WSPT who have the desire and the financial capacity to deliver it to the market, and it is not subject to

any other development approvals;

Suitable for accommodating the proposed uses given that it is of a sufficient size to accommodate the

proposal in its entirety and is not in active use;



Commercially viable as site would be attractive to the market for accommodating the range of uses

proposed by virtue of:

A strategically accessible location adjacent to the intersection of the Great Western Highway and

Westlink M7;

Street frontage and good visibility to a major roadway being the Great Western Highway;

Good accessibility to the site through the wider road network (i.e. location near the Westlink M7

and M4 Motorways); and

Large, relatively level vacant land that can be developed and sub-divided into appropriate sized

lots.

Financially viable as the site is cleared, in single ownership by a landowner who is financially able to

deliver the site to the market. As shown in the high level costs versus revenue modelling undertaken in

the next Chapter the proposed development would likely be financially viable on the Subject Site.

We therefore conclude that the Subject Site is suitable, available and commercially and financially viable to

accommodate the proposed use.

6.6 CONCLUSION

Based on the analysis for the Sequential Test there are no suitable, available and viable sites for retail premises

within existing centres or on the fringe of centres that are capable of accommodating at least a third of the

floorspace for the proposal. No site except the Subject Site meets all of the criteria. Available sites located within

Mt Druitt and Rooty Hill, are small infill retail redevelopment opportunities apart from redevelopment of the

Westfield Mt Druitt shopping centre which would be a significant undertaking. The redevelopment of Westfield Mt

Druitt to accommodate a significant amount of bulky goods premises over and above other retail, commercial and

mixed use developments is also questioned.

In most instances these small or fine grain lots are in multiple ownerships which can make redevelopment

impractical or very long term.

Given the higher-order shopping, civic and cultural role of larger centres such as Mt Druitt and Blacktown CBD,

the viability of bulky goods premises in these locations is limited, given the higher land values attributed to these

centres compared to the low rents achieved by bulky goods premises and large format retail.

Therefore the next best location for additional retail premises is in smaller locations with expansion potential such

as Rooty Hill. However, analysis has indicated that vacant land within the Rooty Hill centre is highly fragmented in

terms of land ownership and large vacant sites on the fringe of the centre are already approved for medium and

high density residential development.

Outside of these centres, bulky goods premises are currently accommodated in predominately industrial precincts

such as Minchinbury and Prospect. Prospect is largely built out with no vacant or underutilised land. The

Minchinbury bulky goods precinct has several vacant lots but these are subject to multiple ownerships and land

amalgamation may be unlikely. The configuration and shape of some lots (i.e. long and narrow or triangular) are



not favourable to bulky goods premises without amalgamation. Additionally some lots are located to the rear of the

precinct and suffer from being surrounded by industrial warehouses and a lack of visibility and passing trade.

Council’s recent approval of the Masters store will improve the perception of the Minchinbury precinct as a bulky

goods shopping destination and may lead to renewed interest in the area. However, the Minchinbury precinct

remains an out-of-centre location, which is not currently recognised in the centres hierarchy within Council’s

Commercial Centre’s Strategy (2007).



7. THE RELEVANCE OF FINANCIAL VIABILITY This Chapter examines the issue of financial or economic viability of retail property development and the

relevance of it in planning. Financial viability is a fundamental consideration when assessing the likelihood of

development proceeding and it therefore is a consideration in assessing alternative development sites in the

Sequential Test. Given the importance of this issue, Hill PDA believes that it is necessary to explore financial

viability concepts and the implications for the Eastern Creek Business Hub proposal in this Chapter.

7.1 WHY IS FINANCIAL VIABILITY IMPORTANT?

In the context of planning and development the term ‘financial viability’ can be understood as:

“….the ability of a development project to meet its costs including the cost of planning obligations, while

ensuring an appropriate Site Value for the landowner and a market risk adjusted return to the development

in delivering that project”60.

A development will only proceed if the costs associated with it are less than the end value, including an allowance

for profit to incentivise the developer and mitigate risk.

The development equation which determines the return on investment is as follows:

GDV = L + B + F + P

where GDV = Gross Development Value, L = Land, B = Building, F = Finance, P = Profit

Development will be feasible to the extent that the components of Land, Building, Finance and Profit do not

exceed the expected Gross Development Value (the total amount realised from completion of the built space).

There are a considerable number of factors affecting the feasibility of individual sites for redevelopment and rarely

is a single factor the only cause for poor development feasibility. It is important to understand that urban land is

subject to pressures for redevelopment which directly affect their land values and the feasibility of developing into

higher and better uses.

Key factors affecting financial feasibility include the following:

Land Value and Site Assembly – In order to economically acquire and develop land the proposed use must

translate into a higher value than the existing use, including the value of improvements to the land (or ‘As Is’

value). While existing improvements may be dated and be due for replacement the income which they produce

or utility that they generate, may still prevent an owner selling at a price which reflects a proposed use.

Construction Costs – Recent difficulties in securing credit and relatively high statutory cost obligations have

exacerbated the overall cost of development. The cost of development materials and the rising cost of

labour have increased costs to developers.

Planning / Development Controls – Planning policy is a major determinant of development costs, particularly

relating to ensuring compliance with planning requirements61. Planning and development controls have the

60 Source: Financial Viability in Planning 1st Edition Guidance Note, RICS (2012)



ability to affect feasibility through changes in land use zoning and densities but also through the costs

associated with compliance with design requirements and securing planning approvals.

Development Profit – The amount of profit received from a development is normally calculated as a percentage

of development costs although it can also be calculated on gross revenue. In order to maintain the same

development margin on a higher density development, an equivalent increase in development profit will be

required for the larger and more costly development.

A mismatch between what local plans permit on a site and what is financially viable to develop prevents

development from occurring. In light of this the ‘White Paper – A new planning system’ seeks to ensure that

matters of financial viability are considered in the strategic planning framework. Indeed, the White Paper

stipulates that Subregional Delivery Plans must be:

“…based on evidence regarding land availability, existing and forecast market demand, the viability of

development as well as community, local council and agency participation. This section is fundamental to

facilitating commercial, retail, industrial and other economic activity in the right locations consistent with

market demand”62.

(Hill PDA emphasis. Note that financial viability is referred to as ‘economic viability’ in the White Paper but the

meaning is the same).

Because financial viability will determine whether or not planning policy objectives can be delivered, consideration

of financial viability is fundamentally linked to the ability of planning policy to enable economic development.

To assist in the process of assessing the financial viability of development, P&I has developed an Urban

Feasibility Model (UFM). The UFM follows the following process which acknowledges the factors influencing

financial viability:

“All relevant controls such as land use zoning and development standards (for example, height, lot size and

amalgamation, setbacks, landscape requirements and onsite car parking) are taken into account to

calculate the dwelling potential of each lot. A standard developer feasibility tool incorporating land

acquisition costs, construction costs, government levies and taxes, finance and sales cost and sales price

is then applied to determine the feasibility of development”63.

The financial viability of development changes over time reflecting development variables such as demand,

planning requirements, construction costs and so on.

Note that financial viability differs from ‘commercial viability’ which refers to the viability of operating a use from a

site once it is developed, not the feasibility of actually developing it. Commercial viability does however influence

financial viability.

Development costs associated with land in centres are often high because of the value of existing operations and

the costs associated with their loss, even temporarily. Even land which is not directly revenue generating, such as

car parking, performs a crucial role in supporting the ongoing vitality and viability of the centre and removal could

have a strong adverse impact on its trading levels. Given that the end return or revenue on land used for bulky

61 Source: AHURI, Planning, Government Charges, and the Costs of Land and Housing (2008) 62 Source: Page 85, White Paper: A New Planning System for NSW, NSW Government (2013) 63 Source: Page 101, White Paper: A New Planning System for NSW, NSW Government (2013)



goods premises is low comparative to other types of retail premises, such as specialty shops, there is often little

financial incentive to redevelopment car parking or other available sites in centres for bulky goods premises.

By way of example the target turnover rates for bulky goods premises are typically around $3,500/sqm64 and for

hardware and home improvement premises such as Bunnings and Masters around $2,500/sqm65. By comparison,

Westfield Mt Druitt recorded an average floor space turnover of $7,355/sqm for the year to December 201266.

Non-bulky goods premises therefore typically comprise the highest and best use of land within centres offering

greater returns on investment compared to bulky goods premises.

The high returns on non-bulky goods premises, the high value of land within centres, the comparatively lower end

value of bulky goods premises and the large land plots bulky goods retailers require makes financially viable bulky

goods premises in centres a challenge.

7.2 RECENT MARKET TRENDS

Market trends influence development returns given that end sales values are a direct reflection of market demand.

As such, to enable a full understanding of the financial viability of retail and bulky goods premises in the locality of

the proposed Eastern Creek Business Hub, it is essential to have a throughout understanding of market trends.

This Section sets out recent trends in the retail and bulky goods sectors of relevance.

General Retail Trends

Over the past three decades significant changes have occurred in the retail industry such as the introduction of

new technologies (i.e. self-service check outs, the internet), the ageing of the population, increased female

participation in the workplace and changing consumer preferences. These changes have placed increased

pressure on many existing centres to either adapt or lose market share. In response the retail industry has

evolved so that it has:

Allowed residents to purchase goods in smaller quantities than usually provided by manufacturers or

wholesalers, from stores located closer to the homes of its consumers and by operating at extended / more

convenient times;

Identified and supplied new products / models of existing products;

Provided consumer information prior to purchase and after sales service;

Provided or arranged financial services for the purchase of goods; and

Invested heavily in information technology and digital media such as websites, iPhone applications and so on.

In the 1980s Australian retail floor space totalled approximately 1.8 square metres per person (excluding

commercial space and automotive retailing), which was roughly divided into equal components of regional, district

and neighbourhood/local centres. Today we have around 2.1sqm to 2.3sqm per capita due to increasing affluence

and consumerism.

64 Source: ABS Retail Census and Hill PDA 65 Source: Masters Frenchs Forest Economic Impact Assessment, Hill PDA (2012) 66 Source: Shopping Centre News Big Guns 2013



Retail is an important sector of the economy. In 2011-12 retail contributed 4.4% to the GDP and in the year to

March 2013, 10.8% of Australian employees worked in retail based on the ABS Census 2011 - 16.1% including

those in food and beverage services. Recent trends suggest that retail sales are climbing back up after a

decline through the GFC. Retail sales in the 12 months to March 2013 were 2.9% higher than the previous year

and 8.3% higher than three years previous67. However, the rate of growth is not evenly distributed across retail

sectors.

Since 2010 spending has risen on cafes, restaurants and takeaway food services by 16% and retail

food/groceries by 11.4%. In contrast spending was much weaker in department stores (- 2.5%) over the past 3

years although there was a slight improvement of +1.3% over the past one year. A similar trend was experienced

in clothing, footwear and personal accessory retailing over the same period (Figure 3). Retailers in these latter

non-food discretionary categories are therefore experiencing challenging times, as consumers have become

cautious and their saving behaviour has changed.

Figure 5 - Retail Trade in Australia February 2008 to February 2012

Source: 8501.0 - Retail Trade, Australia, March 2013

The retail sector has evolved over the past few decades in a response to some key trends. These trends are

discussed further below.

High Street Retailing – Since the 1950s-60s (in parallel with increasing car ownership) there was a move from

high street retailing to shopping centres that provide convenient shopping and car parking. A major change in the

shopping centres has been the change in ownership. Ownership of shopping centres is largely with the retail

property groups (Centro, Stockland and the like) enabling retailers to focus on their core business without having

large investments in the property itself. The development of such shopping centres can make it difficult for existing

high street retailers to continue to compete for trade.

67 Source: 8501.0 - Retail Trade, Australia, ABS



Large Format /Big Box Retail – The Big Box retail format has been growing in Australia since the 1980s with

stores occupying large floor space requiring high turnover on low price/cost products. Typically the Big Box

retailers have focussed on hardware, whitegoods, home wares, electrical goods and liquor. The recent arrival of

Costco and Woolworth’s expansion into hardware via the Masters concept suggests that this trend will continue.

Internet Shopping – A growing proportion of Australians have access to the internet at home with the rate of

access reportedly quadrupling in recent years, from 16% of households in 1998 to 72% in 2008-0968. In 2010

some $9.5bn of retail sales in Australia were made online which equates to 3.9% of total ABS retail sales 69. The

main reasons for shopping online were due to price, convenience and range of goods available. The most

commonly purchased items were computer and software (20%), books (12%), apparel (11%), food and grocery

(10%) and music and videos (7%)70. According to one industry consultant71, online sales in Australia are forecast

to increase to 7.2% of household retail sales by 2015 and to 11.8% by 2020. This would equate to 16% growth

over the next decade.

Lifestyle and Experience Retailing – According to the Urban Land Institute, shopping these days is as much

about want as it is about need. What is more, a growing number of consumers are seeking a positive shopping

experience that is not within enclosed malls or online. This trend has given birth to a new type of retail centre

referred to by a multiple of names, depending on the location, including ‘lifestyle centres’. In the United States the

growth in the number of lifestyle centres is outnumbering the growth of indoor shopping centres as increasingly

consumers are becoming less interested in traditional shopping centres and are searching for new retail

experiences and environments with character and ambience. The key is on retail formats which interact with the

shopper and provide stimulating store environments.

Multi-media Platforms – The growth of technology has driven successful retailers to embrace multi-media

platforms. Over and above internet shopping this involves interact shopper experience in store, the ability to

browse stock and confirm availability on portable telephone technicalities, receive exclusive offers via email and

‘big data’ mining to provide targeted digital marketing. In this manner some retail stores have evolved more as

showroom spaces to allow shoppers to touch and feel goods without necessarily purchasing in-store. Apple is an

example of this new type of retail experience.

Bulky Goods Premises

Bulky goods premises are often described as low cost / high bulk goods and ancillary products. Retailers of these

goods and products have identified financial benefits in lower occupancy costs and economies of scale outside of

established high-rent and high-cost retail centres.

Bulky goods premises first appeared as showrooms attached to distribution and warehousing industries. Over

time bulky goods strip premises and centres have attracted a number of furniture, appliance retailers and

hardware stores such as Harvey Norman, Domayne, Bing Lee, Bunnings, bedding shops, lighting shops, etc.

Bulky goods can take the form of strip premises along a major highway (e.g. Parramatta Road). Alternatively it

can be in a standalone building or ‘power centre’ such as the Homebase Prospect.

68 Source: 8146.0 - Household Use of Information Technology, Australia 69 Source: Retail in the Spotlight Forum, Property Council of Australia 17/11/2011 70 Ibid 71 Source: Urbis – Retail Perspective August 2011



More recently there have been non-bulky goods premises attracted to these peripheral locations including video

rental stores, large liquor stores, and factory outlets. Fast foods (such as McDonalds, Pizza Hut and KFC) and

highway based convenience stores have also located in bulky goods precincts.

Bulky goods premises are reliant on attracting shoppers from a wide trade area given the infrequent purchasing of

most bulky goods items. Because of the necessity for a large trade area, bulky goods premises tend to cluster

together to ensure a strong enough offer to attract shoppers from a wide trade area. Businesses such as Masters

and Bunnings are attractors in their own right and have greater flexibility as to where to locate, but even these big

drawcard retailers tend to favour locations adjacent to existing or planned bulky goods clusters.

The clustering of bulky goods premises is attractive to shoppers as it allows easy price comparison between

different operators offering similar products. It is also beneficial from a planning perspective as it reduces the need

for shoppers to travel consistent with ecologically sustainable development and reducing demand on transport

infrastructure. This explains the emergence of bulky goods clusters in out-of-centre locations which can offer easy

access to subregional markets, large land plots and low land prices. Given the nature of bulky goods items

shopping for them is frequently undertaken by car, necessitating good vehicular access to successful bulky goods

locations.

Requirements for successful bulky goods locations include:

Having a large and extensive trade area;

Being in a central position in the trade area or near the main entry point of a large trade area;

Cheap and substantial land to enable plentiful parking and loading and unloading facilities; and

Being located on a major road with high visibility and accessibility.

Additional desirable requirements include:

Having a trade area that is expanding as new homes generate higher demand for bulky goods premises

than established homes; and

Having a wealthy trade area with high disposable incomes. Higher income households spend

considerably more on bulky goods than lower income households.

The above factors relate to commercial viability. Based on these factors whilst it may be a desirable planning

characteristic to focus bulky goods premises in existing centres, this is not always achievable and in the case of

smaller centres, not necessarily a good outcome. Given the extensive trade areas served by bulky goods

premises their presence in a lower order centre in a residential area such as Rooty Hill would lead to a significant

increase in traffic movement locally and significantly extend the trade area served by the centre. This is

notwithstanding the fact that such development is unlikely to be commercially viable given the factors outlined

above. This is recognised in the NSW Draft Centres Policy as follows:

“In local centres the land uses are also similar, although differences in the scale of development are more

important for these centres. For example, large floor plate offices, high traffic generating developments or bulky

developments would typically be more suitable to major centres or town centres than neighbourhood centres”72

72 Source: Page 15, NSW Draft Centres Policy, NSW Planning and Infrastructure (2009)



(Note: Hill PDA emphasis).

It should also be recognised that because it is more commercially attractive for bulky goods operators to cluster

together large point-in-time increases in bulky goods premises are necessitated - rather than development

occurring one operator at a time. A minimum development size is therefore often required to ensure that projects

are commercially and financial viable.

The commercial viability needs of bulky goods premises are recognised in the NSW Draft Centres Policy. It states that:

“Bulky goods premises often need a large area for the handling, display or storage of goods, or direct

vehicular access by members of the public to the site to load or unload goods. They are also attracted to

locations that offer lower site costs offsetting lower retail turnovers relative to floor area....

Bulky goods premises should be accommodated in zones B2–B4 in centres, or where this is not realistic,

they should be clustered together in an appropriate B5 zone in an edge-of-centre location. This provides

customers with the benefit of access to bulky goods premises in one location, but also in a location that

supports the nearby centre”73.

This supports the principle of clustering and recognises that flexibility should be applied to the requirement for

such uses to be accommodated in centres, in recognition of commercial viability needs.

Large Format/ Big Box Retail

There is no universal definition of large format retail and the term is somewhat ambiguous, but it refers to a

physically large retailer. We understand it to loosely refer to any retail unit of greater than 1,000sqm. This includes

retailers such as ALDI, Dan Murphy’s, Coles and Woolworths as well as the likes of Spotlight, JB Hi -Fi etc. and

other bulky goods retailers.

Big box retail is used interchangeable with large format retail. The NSW Draft Centres Policy provides a definition

of Big Box retail as follows:

“A big box store can be from 4,000 square metres up to 18,000 square metres and is typically a large, free-

standing, rectangular, generally single-floor store built on a concrete slab surrounding by large expanse of

parking”74.

At a larger scale, large format retail included single warehouse type retail units typically greater than 10,000sqm

and drawing from a large catchment (sometimes also referred to as ‘big box retail’). Examples of such retailers

include Costco, Bunnings, IKEA, Masters and Harvey Norman (although many of these can be accommodated

under the definition of bulky goods premises).

The warehouse-type large format retail is an emerging retail format in Australia and is currently seeing significant market

activity from the likes of Costco and Masters actively developing new units, particularly in NSW. Emerging formats such as

these serve an important role in promoting and establishing competition and innovation in the retail market.

73 Source: Page 20, NSW Draft Centres Policy, NSW Planning and Infrastructure (2009) 74 Source: Page 21, NSW Draft Centres Policy, NSW Planning and Infrastructure (2009)



Given the significant site requirements of large format retail premises they predominately seek sites outside of

commercial centres where large plots are more available and are cheaper than within centres. In addition, similarly to

bulky goods premises, larger large format retail businesses frequently sell bulky goods items or, in the case of Costco,

items in bulk which necessitates easy access by car and appropriately high levels of car parking facilities.

Generally the largest large format retail businesses base their business model on high turnover, low prices and low

costs. They have generally been housed in large single storey buildings providing sizeable amounts of parking.

There is a clear distinction between smaller large format retail of 1,000sqm to 5,000sqm and the larger large

format retail of greater than 10,000sqm. Whilst the aim should always be to accommodate such uses within

defined centres, for the largest large format retail in particular this is often unrealistic given the significant site

requirements demanded.

Retail Spend

Between 1986 and 2012, the average real retail growth rate per capita was 0.98% (ABS Retail Sales, CPI and

Population Estimates). However, the long-term trend line ("line of best fit") indicates a greater level of average

growth at 1.43% over the 1986 to 2012 period. Retail sales over the past five years have been flat but this is not

reflective of the long term trend.

The historic trend in real retail growth compared to CPI between 1986 and 2012 is shown in the following figure.

Figure 6 - Real Retail Growth: Trend and Average Growth 1986-2012 ($2010)

Source: ABS data, Hill PDA (2013)

The implications of this real rate growth are that, without any population growth whatsoever, over time additional

retail floor space will be required to cater for increasing demand as the population gets wealthier. Hill PDA

currently uses an allowance of 1.2% growth in real retail spend when projecting demand of which around half

0

50

100

150

200

250

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

$/Capita

$/Capita ($2012)

CPI Index

Expon. ($/Capita ($2012))



(0.6%) is assumed to be absorbed by target turnover75 increases. As such retail demand increases year on year

even with a static population.

Population Growth

Retail demand growth is largely driven by population growth. The population growth targets in the West Central

and North West Subregion contained in the Draft Metropolitan Plan for Sydney (P&I, 2012) are for an additional

74,000 residents by 2021 and 148,000 residents by 2031.

Applying an average bulky goods premises demand rate of 0.5sqm per capita76 the growth in demand for bulky

goods premises in the West Central and North West Subregion alone could be equivalent to some 74,000sqm

GLA additional bulky goods premises between 2011 and 2031.

The combined effect of real retail expenditure growth and population growth are demand increases for re tail and

bulky goods premises over time. Indeed as previously noted in the Study demand growth in the trade area served

by the City of Blacktown will be for an additional 620,000sqm of total retail premises between 2007 and 2036 –

equivalent to an additional 5 Blacktown CBDs or an additional 7 Westfield Mt Druitt’s.

Conclusion on Market Trends

The analysis of market trends for retail and bulky goods premises has indicated the following:

There is growing demand for bulky goods premises as a result of population growth and real expenditure

growth over the period to 2031;

Planning policy indicates that the preferred location to accommodate bulky goods premises is in centres

but that, due to the site requirements of operators, these locations may not be commercially viable;

Due to the characteristics of bulky goods premises they are generally not suited towards smaller centres

in the retail hierarchy such as neighbourhood centres; and

Commercial and financial viability determine whether development will occur.

Commercial viability means that the site must offer the attributes which businesses require in order to operate

their business successfully.

Financial viability means that the value of the site if it were to be developed for retail or bulky goods premises

must outweigh the development costs of land, building, finance and profit combined, otherwise development will

not occur.

Given the low end values (and rents) of bulky goods premises, particularly compared to other land uses such as

specialty retail shops or residential uses, the viability of bulky goods premises is often challenged by the higher

land values (and amalgamation costs) associated with in centre development. Hence these uses tend to prefer

fringe and out-of-centre locations where land values and site amalgamation costs are less. This is recognised in

the NSW Draft Centres Policy which advocates flexibility in accommodating bulky goods premises and in the

White Paper which emphasises the importance of financial viability in planning.

75 Note: ‘Target Turnover’ reflects industry benchmark or average levels as measured with best available data.

76 Sourced from Marketinfo 2009 data and assuming a target turnover rate of $3,500/sqm



7.3 FINANCIAL VIABILITY OF THE PROPOSAL ON ALTERNATIVE SITES

To illustrate the importance of financial viability as it relates to Eastern Creek Business Hub proposal, Hill PDA

has tested the feasibility of redeveloping two alternative sites to accommodate the mix of uses proposed on the

Business Hub.

These sites were chosen based on discussions with P&I (30th May 2013) and comprise:

Westfield Mt Druitt shopping centre and car park; and

Rooty Hill Council Depot.

This section also considers Minchinbury Home Town.

Note that this Section comprises a comparison of costs versus revenues to demonstrate the high cost of

redeveloping some in and edge-of-centre sites for the purposes of the bulky goods premises proposed only. It

does not constitute a full financial feasibility cash flow model. It estimates the capital costs associated with

constructing the proposed development compared to the potential revenue. It subsequently considers the costs

that would be associated with a similar proposal on alternative sites.

Development on the Subject Site

The proposed Eastern Creek Business Hub (Stages 1 and 2) comprises a series of buildings which total

52,800sqm (GFA) across 16.3ha of land. This achieves a FSR of only 0.32:1. The buildings are all single storey

and car parking is open and at grade. The total estimated construction cost (including construction contingency) is

$97m as summarised in the table below.

Table 21 - Estimated Construction Costs of the Eastern Creek Business Hub Proposal

Item Quantity Type $/Qty Total ($)

Demolition 1 item 1,600,000 1,600,000

General Retail Centre Premises 9,500 sqm 1,600 15,200,000

Lot 2 Bulky Goods Premises 6,500 sqm 1,200 7,800,000

Lot 1 Bulky Goods Premises & LFR 17,500 sqm 1,200 21,000,000

Stage 1 Parking 830 spaces 4,000 3,320,000

Stage 2 Bulky Goods Premises 19,300 sqm 1,200 23,160,000

Stage 2 Parking 422 spaces 4,000 1,688,000

Sub-Total

73,768,000

Landscaping

1,000,000

Roads and Services

12,568,000

Allowances

816,000

TOTAL 88,152,000

Plus Construction Contingency @ 10% 8,815,000

TOTAL CONSTRUCTION 96,967,000

Source: WT Partnerships and Rawlinsons Construction Handbook 2013

Note that the above estimate excludes design costs, application fees, project management fees and project

contingencies which would add a further 20% to 25% on the above.

Rental income (net of outgoings or landlord operational costs) for bulky goods premises in most cases is below

$200/sqm (NLA) in Western Sydney. If $200/sqm for bulky goods premises and $500/sqm for general retail



premises is assumed, the proposed development will have an end value of around $160m (assuming an 8.5% to

9.0% capitalisation rate77).

For development to be viable the total project costs (including land value, contingencies, design, statutory fees,

leasing incentives, interest and finance, etc.) must be below the end value with a sufficient profit margin to cover

risk (say 15% to 20% of costs).

Whilst a detailed feasibility assessment has not been undertaken, with a construction cost of $97m representing

around 60% of the end value, the proposal is sufficiently cost-effective to achieve feasibility.

Westfield, Mount Druitt

Westfield Mount Druitt comprises buildings which are close to 8ha on a site of 15ha. At face value the site would

appear to be underutilised both in social planning and economic/valuation terms given that it comprises single storey

built form and extensive at grade car parking. However, even a scaled-down version of an Eastern Creek Business Hub

on the Westfield Mount Druitt site is likely to be financially challenging although it may be physically possible.

Whilst not examined in detail, any redevelopment of the Westfield site is likely to require part of the site to

continue trading throughout the construction period. With this in mind, the only practical way to achieve a proposal

such as the Eastern Creek Business Hub on the Westfield site is likely to include demolition of the western

building (including Kmart and Harvey Norman stores) together with much of the car park immediately to the north.

This will enable the main building to continue trading.

Accommodating the proposed 52,800sqm of floor space as per the Eastern Creek Business Hub proposal, as well

as the reinstatement of the existing stores (around 13,000sqm) and reprovision of existing and new car parking

spaces would require a three level retail building with a multi-deck car park of around 5 levels.

Construction costs would be higher for multi-storey construction – particularly with car parking which will increase from

$4,000 per at grade car space to $20,000 per multi story car space. It has been assumed that basement car parking

would not be desirable in this location due to the higher costs of construction (upwards of $40,000 per car space).

Construction costs for built form would also increase from an estimated $1,200/sqm for single storey construction to

around $2,000/sqm for multi-level construction78. An approximate estimate of costs is shown in the following table.

77 Note: Capitalisation Rate can be understood as desired rate of return commensurate wi th the risk associated with the development 78Source: Rawlinsons Construction Handbook 2013



Table 22 - Estimated Construction Costs of Westfield Mt Druitt Option


Demolition 1 item 1,500,000 1,500,000

General Retail* 23,500 sqm 2,000 47,000,000

Bulky Goods 45,300 sqm 2,000 90,600,000

Car Parking* 2,450 spaces 20,000 49,000,000

Sub-Total

188,100,000

Landscaping

1,000,000

Roads and Services

2,000,000

Allowances

200,000

TOTAL 191,300,000



* Includes reinstatement of existing tenants and car parking spaces and an additional 2,000sqm of internal circulation.

Source: Rawlinsons Construction Handbook 2013

Some $210m of construction costs are estimated to be associated with this option using this high level cost

estimate, more than double the cost of the proposal on the Eastern Creek Business Hub. Note that this excludes

any additional costs outside of those associated with construction that will occur with this option. The loss of

trading during the construction process, the loss of car parking spaces, the impacts of construction on the

operations of the Westfield, compensation to existing tenants (etc.) will all contribute to additional project costs.

There are also higher risks with these more complex projects that generally translate to higher contingency

allowances or costs for mitigation measures.

The estimated construction cost is already higher than the end value of the building – or the added value to

Westfield. After allowing for construction contingencies, project contingencies, compensation to existing tenants /

loss of trade during construction, tenant incentives, design costs and statutory fees and interest costs, it is

considered that the viability of development would be significantly challenged. At the very least, the loss would be

in the order of $100m and could be even higher.

These high level cost estimates are premised on the provision of bulky goods premises which yield lower returns

comparable to high street retail premises. The provision of high street or specialty retail premises on this site

would significant increase the potential financial viability of redevelopment. However for the reasons outlined

previously the proposed retail premises would not meet identified need by residents in the trade area if it were

located in Mount Druitt.

This example illustrates the difficulty in ensuring the financially viable of redeveloping car parking sites which

support other uses. Given the role that car parking performs in supporting the successful operation of adjacent

uses such as shopping centres, rail stations, public facilities and so on, the loss of parking spaces must be offset

by additional provision locally to mitigate the strong potential adverse impacts on the uses which they support.

Loss of car parking spaces even in the short-term can cause severe adverse impacts and the reprovision of car

parking spaces as multi-level or subterranean car parking in any redevelopment is expensive. In most cases the

return on bulky goods premises does not justify the high capital costs of redeveloping car park sites.

Council Depot, Rooty Hill

The Rooty Hill Depot has a site area of around 4.4ha – almost a quarter the size of the Eastern Creek Business

Hub site. However given its location within a residential area and with no direct vehicular access from the south

or east, it would need to accommodate a sizable proportion of bulky goods premises in order to become a



destination for bulky goods shopping and be viable. This means development would again need to be multi-storey

which results in a significant increase in construction costs. An estimate is provided in the following table.

Table 23 - Estimated Construction Costs of Rooty Hill Depot Option


Demolition 1 item 1,600,000 1,600,000

General Retail Premises 10,000 sqm 2,000 20,000,000

Bulky Goods Premises 45,300 sqm 2,000 90,600,000

Stage 2 Parking 1,252 spaces 20,000 25,040,000

Sub-Total

137,240,000

Landscaping

1,000,000

Roads and Services

4,000,000

Allowances

200,000

TOTAL 142,440,000



Source: Rawlinsons Construction Handbook 2013

Once allowances are made for project management, design costs and statutory fees at around 12%, incentives,

finance, project contingencies and so on, total project cost would well exceed the end value of the project by more

than $30m – even without the land cost component and a profit/risk margin assumption.

In any case, in order to facilitate the development at the Rooty Hill Depot a rezoning of the land would be required

because bulky goods premises use is currently not a permissible use on the land. This would establish it as a new

out-of-centre location.

Minchinbury Home Town

The existing Minchinbury Home Town is underperforming with numerous vacant shopfronts. However, as

discussed previously this poor performance is attributed to the age and nature of buildings. It is understood that

this facility was not originally designed as a bulky goods centre but as a location for predominantly industrial

occupiers79and does not relate to the requirements of bulky goods premises today.

In order for the stock to be brought up to standard where it would be capable of meeting the requirements of

modern operators, demolition and reconstruction would be required. However as some units are occupied this

would involve the ceasing of existing leases and associated decline in rental income. This leads to higher

construction costs which are not offset by the rental value which the new units would achieve given the relatively

low rental return from bulky goods premises. Furthermore, given the suboptimum location of Minchinbury Home

Town for bulky goods premises the potential uplift in land value following redevelopment would be constrained. As

such there is no financial incentive to redevelopment Minchinbury Home Town in the current market and the

potential profit to be gained from doing so would not be offset by the associated costs.

Because financial viability fluctuates over time reflective of the market, demand increases resul ting from

population and real expenditure growth which supports demand for the Eastern Creek proposal may also allow

Minchinbury Home Town to be redeveloped for bulky goods premises in the future. The proposal does not

preclude this from happening given the extent of demand growth and the quantum of bulky goods premises which

this would support both the Eastern Creek proposal and a redevelopment/ expanded Minchinbury.

79 Note: As advised by local agent



8. STRATEGIC PLANNING FRAMEWORK The Chapter responds to the strategic justification queries raised by P&I in Schedule 1 (Strategic

Justification) of their letter to WSPT (dated November 2012). In particular, P&I raised the need for the proposal

to be considered against Blacktown City Council’s existing and planned strategic framework for retail centres in

the locality.

8.1 STRATEGIC JUSTIFICATION

The proposed Eastern Creek Business Hub comprises two distinct components:

A Village Centre80 comprising 9,500sqm GFA of retail premises. This would meet the daily and some

weekly convenience shopping needs of residents in the local area; and

An adjacent freestanding bulky goods/ large format “out of centre” retail cluster serving a significantly larger

trade area and used on a more infrequent basis by trade area residents for a narrow range of higher order

shopping.

The proposed Eastern Creek Business Hub is not identified within an adopted or proposed Metropolitan or

Subregional planning policy document for these uses. Notwithstanding this, these policy documents were not

informed by a retail floorspace supply and demand assessment to determine the extent additional supply should

be planned81. Accordingly Hill PDA’s assessment has identified latent demand that exceeds the capacity of the

centres in the locality identified in the existing hierarchy.

The economic analysis undertaken by Hill PDA has established that:

There is sufficient unmet demand to support the Village Centre and freestanding bulky goods/ large format

retail cluster in the locality as a result of existing undersupply and continuing population and real

expenditure growth;

There are no sites within or adjacent to existing centres capable of accommodating the proposal even in a

scaled-down form. This has been demonstrated through a sequential approach analysis. The site of the

proposal is considered to be the only realistic option for the floorspace demand identified to be met in the

locality. Without the proposal proceeding the demand it would accommodate would not otherwise be met

within the trade area; and

Given that the proposal is responding to unmet demand, it would not lead to trading impacts on existing

centres which would jeopardise their vitality or viability or cause any centres to cease trading. Impacts

would all be within the normal competitive range.

On this basis strategic justification for the proposal has been demonstrated in the context of the centres hierarchy

and relevant planning policy requirements.

80 Note: As defined in the Metropolitan Plan for Sydney 2036 and the Draft Metropolitan Strategy to 2031

81 Note: Planning policy advocates the use of Subregional floorspace supply and demand assessments to identify appropriate locations to meet demand, including new centres or retail clusters. See Draft Centres Policy (DoPI, 2009) and Metropolitan Plan for Sydney 2036 DoPI, 2010).



The EIS, together with Hill PDA’s Economic Impact Assessment (August 2012) recognised the importance of the

following key State and Local planning policy documents in relation to the determination of the proposal:

Draft Metropolitan Strategy for Sydney to 2031 (2013)

Metropolitan Plan for Sydney 2036 (2010)

Draft North West Subregional Strategy (2007)

NSW Draft Centres Policy (2009)

Draft SEPP (Competition) (2010)

Blacktown City 2025 (2008)

Blacktown Commercial Centres Strategy (2007)

Additional analysis of the proposal in the context of the above policies is provided in the following table.



Table 24 - Planning Policy Considerations Policy Considerations

Draft Metropolitan

Strategy for Sydney to

2031

The proposal would deliver net additional jobs in this locality and in doing so assist the LGA and the West Central and North West Subregion meet the target of

an additional 75,000 new jobs by 2021 and 142,000 new jobs by 2031;

It would contribute towards achieving Objective 15 of the draft Strategy which seeks to ‘provide for a good supply of retail floorspace’; and

The draft Strategy requires that “where bulky goods premises cannot be accommodated in or close to existing centres, subregional planning and local planning

will need to identify alternative locations”82. This is consistent with the approach which has been adopted for the proposed ECBH given the lack of capacity

within existing centres or on other potentially sequentially preferable sites.

Metropolitan Plan for

Sydney 2036

The proposal would assist in meeting demand for additional retail premises generated by population growth and would provide additional employment which

would contribute towards achieving the target of 145,000 new jobs in the North West Subregion by 2036.

One of the key elements of the Plan’s centres approach is concentrating activity in accessible centres and managing out–of–centre development to maximise

the economic and social advantages of clustered activity.

Whilst Objective B1 of Strategic Direction B Growing and Renewing Centres recognises the importance of providing land within centres to accommodate

additional commercial premises, it also recognises that in some cases this is not possible given that:

o Retailing which requires large floor areas, such as bulky goods premises, cannot always be readily accommodated in existing centres. Subregional

planning and local planning will need to identify locations for subregional clusters for these kinds of retail premises which support the economic

development of centres in those subregions. The B5 Business Development Zone is generally an appropriate zone in which to cluster this kind of

development.

Objective B1 also recognises that retailing in industrial locations is not an ideal solution. In particular:

o The pressure for retailing to occur in industrial areas continues to exist. Ideally, retailing in areas with an industrial zoning should continue to be

limited to retailing that is ancillary to an industrial use and the retailing of products such as building supplies—where the retailing generates impacts akin

to industrial uses.

Based on the above:

o Clustering of activity within centres is important. The proposal will include a variety of retail premises that will benefit from co-location as well as an

accessible location within the trade area, for both pedestrian and car based trade. The proposal is also located adjacent to an existing primary school,

which together with surrounding residential uses; provide an appropriate cluster of land uses.

82 Source: Page 52, Draft Metropolitan Strategy for Sydney to 2031, NSW Planning and Infrastructure (2013)



o Bulky goods premises in existing industrial zoned precincts such as the Minchinbury precinct should be limited unless they are designated as a centre in

their own right.

o Not all centres will be able to accommodate large format retail as has also been demonstrated by the sequential test within this report. Therefore, local

planning is required to identify other potential locations for such development.

In summary therefore, notwithstanding that the proposed Business Hub is not identified as a centre in the Metropolitan Plan for Sydney 2036, it would accord

with the relevant aims and objectives of the Plan. Indeed the Metropolitan Plan is not meant to restrict or stifle development where it is warranted, for example in

the case of identified demand. The centres hierarchy states that “Centres will inevitably grow or change over time, and will be actively encouraged to do so”83.

This demonstrates the desire for a flexible, responsive system for planning for centres.

NSW Draft Centres

Policy (2009)

In line with the Draft Centres Policy, the proposal would:

o Cluster retail premises and bulky goods premises in one location and would constitute a flexible approach by allowing new centres to form;

o Leave it to the market to determine what are the most appropriate uses on the site;

o Provide a mix of retail types including large format retail which responds to forecast demand; and

o Encourage competition in the retail and bulky goods premises sectors by allowing new premises and potentially new businesses not currently represented

to enter Blacktown LGA.

Whilst the NSW Draft Centres Policy is still in draft form, P&I has consistently been applying the guidance of the Policy to new development proposals since its

publication. Hill PDA was advised by P&I to apply the content of the NSW Draft Centres Policy to the subject proposal. On this basis it is considered that the

NSW Draft Centres Policy should carry considerable weight in assessing the proposed Business Hub.

Draft SEPP

(Competition) (2010)

In line with the Draft SEPP (Competition), the proposal would:

Provide new retail and bulky goods premises and new types of businesses which would support competition in this locality; and

The retail impact of the proposed development is not likely to prejudice the commercial viability of existing centres in the surrounding area. Beyond this, it is not

the role of the planning system to consider the trading impacts on individual retailers.

Draft North West

Subregional Strategy

(2007)

The proposal would meet the objectives of the Draft North West Subregional Strategy by contributing towards the target of creating an additional 45,000 new

jobs in Blacktown LGA between 2006 and 2031.

Blacktown Council’s

Commercial Centres

Strategy (2007)

The Commercial Centres Strategy notes that:

Significant population growth is forecast to sustain centres.

83 Source: Appendix 4, Metropolitan Plan for Sydney to 2036, NSW Planning and Infrastructure (2010)



Mt Druitt is a very good performing centre with opportunities for expansion and nominates Mt Druitt as a Major Centre by Council definition but a Town Centre

based on P&I definitions.

Rooty Hill is nominated as a Village Centre with 16,000sqm of convenience retail premises.

Given bulky goods was excluded from the Commercial Centres Strategy, the Strategy nominates that a bulky goods supply and demand assessment should be

undertaken and a strategy for bulky goods established. Currently no bulky goods clusters outside of centres such as those within the Minchinbury precinct,

Prospect Homebase or Blacktown Mega Centre are recognised within the Strategy.

With reference to out-of-centre development, the Strategy advocates providing land in suitable locations well ahead of anticipated demand, an outcome which

the proposed development at the Eastern Creek Business Hub is seeking to achieve.

The Strategy indicates that the City has insufficient commercial land to accommodate likely demand and therefore there may be a need to zone additional land

for commercial purposes beyond 2014. The proposed development is in response to this identified undersupply of commercial land and is in accordance with the

recommendations of the Strategy.

Both the NSW Draft Centres Policy and the Metropolitan Plan indicate hierarchies should be flexible and not rigid to allow existing centres to expand, new

centres to develop and new retail formats to be accommodated.



Appendix 1 - RESPONSE TO SGS JULY/ AUGUST 2013 PEER REVIEW

1.1 Introduction

SGS Economics and Planning (SGS) was engaged by the NSW Planning and Infrastructure (P&I) to undertake a

peer review of Hill PDA’s Economic Impact Assessment (dated June 2012) and the draft Supplementary

Economic Report (dated March 2013). The findings of this peer review are set out in the ‘Peer Review of the EIA

for Eastern Creek Business Hub: Final Report’ dated July 2013 (the ‘Peer Review’). This Supplementary Report

has been amended in part to reflect the Peer Review findings. It is not the intention of this Section to respond to

all of the comments in the Peer Review; however we have provided a response to the Executive Summary.

Note that our record of the telephone discussion held between Hill PDA and SGS during the completion of the

Peer Review is provided at the end of this Section

1.2 SGS Summary & Conclusions

Paragraph 1:

“The original EIA and the Supplementary report have been reviewed in terms of the methods used, data sources

and interpretation of results. In broad terms, we support the approach taken to the economic impact testing.

Catchment definition, household expenditure data, population forecasts and retail demand forecasts are

supportable. However, following the review we have identified a series of technical issues relating to model inputs

and assumptions. We have also highlighted deficiencies in the benefits assessment and noted the lack of a

sequential test”.

Hill PDA response:

SGS concur with the Hill PDA methodology and the defined trade areas, household expenditure, population

forecasts and demand forecasts. On this basis there is proven demand for the quantum of floorspace proposed at

the Eastern Creek Business Hub and this is not disputed. This has now been demonstrated by three specialist

consultants (Hill PDA, MacroPlan Dimasi, SGS).

Paragraph 2:

“The Supplementary report addressed most of the identified issues. Further detail was given clarifying model

inputs and assumptions. The main outstanding issue likely to materially affect the impact test results was the use

of an RTD lower than published benchmarks. An RTD in line with published benchmarks was used in the SGS

impact testing. The supplementary report included a sequential test and net community benefit test”.

Hill PDA response:

The RTD (Retail Turnover Density) used in our studies aligned with the previous MacroPlan Dimasi assessment

for the proposed Business Hub. We acknowledge that for large food and beverage operators this may be lower

than ‘average’ however it is reflective of the comparatively lower socio-demographic of the defined retail premise



trade area which will lead to lower available retail spend. We have also included an allowance for the RTD to

increase over time in line with the historic trend since 1986.

RTD’s vary between retail consultants and localities. SGS, for example, in advising P&I on a future

‘neighbourhood centre’ in Leppington East used a supermarket RTD of $6,488/sqm84. This was for a near identical

centre to the retail premises sought on the proposed Eastern Creek Business Hub. An 8,000sqm GLA centre was

proposed in East Leppington of which 4,000sqm would relate to a large food and beverage operator and

4,000sqm to specialties.

In any case, the Peer Review assesses demand using a greater RTD of $11,000/sqm for a large food and

beverage operator and still shows sufficient demand for the proposed development.

Paragraph 3:

“We broadly support the approach taken the sequential test. However, we would suggest that testing exactly the

same configuration in an in-centre location is unreasonable –the sheer scale of the proposed development means

that this would not be likely to happen. If the components were broken up, co-location benefits will likely still exist

by virtue of the components now being ‘in centre’. If components of the proposed development are not viable in

alternative locations then this should be demonstrated (at least in terms of a high-level development feasibility

test)”.

Hill PDA response:

The Report now includes discussion of the importance of financial viability in Chapter 4. Chapter 4 also

undertakes high level feasibility testing of a number of in centre sites to demonstrate this issue further.

We concur that flexibility should be applied in assessing the potential of alternative sites to accommodate the

proposed development and as such we have considered the potential for some sites to accommodate a scaled -

down version of the proposed floorspace. As discussed in this Report in Section 4.2 under ‘Bulky Goods

Premises’, bulky goods retailers seek to cluster with other similar businesses to increase their overall attraction to

shoppers and thus underpin their commercial and financial viability. Bulky goods retail floorspace development

thus tends to occur in large quantum increases. As such, a large site capable of accommodating a significant

component of bulky goods retail floorspace is required even if the proposed development were to be

disaggregated.

The principal of the sequential sites assessment is to establish that there are no alternative sites within or on the

edge of centres that could accommodate the proposed development. The sequential sites test in Chapter 3 and 4

of the Report demonstrates this. As such, it is not a case of the development proceeding in this location at the

expensive of an alternative central location but rather the development would simply not occur in the absence of

this given the lack of alternative sites. Note that, given the extent of demand in this locality, the proposed

Business Hub and additional bulky goods floorspace in Minchinbury will be needed. On this basis whilst we agree

with SGS that the community benefits associated with the proposed Business Hub would still be achieved on an in

central site, the entire premise of the sequential test determines that no alternative sites are available that are

84 Source: Page 49, East Leppington Employment & Retail Study / Final Report, SGS (2013)



suitable, available, commercially or financially viable. This is an important concept which underpins the net

community benefits test (NCBT).

Paragraph 4:

“For the net community benefit test, we disagree with the way that the listed effects are considered by HillPDA. In

summary, we would expect a treatment of effects that is broadly in line with cost benefit analysis methodology. In

this respect, we disagree with HillPDAs construction of the base case and the treatment of transfer effects in the

system. On this basis, we do not feel that the HillPDA analysis demonstrates a net community benefit. ”

Hill PDA response:

It is our understanding that the NCBT is intended to be a more qualitative judgement of community costs and

benefits not a quantitative assessment using the cost benefit analysis approach. We should note that we have

used a comparable approach to that within this Report in other schemes which have been accepted by State and

local Government, for example the planning proposal to rezone land at Hector Close, Kellyville, from B1

Neighbourhood Centre to B2 Local Centre in The Hills Shire Local Environmental Plan 2012, or the provision of a

new centre at 301 Samantha Riley Drive, Kellyville.

We have made some amendments to our NCBT to reflect the Peer Review. Notwithstanding this the Peer Review

is premised on the Base Case being the development of a comparable quantum of floorspace within a centre. This

is incorrect. The purpose of the sequential test is to establish that there are no alternative sites within centres on

which it could realistically be accommodated and thus the Base Case is that this development would not proceed

in the trade area at all, if not on this site. Both the Base Case and the Alternative scenario assume redevelopment

of Minchinbury. The Base Case thus would manifest in overtrading of existing bulky goods facilities as additional

resident demand is not met by new floorspace and an increased need for residents to travel outside of the trade

area to destinations which are capable of providing new floorspace to meet demand. In this context, the

community benefits which are identified in Chapter 5 are genuine net benefits.

In any case, Hill PDA has now completed a Cost Benefit Analysis as part of the planning proposal which

supersedes the NCBT.

Paragraph 5:

“As configured, the proposal would not pass a test against the policy elements in the Metropolitan Plan for Sydney

2036. It is out of line with the Draft NW Regional Strategy and the Blacktown Commercial Centres Strategy 2007.

Generally, the strongest support for the project is found in documents that are not adopted policy (NSW Draft

Centres Policy, Draft SEPP (Competition)).”

The Peer Review is largely premised on the proposed Business Hub contravening the Metropolitan Plan because

it is not an identified centre. Whilst this development is not an identified centre, the Metropolitan Plan advocates

flexibility towards new centres which should be allowed to form in response to demand. Indeed in relation to the

centres hierarchy it states that “Centres will inevitably grow or change over time, and will be actively encouraged

to do so”85. This demonstrates the desire for a flexible, responsive system in planning for centres. The

85 Source: Appendix 4, Metropolitan Plan for Sydney to 2036, NSW Planning and Infrastructure (2010)



Metropolitan Plan does not seek to stifle development. A Planned/ Potential Town Centre at 301 Samantha Riley

Drive, for example, is proceeding following Hill PDA’s Urban Capability Statement (2012) and which included a

NCBT, despite it not being identified in the Metropolitan Plan or the relevant draft North West Subregional Plan.

This would not have proceeded if the policy interpretation advocated in the Peer Review were applied.

In light of the absence of sequential sites established in this Report, a flexible approach to site selection is

mandated in this instance in order for proven need to be met. Notwithstanding that the proposed Business Hub is

not within a defined centre, it would meet other aims of the Metropolitan Plan including support jobs, supporting

economic development and meeting retail demand.

The NSW Draft Centres Policy also advocates a flexible approach towards to allow new centres to form. Whilst it

is recognised that this is not Government policy we should not that P&I has consistently been applying the

guidance within it to new development since its publication. Indeed, we were advised by P&I in our meeting on

28th November 2012 to apply the content of the NSW Draft Centres Policy to this development. Indeed the

requirement for the sequential test, as recommended by SGS in the Peer Review, emerges out of this document.

On this basis we consider that the NSW Draft Centres Policy to carry considerable weight in relation to this

proposal.

Paragraph 6:

“The floorspace split proposed in the original EIA results in significant impacts on existing centres. Rooty Hill,

Myrtle St, Holbeche Rd, Evans Rd and Rainbow Shopping Centre all have turnover impacts greater than 10%. As

a result these centres all have lower RTDs in 2016 than their 2011 levels. These 2016 RTDs for impacted centres

and bulky goods precincts are also lower than RTD benchmarks. The scale of impacts is such that the role and

function of some impacted centres may be threatened –Rainbow Shopping Centre experiences the most

significant adverse impact.”

Hill PDA response:

We concur that impacts of greater than 10% are generally considered to be above the competitive range; however

this should be based on the impact over time not immediate or ‘point-in-time’ impacts. It should also be viewed in

the context of current levels of trade. This is because point-in-time impacts do not account for growth in

expenditure and the performance of centres is fundamental in determining the level of impact which they could

sustain.

The Peer Review identifies in Chapter 5 Table 5 that in the highest impact scenario, which SGS consider is

unlikely, impacts on all defined centres over the 2011 to 2016 would be less than 10%. Rainbow Shopping Centre

would experience the greatest level of impact based on the Peer Review, equivalent to an 8.9% loss of trade

compared to the 2011 level. This is within the competitive range. This centre was found by Blacktown City Council

to have a ‘good performance’ and a high retail turnover density86. On this basis it would be capable of sustaining

and impact within the normal competitive range without its vitality or viability being threatened.

86 Source: Blacktown Commercial Centres Strategy (2007)



It is not the role of the planning system to protect the trading position of individual businesses; rather it should

ensure that the vitality and viability of centres is not threatened by new development. In this context trading

impacts would not threaten the role of centres and are thus not a further consideration.

Paragraph 7:

“The floorspace split proposed in the supplementary report shows that there are no centres with turnover impacts

greater than 10%. However, the resultant RTDs for some bulky goods precincts (Homebase Prospect and Seven

Hills (bulky goods)) are lower than their 2011 levels and are also lower than benchmark RTDs for bulky goods

retail. In this case we would suggest that the level of impacts is such that the role and function of affected centres

and bulky goods precincts is unlikely to be threatened.”

Hill PDA response:

SGS concur that the trading impacts associated with the bulky goods component of the proposed Business Hub,

even if the large format retail premises was used for bulky goods uses, is acceptable.

Paragraph 8:

“From the impact testing it’s clear that the original floorspace split (with Costco occupying the large format retail

portion of the site) has a much greater adverse impact than the floorspace split tested in the supplementary

report. We would consider the impacts from the original floorspace split significant and at levels where the role

and function of some impacted centres may be threatened.”

Hill PDA response:

Costco was included to assess a high impact scenario only. SGS elude in Page 11 of the Peer Review that

Costco is unlikely to be the end occupier and we agree with this assertion. Ultimately the use of the unit would be

determined by the market; however even in this unlikely higher impact scenario trading impacts would be

acceptable.

Paragraph 9:

“Impact mitigation may be achieved by ensuring the ‘large format retail’ floorspace is occupied by a bulky goods

type retailer rather than a Costco type retailer. We accept that, with all other things being equal, impacts are likely

to be less significant if they occur further into the future as some retail expenditure growth is anticipated (by virtue

of some per capita increase multiplied with population growth in the catchment). In this sense, a staged

development will also mitigate the impact felt by other centres from the proposed development. The proponent

would be likely to adopt a staged development in any case to reduce their risk in introducing new floorspace to the

market”.

SGS and Hill PDA agree that Costco is unlikely to be the end operator – this was simply tested as a high impact

scenario. The phasing and use of the development would be provided in line with market demand and, in order to

provide the market with flexibility should not be restricted based on a hypothetical development scenario which is

unlikely to occur. The market should be allow to regulate the phasing of this development and the end users,

given that trading impacts have been demonstrated to be acceptable.



1.3 Record of Telephone Discussion with SGS

Date: Wednesday 3rd July 2013

Location: Via teleconference

Hill PDA Staff: Adrian Hack – Principal, Tom Duncan – Senior Consultant

SGS Staff: Rob Lee – Principal

1) SGS: Why has the gravity modelling changed between the EIA and the Supplementary report?

Hill PDA: A different scheme was modelled.

2) SGS: Why has the Minchinbury floorspace data changed?

Hill PDA: The Supplementary report was informed by a site visit.

3) SGS: Why was a target turnover rate of $9,000/sqm used for supermarkets?

Hill PDA: source was the MacroPlanDimasi report.

4) SGS: Why was a 1.2% per annum real growth rate used

Hill PDA: It is derived based on the long-term trend since 1986 and target turnover increases are

assumed to absorb half of this growth.

5) SGS: Why would the same economic benefits be achieved if disaggregated components of the

development were delivered on central sites?

Hill PDA: It would not be commercial viable to split the development into too many small components and

the sequential approach has demonstrated there are no suitable, available, commercial or financially

viable sites. Note: SGS has not seen our updated sequential sites assessment incorporating

commentary/ modelling regarding financial viability.

6) SGS: Why did we not look at sites in a wider area?

Hill PDA: The trade area would change if the proposal were accommodated on a site outside the primary

trade area. The centres were surveyed are located within a reasonable distance of the Subject Site and

could potentially meet identified demand with the trade area.

7) SGS: Why did you choose Costco? Is it likely to be a different retailer?

Hill PDA: Yes. Costco was simply modelled as a high impact scenario but the end occupier will depend

on market demand and could well be a different retailer or bulky goods floorspace, leading to much

reduced impacts compared to those modelled in the EIA.



8) SGS: The impacts on Minchinbury and Seven Hills are fairly high.

Hill PDA: Our development would only be implemented when there is sufficient demand- could be much

longer than the assumed point-in-time impacts modelled. Growth in expenditure will mitigate any short-

term impacts. In any case, these locations are not within centres as defined by the NSW Draft Centres

Policy. Minchinbury is an inferior location for bulky goods uses compared to our site so questionable

community benefit in protecting it, however the demand is sufficient to support our development and an

expansion of Minchinbury in the medium to long term.

9) SGS: Not all jobs quantified in the net community benefit will be net additional.

Hill PDA: Agreed. Some will be transferred from other locations. However, given the lack of sequential

sites this amount of floorspace would simply not be developed if not on the Subject Site so the unmet

demand is likely to manifest in overtrading of existing facilities and greater escape expenditure. As such

the proposed development would lead to a net uplift in jobs compared to the base case.

1.4 Record of Meeting - Thursday 20th November 2013

Following on from the above dialogue, Hill PDA met with the Department and SGS to discuss outstanding matters

pertaining to the Supplementary Report and the draft Cost Benefit Analysis (CBA) which had been provided to the

Department and peer reviewed by SGS.

Attendees were:

Sarah Hill (Hill PDA);

Tom Duncan (Hill PDA);

Adrian Hack (Hill PDA);

Eric Broadie (WSPT);

Rob Lee (SGS);

Robert Byrne (P&I);

Thomas Mitten (P&I);

Mark Schofield (P&I); and

Chris Richie (P&I).

Hill PDA’s record of the meeting, which was provided to the Department and SGS for confirmation, is provided

below.

Both parties agreed that there is sufficient demand for the proposal;

The trading impact under the ‘lower impact’ scenario is agreed as acceptable by all parties;

The Department have a preference for a ‘lower impact’ Scenario. Hill PDA noted that the impacts of the

scenario as proposed would be acceptable as all impacts would be under 10% (an acceptable level) as

of 2016 and thus there is no need to provide a lower impact scenario;



SGS and Hill PDA have different opinions regarding what the base case might be however given the use

of the CBA methodology this issue can be addressed by comparing a range of scenarios equally rather

than comparing scenarios to one base case;

There was a discussion regarding minimum site size (i.e. 4ha). The Department suggested a minimum

site size of 3.2ha. Post-note: the Supplementary Report considered all potential sites including those

under 4ha. It all cases except for two (for sites of less than 0.2ha) all sites failed on multiple criteria not

just site suitability which includes site size. As such, lowering the threshold of sites to 3ha would make

no difference to the findings of the sequential sites assessment;

To take matters forward and allow the Department to make their assessment, some changes are recommended to

the CBA as outlined below.

Suggested alterations to the CBA by SGS / the Department:

Amend the CBA Standing (the area within which costs/ benefits are assessed) to the trade area of

the proposal;

Include a quantitative assessment of the benefits created by the parkland enhancement;

Travel time job savings should be based on retail jobs only;

Shopping and worker travel patterns should be broken down in finite detail i.e. by travel zones

rather than for the LGAs;

Turnover benefits should include the capture benefits of retail expenditure which would otherwise

be lost to the Standing as one net line item rather than two;

The opportunity cost of potential sites should be included where possible. Acquisition costs for

relocating the Council depot to be included as a separate line item; and

Better align Table 4 and Table 11.

Hill PDA agreed to investigate, and where appropriate make these amendments so as to reissue the CBA. In the

process of undertaking this work, and in the interests of expediency, it was agreed by all parties that Hill PDA

could call SGS directly to clarify any matters and ensure that they were being appropriately addressed.



Appendix 2 - EASTERN CREEK BUSINESS HUB, ECONOMIC IMPACT ASSESSMENT,

HILL PDA (2012) - EXTRACT

The following excerpt is the ‘Retail Impact Assessment’ chapter from Hill PDA’s 2012 – Eastern Creek Business

Hub Economic Impact Assessment. This chapter only discusses the retail turnover impacts of the proposal

inclusive of a food and grocery related large format retailer.



7 Retail Impact Assessment

In terms of assessing economic impacts, previous court judgements such as “Fabcot Pty Ltd v Hawkesbury City

Council (97) LGERA” and “Cartier Holdings Pty Ltd v Newcastle City Council and Anor [2001] NSWLEC 170” have

provided some guidance on relevant issues. The NSW Land & Environment Court has stated that Councils should

not be concerned about competition between individual stores as this is a matter of fair trading. It should however

concern itself with impacts in the locality.

This section assesses the impact of the retail components of the proposal on existing retail centres in the locality.

The EPA & Act (1979) is not clear on what is meant by locality, however for the purpose of this assessment we

have assumed it to be the trade areas or the geographical influence of the proposal.

Note that the impact of the proposed development on the existing centres hierarchy is considered in Chapter 8.

7.1 Staging of the Proposal

The current scheme seeks permission for a Staged DA involving 9,500sqm (GFA) of retail centre floorspace and

43,300sqm (GFA) of bulky goods and large format retail floorspace as indicated below.

Table 7.1 - Eastern Creek Business Hub Concept Proposal – Retail Uses

Stage Retail Use Floorspace (GFA)

1

Retail Centre 9,500sqm

Large Format Retail 14,000sqm

Bulky Goods 10,000sqm

2 Bulky Goods 19,300sqm

Total 52,800sqm Source: Eastern Creek Business Hub EIS-05(B), Architectus (August 2012)

The staging of development is not yet known. As a result, it has been assumed that Stage 1 would be developed

by 2016, with Stage 2 to be developed in the next ten years (i.e. by 2022).

7.2 Estimated Turnover of the Proposal

Convenience Retail Centre

For the purposes of this EIA, Hill PDA has assumed a 9,500sqm (GFA) centre would result in 7,750sqm of gross

lettable area (GLA). Whilst the exact retail mix of the proposed retail centre on the Subject Site has not yet been

determined, for the purpose of quantifying economic impact, a likely floorspace mix has been assumed based on:

Demand identified in Chapter 5 of this EIA; and

Hill PDA’s industry knowledge about centres of this size.



As a result, the following table applies industry benchmark target turnover rates to the assumed retail mix to

quantify turnover in 2016, when it is assumed the new retail centre will commence operations. Note that the target

turnover rates include an allowance of 0.65% per annum to allow for growth in real retail spend87.

Table 7.2 - Retail Centre Floorspace Mix and Turnover in 2016

Retailer Type Floorspace (sqm) GLA

Target Turnover ($/sqm) Turnover ($m) 2016 2011 2016

Supermarket 4,000 9,000 9,296 37.2

Mini Major (e.g. liquor store) 1,500 9,000 9,296 13.9

Specialty Retail 2,000 5,500 5,681 11.4

Shopfront Commercial 250 - - -

Total 7,750 - - 62.5 Note: Benchmark turnover rates derived from various sources including Urbis Retail Averages, ABS Retail Survey 1998-99 escalated at CPI to $2009, Shopping Centre News, Hill PDA and various consultancy studies. The trading level of the proposed supermarket reflects the demographic constitution of the trade area. An assumed floorspace turnover increase of 0.65% per annum in line with historic trends.

The above table indicates the proposed retail centre is estimated to achieve a turnover of $62.5m in 2016 upon its

first full year of operation.

Bulky Goods Retail

Hill PDA has assumed that 29,300sqm of gross floor area would equate to around 26,400sqm of gross lettable

area (GLA) based on the nature of the bulky goods floorspace proposed.

A target turnover rate of $3,500/sqm has been applied to the proposed bulky goods component. This is forecast to

increase 0.65% per annum and results in turnover of $32.5m in 2016 upon its first full year of operation. Stage 2 is

estimated to turnover $65.4m upon its first full year of operation in 2022.

Table 7.3 - Bulky Goods Turnover 2016 and 2022

Stage 1 - 2016 Stage 2 – 2022*

Additional Floorspace (sqm GLA) 9,000 17,400

Target Turnover ($/sqm) 3,615 3,759

Total Turnover ($m) 32.5 65.4 * Not cumulative. Applies to additional floorspace only. The gravity model takes account of cumulative impacts from both stages. Note: Benchmark turnover rates derived from various sources including Urbis Retail Averages, ABS Retail Survey 1998 -99 escalated at CPI to $2009, Shopping Centre News, Hill PDA and various consultancy studies. Assumed floorspace turnover increase of 0.65% per annum in line with historic trends.

Large Format Retail

There is no universal definition of large format retail (LFR) and the term is somewhat ambiguous although it can

be understood as referring to a physically large retailer. At a large scale LFRs include single warehouse type retail

stores typically greater than 10,000sqm and drawing from a large catchment. Examples of such retailers include

Costco, Bunnings, IKEA, Masters and Harvey Norman. However, in many cases these are accommodated under

the definition of bulky goods premises.

With this in mind, it is understood the end occupant for this component is envisaged as retailer selling a mixture of

food and non-food goods. That said, a tenant has not yet been confirmed and if not secured, that space could be

occupied by a homemaker centre, hardware retailer or other bulky goods retailer.

87 This is in line with historic trends. Expenditure per capita has increased at around 1.3% to 1.4% above CPI every year since 1986. Around half of this increase has translated into an increase in retail floorspace per capita (from 1.8sqm in the 1980s to around 2.1-2.2sqm today). The balance of the increase in expenditure has translated into a real increase in turnover per square metre rates.



In any case, based on estimated revenue by commodity type for the proposed Costco in Liverpool88 and assuming

a 14,000sqm (GFA) store would result in around 13,300sqm (GLA), turnover of the LFR component is estimated at

$120.5m in 2016, increasing to $125.3m in 2022.

Of total turnover 67% ($80.3m) is assumed to be household related with the remaining 33% ($40.3m) related to

business/trade expenditure. This allocation is based on Costco membership patterns, where membership is available

to both households and businesses89.

Furthermore, of total turnover 69% is related to food, liquor and grocery products and 12% towards bulky goods and

homewares. The remainder is related to other commodity types such as apparel, homewares, cafes, retail services

and leisure goods.

Table 7.4 - Large Format Retail Turnover in 2016

Commodity Type

Allocation of Total Sales Allocation to Households

Proportion of Sales* Turnover ($m) Proportion of Sales* Turnover ($m)

Food, Liquor and Groceries 69% 83.2 65% 54.1

Bulky Goods/Homewares 12% 14.5 75% 10.8

Non-Retail 2% 2.4 0% -

Remainder 17% 20.5 75% 15.4

Total 100% 120.5 67% 80.3 Note: The above includes growth in real turnover of 0.65% per annum *Source: based on data from Costco Liverpool Economic Impact Assessment, Essential Economics (March 2011).

8.3 Redirection of Turnover

Based on the above assumptions, total retail turnover on site will equate to $175.3m in 2016 due to the

implementation of Stage 1 of the proposal. This turnover will be redirected from competing centres.

In order to assess the redirection of turnover, Hill PDA prepared a bespoke gravity model. The main principles in

the gravity model are that:

1. Like for like stores compete with one another. That is a grocery/ food retailer will compete with existing

grocery/ food retailers in the locality, and likewise with specialty stores;

2. The level of redirected expenditure from a centre is directly proportional to the turnover of that centre.

Hence more expenditure will be drawn from a centre that has higher trading levels;

3. The level of redirected expenditure from a centre is indirectly proportional to the distance from the

Subject Site in terms of drive time. This is based on the premise that shoppers will try to minimise

distance, time and travel costs when travelling to undertake shopping – particularly “chore” shopping

(predominantly for food, groceries and other regular items); and

4. Impacts of trade and business related sales are not included in the gravity models. Trade related

expenditure is likely to be redirected from a wide variety of destinations, many of which are wholesale

and trade warehouses located in industrial areas. As such, they have not been included here.

88 Note: The Costco Liverpool Economic Impact Assessment assumes a turnover of $120m ($2010) in 2013 based on discussions with Costco. This has been rebased to 2009 prices based on historic CPI data then increased by 0.65% per annum to 2016. 89 Costco Liverpool Economic Impact Assessment, Essential Economics (March 2011)



The following gravity model table indicates that the $175.3m in retail turnover of Stage 1 in 2016 would be

redirected from a range of centres. In absolute dollar terms, the largest redirection from centres will be from Mount

Druitt (-$42.4), followed by Blacktown (-$25.3m) and St Marys (-$12.0m).

Table 7.5 - Redirection of Expenditure from Existing Centres in 2016

1 2 3 4 5 6 7

Retail Centre

Distance from Subject Site

(km)

Approx. Retail Floor

Space Turnover

in 2011

Turnover in 2016 without

Proposal

Turnover in 2016

with Proposal

Immediate Shift in

Turnover

% Shift in Turnover

in 2016

Shift in turnover

from 2011 to 2016

% Shift in turnover

from 2011 to 2016

Stage 1 Proposal 30,050 - - 175.3 175.3 - - -

Blacktown 7.2 141,500 705.0 759.9 734.6 -25.3 -3.3% 29.6 4.2%

Mount Druitt 3.0 70,350 470.0 526.6 484.2 -42.4 -8.1% 14.2 3.0%

St Marys 8.0 42,500 257.8 288.8 276.8 -12.0 -4.2% 19.0 7.4%

Plumpton Marketplace 5.8 15,600 143.6 160.9 149.8 -11.1 -6.9% 6.2 4.3%

Rooty Hill 1.5 7,500 48.6 54.5 48.2 -6.3 -11.5% -0.4 -0.9%

Doonside 3.8 1,500 9.3 10.4 9.6 -0.7 -7.2% 0.4 4.0%

Myrtle Street, Prospect 5.3 4,000 32.6 36.5 31.1 -5.4 -14.7% -1.4 -4.4%

Holbeche Road, Arndell Park 4.3 3,000 22.1 24.7 21.8 -2.9 -11.9% -0.3 -1.3%

Minchin Drive, Minchinbury 2.5 2,500 16.8 18.8 17.3 -1.5 -7.7% 0.6 3.4%

Evans Road, Rooty Hill 0.5 1,500 9.1 10.2 9.1 -1.1 -10.7% 0.0 0.0%

Rainbow Shopping Centre 3.9 4,500 35.1 39.4 32.7 -6.7 -17.0% -2.4 -7.0%

Homebase Prospect 6.0 25,000 90.4 84.3 79.1 -5.1 -6.1% -11.2 -12.4%

Minchinbury Precinct 5.0 46,000 133.0 199.1 185.4 -13.6 -6.8% 52.4 39.4%

Seven Hills (Bulky Goods) 11.0 15,000 51.5 50.7 48.7 -2.0 -3.9% -2.8 -5.4%

Wetherill Park 10.0 20,000 68.7 100.0 95.8 -4.2 -4.2% 27.1 39.4%

Other Localities - - - - - -35.1 - - -

TOTAL - 400,450 2,093.6 2,364.7 2,399.7 0.0 1.5% 306.2 14.6%

1 Various including Shopping Centre News, PCA Shopping Centres Directory, Hill PDA Floorspace Surveys, MacroPlan Dimasi (March 2012)

2 Various including Shopping Centre News, PCA Shopping Centres Directory, Shopping Centre Annual Reports, Urbis Retail Averages, Other Consultancy Reports and Hill PDA Estimate.

3 Allows for population growth of 1% per annum and real growth in retail spend per capita of 1.3% per annum in line with historic trend since 1986 (Hill PDA Calculation from ABS Retail Sales, population estimates and CPI indexes)

4 Immediate shift in turnover. This is difference between the development and the do nothing options (i.e. no Stage 1 development).

5 Immediate percentage shift is shift in turnover divided by the turnover in 2010 without the development proceeding.

6 This is the shift in turnover from 2011 to 2016 after the opening of the new development.

7 This is shift in turnover from 2011 to 2016 divided by the based turnover in 2011.

There are no universal measures of significance of economic impact. There are references in various consultancy

reports and statements in the Land & Environment Court which suggest that a loss of trade below 5% is

considered insignificant, 5% to 10% is low to moderate, 10% to 15% is moderate to high, and above 15% is a

strong or significant impact.

The greatest relative impacts of the proposal relate to small surrounding centres and results predominately from

the impacts of supermarket type floorspace. As a proportion of turnover, the greatest impacts are forecast to be

on Rainbow Shopping Centre Doonside (-17.0%), Myrtle Street Prospect (-14.7%), Holbeche Road Arndell Park

(11.9%), Rooty Hill Village Centre (-11.5%), and Evans Road Rooty Hill (-10.7%). Although the amount of

expenditure redirected from these centres is more modest, such turnover represents a greater proportion of their

total trading level given their comparatively low turnovers.

Furthermore, we note that the Blacktown Commercial Centres Strategy (2007) records that Rainbow Shopping

Centre has a ‘good performance’ (i.e. with low vacancies and high retail turnover density). As such it could

accommodate this level of impact without the commercial viability of the centre being jeopardised.



Whilst these centres are forecast to experience moderately high impacts in 2016, these are immediate or point in

time impacts. Due to growth in real retail spend over time, all centres will enjoy growth in trade, and as a result the

impact on these centres lessens (see Column 7). For example the impact on Rainbow Shopping Centre and

Evans Road will lessen to -7.0% and -0% respectively by 2016. This level of trading impact is within the normal

competitive impact range.

It should be noted that the gravity model assumes pipeline or mooted development will proceed with proposed

expansions in Minchinbury and Wetherill Park realised prior to 2016 – hence why there is considerable variation in

impacts between these centres. Homebase Prospect is expected to experience a moderate loss over time

however this is largely due to the proposed bulky goods expansions in Minchinbury. The impacts will be lessened

if any of these mooted developments did not proceed.

All other centres will experience insignificant adverse impacts or will enjoy some growth in trade from 2011 to 2016.

In any case, over time the economic impacts would be lessened further as a result of expenditure and population

growth in the trade area. The following table shows that even with the additional Stage 2 of bulky goods, all

centres and retail destinations will experience a real (non-inflated) increase in trading levels from 2016 to 2022.

Hence such impacts could be absorbed without jeopardising the viability of these centres.



Table 7.6 - Redirection of Expenditure from Existing Centres in 2022 1 2 3 4 5 6 7

Retail Centre Distance from

Subject Site (km)

Approx. Retail Floor

Space Turnover

in 2016

Turnover in 2022 without

Proposal

Turnover in 2022

with Proposal

Immediate Shift in

Turnover

% Shift in

Turnover in 2022

Shift in turnover

from 2016 to 2022

% Shift in turnover

from 2016 to 2022

Stage 2 Bulky Goods

65.4 65.4

Stage 1 (existing in 2022)

30,050 175.3 175.3 166.8 -8.5 -4.9% -8.5 -4.9%

Total Eastern Creek - 30,050 175.3 175.3 232.2 56.9 32.4% 56.9 32.4%

Blacktown 7.2 141,500 735.8 813.4 805.6 -7.7 -1.0% 69.8 9.5%

Mount Druitt 3.0 70,350 485.0 555.9 552.9 -3.0 -0.5% 67.9 14.0%

St Marys 8.0 42,500 277.0 317.5 317.5 0.0 0.0% 40.5 14.6%

Plumpton Marketplace 5.8 15,600 150.2 172.2 171.9 -0.2 -0.1% 21.7 14.5%

Rooty Hill 1.5 7,500 48.2 55.2 55.2 0.0 0.0% 7.0 14.6%

Doonside 3.8 1,500 9.7 11.1 11.0 -0.1 -1.0% 1.3 13.5%

Myrtle Street, Prospect 5.3 4,000 31.3 35.9 35.9 0.0 0.0% 4.6 14.6%

Holbeche Road, Arndell Park 4.3 3,000 21.9 25.1 25.1 0.0 0.0% 3.2 14.6%

Minchin Drive, Minchinbury 2.5 2,500 17.3 19.8 19.8 0.0 0.0% 2.5 14.6%

Evans Road, Rooty Hill 0.5 1,500 9.1 10.4 10.3 -0.1 -1.4% 1.2 13.0%

Rainbow Shopping Centre 3.9 4,500 33.0 37.8 37.8 0.0 0.0% 4.8 14.6%

Homebase Prospect 6.0 25,000 80.0 74.7 69.8 -4.9 -6.5% -10.2 -12.7%

Minchinbury Precinct 5.0 46,000 187.7 265.1 245.6 -19.5 -7.4% 57.9 30.9%

Seven Hills (Bulky Goods) 11.0 15,000 49.1 49.3 47.2 -2.1 -4.2% -1.9 -3.9%

Wetherill Park 10.0 20,000 96.5 133.6 127.6 -6.1 -4.5% 31.1 32.2%

Other Localities

-13.1

TOTAL - 400,450 2,407.1 2,752.4 2,765.4 0.0 0.5% 358.3 14.9%

1 Various including Shopping Centre News, PCA Shopping Centres Directory, Hill PDA Floorspace Surveys, MacroPlan Dimasi (March 2012)

2 Various including Shopping Centre News, PCA Shopping Centres Directory, Shopping Centre Annual Reports, Urbis Retail Averages, Other Consultancy Reports and Hill PDA Estimate.

3 Allows for population growth of 1% per annum and real growth in retail spend per capita of 1.3% per annum in line with histor ic trend since 1986 (Hill PDA Calculation from ABS Retail Sales, population estimates and CPI indexes)

4 Immediate shift in turnover. This is difference between the development and the do nothing option (i.e. do nothing option is no Stage 1 or Stage 2 and 2022).

5 Immediate percentage shift is shift in turnover divided by the turnover in 2010 without the development proceeding.

6 This is the shift in turnover from 2011 to 2016 after the opening of the new development.

7 This is shift in turnover from 2011 to 2016 divided by the based turnover in 2011.

It should be noted that our methodology is likely to over-emphasise the economic impacts of additional

supermarket and grocery floorspace, given that this includes the food and grocery component of the large format

retail development.

In reality, the food and grocery related expenditure which the LFR attracts would be drawn from a much larger trade

area than that of the trade area defined for the retail premises component of the proposal. Therefore its impacts and

redirection of turnover would be spread thinly between larger numbers of centres than those listed in the gravity model.

Nevertheless there will be some adverse impacts of the proposed development on existing centres in the

immediate locality predominately resulting from the Village Centre floorspace proposed. To some extent this

reflects the relatively modest turnovers which such centres have. Whilst the proposed development may challenge

some of the individual retailers, the impacts are unlikely to jeopardise the commercial viability of any centre.

In support of this, it should be recognised that the estimated turnover of the retail components are only a small

proportion of total available retail expenditure in the resident trade areas. They allow for significant expenditure to

still be captured by other centres.



The retail centre turnover of $62.5m in 2016 is equivalent to 17.3% of total household expenditure in the trade areas

that year ($361m), with the remaining 82.7% of expenditure to be captured by other and higher order centres.

Similarly, bulky goods turnover of $32.5m in 2016 is only 3.7% of available bulky goods expenditure in the trade

areas that year, with the remainder to be captured by other clusters and centres. In 2022 when Stage 2 is

implemented, total bulky goods turnover on the Subject Site ($99.2m) is equivalent to just 10.2% of total bulky

goods expenditure spend that year ($972m). This remains only a small proportion of total available expenditure.

Beyond this, it is not the role of the planning system to consider competition between individual traders. In our

view the wider positive economic impacts of the proposed development in terms of responding to need, creating

jobs, widening choice for consumers (etc.) outweigh the negative impacts on a smaller number of centres, none of

which would experience a strong or significant impact.

The presence of workers on the Subject Site during the construction process may also provide a short-term boost

to local traders. These workers represent additional retail expenditure available to be captured by retail facilities

locally, particularly with respect to catering and food related facilities.



Appendix 3 - SITES 4-6 AND SITES 8-13 IN THE MINCHINBURY PRECINCT – BULKY

GOODS REDEVELOPMENT TESTING



Appendix 4 - FINDINGS OF HILL PDA’S SITE VISIT MARCH 2014

MEMORANDUM

C13263 – Eastern Creek Business Hub P a g e 1 | 13

Job number / name: C13263 – Eastern Creek Business Hub

Client name: Western Sydney Parklands Trust

From: Tom Duncan, Hill PDA

To: Rob Lee, SGS Economics and Planning

Date: 28th March 2014

1. Introduction

This briefing note sets out the findings of additional research undertaken by Hill PDA pertaining to five centres in

the Blacktown Local Government Area. The evidence has been requested to determine the current trading

performance of a number of centres in the vicinity of the proposed Eastern Creek Business Hub (ECBH) as well

as their current rental levels.

Provision of this data will assist the NSW Planning & Infrastructure’s (P&I) economic consultants SGS to conclude

that the centres in question are trading well and that, based on the rental levels being achieved, a lowering the

Benchmark Retail Turnover Densities (RTDs) used to assess their performance in the Peer Review Summary

(February 2014) is justified.

2. Site Visits

Introduction

Hill PDA conducted site visits on Tuesday 25 th March 2014 to five centres which are forecast to experience an

adverse or neutral trading impact as a result of the proposed ECBH in 2016. These centres were agreed with SGS

in advance as comprising:

Myrtle Street, Prospect;

Holbeche Road, Arndell Park;

Rainbow Shopping Centre;

Evans Road, Rooty Hill; and

Rooty Hill.

The purpose of the site visits was to gain an understanding of the operation and the trading performance of the

centres by examining the quality of the retail offer, the presence of key anchors and the quantum of vacant

floorspace. The findings of the site visits in relation to each of the five centres are provided below.

MEMORANDUM


Myrtle Street, Prospect

Description

This compact centre serves a localised shopping role. It is anchored by a modern full-line Woolworths

supermarket and a medical centre which supports adjacent specialty stores. Two petrol filling stations front

Flushcombe Road (which include a 7-eleven and a small Woolworths store) allowing the centre to perform a dual

role serving the convenience shopping and medical needs of local residents as well as servicing the needs of

passing motorists.

Photographs

Vacancies

The centre contains an estimated 4,000sqm of retail floorspace1. 1 vacant unit was recorded in the centre

occupying an estimated 80sqm of floorspace. As such, the centre has a vacancy rate of 2% of total floorspace.

The vacant tenancy comprises a former Civic Video store which appears to have been recently vacated. This is

likely to reflect changing consumer tastes with a shift away from DVD rental stores towards online rentals and

streaming, rather than being reflective of a lack of demand for representation in the centre from retail tenants.

1 Source: Eastern Creek Business Hub Economic Impact Assessment, Hill PDA (2012)

MEMORANDUM


Hill PDA Conclusion

With only 1 small vacant unit and a number of different anchors, this centre appears to be trading well. This is

further evidenced by the Woolworths car park being full during our site visit despite being outside of peak trading

hours. The centre makes a strong convenience based and conveniently accessible offer to local residents which

will remain unchanged following the proposed ECBH. It is unlikely that any of the main anchors (Woolworths,

medical centre, 2 x petrol filling stations) would close as a result of the impacts identified and thus the proposed

ECBH is not considered likely to threaten the viability of this centre.

SGS Peer Review Summary (February 2014) Conclusion

Myrtle Street Prospect in 2016 will be trading at 12% below expected Benchmark RTD levels and would

experience ‘significant negative impact’ as a result of the proposed ECBH.

Holbeche Road (Arndell Park)

Description

This modern centre contains adjacent precincts which are well-connected and serve two different roles. The

freestanding ALDI at the east of the centre serves some convenience shopping needs of residents and workers

whilst the specialty store based precinct to the west provides a range of daily and weekly retail goods and

services. This includes a high component of take-away and cafes provision, a butchers, a bakers, a convenience

store, a liquor store and a florist.

Photographs

MEMORANDUM


Vacancies

The centre provides 3,000sqm of floorspace in total2. It contains 3 vacant tenancies occupying an estimated

220sqm floorspace. On this basis it has a vacancy rate of 7% of total floorspace. Notwithstanding this, the vacant

tenancies are all located on the first floor of the centre away from the car park and main pedestrian routes. Other

first floor tenancies comprise shopfront commercial uses such as a recruitment consultant/ driver training centre

and a masseuse and the vacant units are being marketed for commercial office rather than retail uses. The centre

has 100% occupancy of ground floor retail tenancies. The vacancies reflect their poor location relative to passing

foot traffic and other retailers, not a lack of demand for representation in the centre.

Conclusion

This centre is clearly performing well with 100% ground floor occupancy and a range of localised retail goods and

services provided including an ALDI. The centre has a diversified customer base serving both workers and local

residents. The car park serving the specialty stores was full at the time of our site visit further indicating the

strength of the centre. The centre is located 4.3km east of the proposed ECBH and will remain much more easily

accessible to the trade area it serves. None of the existing tenants is expected to close as a result of the impacts

identified.

SGS Peer Review Conclusion

Holbeche Road in 2016 will be trading at 18% below expected Benchmark RTD levels and would experience

‘significant negative impact’ as a result of the proposed ECBH.


MEMORANDUM


Rainbow Shopping Centre

Description

Rainbow Shopping Centre comprises a Supa IGA, a specialty store strip and a separate petrol filling station which

includes a Coles Express. The Supa IGA has recently been refurbished and the car park serving both the

specialty stores and the Supa IGA was full at the time of our site visit. It has a component of ethnic goods and

services.

Photographs

Vacancies

The centre contains 1 vacancy tenancy of 55sqm in the specialty strip out of 4,500sqm floorspace3 in total. This

equates to a vacancy rate of 1% of total floorspace. The vacant tenancy represents one half of a subdivided unit

within the specialty parade and may be unsuited towards most modern tenancies which favour larger floorplates.


MEMORANDUM


Conclusion

The centre has a varied retail offer, low vacancies, a number of anchors (Supa IGA, petrol filling station/ Coles

Express, ethnic specialty stores) and high patronage as evidenced by high car park usage. These indicate strong

trading performance. Residential development is occurring immediately adjacent to the centre and it can expect to

further increase its trading performance in the future as the number residents in the local catchment increases.


Rainbow Shopping Centre in 2016 will be trading at 18% below expected Benchmark RTD levels and would

experience ‘significant negative impact’ as a result of the proposed ECBH.

Evans Road

Description

This centre is an older format dominated by small retail tenancies with a strong ethnic focus. It provides a highly

limited offer which includes several quasi-wholesale uses including food manufacturers and distributers. A 7-

eleven and petrol filling station is located on the Evans Road/ Rooty Hill Road South junction. Other tenancies

include a liquor store, a lawn mower shop and a dry cleaner.

Photographs

MEMORANDUM


Vacancies

The centre contains 1 vacant unit occupying circa 80sqm. This is equivalent to a vacancy rate of 10% of total

floorspace. The vacant tenancy is located away from the car park serving other specialities.

Conclusion

This centre is likely to be trading modestly at the current time. It does not well serve the retail or service needs of

the local population who will still need to travel to other localities to undertake most of their basic shopping needs.

That said some of the uses which it contains are not focused on the local community but rather on wholesale and

catering trade which would not be affected by the proposed ECBH.


The centre would experience ‘significant negative impact’ as a result of the proposed ECBH.

Rooty Hill

Description

Rooty Hill is a large centre located 1.5km north of the proposed ECBH. It is dissected by the rail line into Rooty Hill

South and Rooty Hill North. Rooty Hill South is anchored by an IGA, a large tavern and liquor store and strip retail

fronting Rooty Hill South Road. Rooty Hill North is dominated by specialty tenancies providing a wide range of

retail and other service needs of local residents. The presence of the rail station and adjacent commuter car park

is a strong anchor for this centre.

MEMORANDUM


Photographs - Rooty Hill North

Photographs - Rooty Hill South

Vacancies - Rooty Hill North

Rooty Hill North contains 2 vacant units occupying an estimated 200sqm compared to 10,000sqm floorspace

provided in this part of the centre in total4. This equates to a vacancy rate of 2% of total floorspace. 1 of the vacant

units has only recently been vacated and is not yet listed for lease.

Vacancies - Rooty Hill South

Rooty Hill South contains 2 small vacancies of 50sqm each which are located on side roads away from the main

retail strip. These account for 1% of the total floorspace provided in Rooty Hill South.


MEMORANDUM


Overall the vacancy rate in Rooty Hill is 2% of total floorspace. Clearly this is a low level indicating that the centre

is trading well with strong demand for representation from tenants.

Conclusion

Rooty Hill North and South effectively function as two separate entities. The southern part services a localised

catchment with the IGA and Lone Pine Tavern being key anchors. Neither of these is expected to close as a result

of the proposed ECBH. Rooty Hill North is focused on specialty retailers which serve a local residential catchment

and commuters using the Rooty Hill Rail Station. Rooty Hill North also contains a school.

Whilst the centre is dominated by specialty retailers appears to be trading well with low vacancy levels, a wide

range of goods and services and apparent high levels of patronage. Many of the specialty retailers target niche

ethnic goods and services such as Asian groceries, Fijian supermarket, Chinese medicine and so on. These may

be unaffected by the proposed ECBH which is largely focused on providing a different offer.

The rail station is a strong positive for the centre attracting potential customers to it. This key anchor would be

unaffected by the proposed ECBH.


The centre would experience ‘significant negative impact’ as a result of the proposed ECBH.

Conclusions

This Section has established that:

Myrtle Street Prospect performs a dual role serving passing motorists through two petrol filling stations

and serving the convenience needs of residents through a full-line Woolworths supermarket, medical

centre and associated specialities. It appears to be trading well with just 1 recently vacated tenancy

accounting for 2% of total floorspace in the centre and given the busy nature of the centre car park

despite the off peak timing of Hill PDA’s site visit. The proposed ECBH would not compete with the

convenient nature of this centre comparative to its residential catchment and it is not expected to lead to

the closure of any of the anchors;

Holbeche Road (Arndell Park) serves both local residents and local workers and is a popular centre

with high car parking usage observed during our site visit. The centre has no vacant tenancies at ground

level and provides two distinct offers comprising an ALDI supermarket and a convenience and catering

based specialty offer. The centre appears to be performing well currently. The proposed ECBH would

MEMORANDUM


not threaten the role or function of this centre and it would remain the most convenient centre for local

workers and residents in the trade area of Holbeche Road. The proposed ECBH is not expected to

jeopardise Holbeche Road’s financial viability;

Rainbow Shopping Centre is performing well with just 1 vacant tenancy accounting for 1% of total

floorspace, a diverse retail offer, a busy car park at the time of Hill PDA’s site visits and dual anchors of

a Supa IGA and a petrol filling station/ Coles Express. Adjacent residential development will support an

increase in the trading level of this centre in the future;

Evans Road Rooty Hill is a poor quality centre that does not well serve the needs of local residents.

Despite this it has near full occupancy with just 1 vacant unit. Tenancies in the centre serve a niche role

including some wholesale trade and ethnic retail focused tenancies which are not expected to compete

directly with the proposed ECBH; and

Rooty Hill North and South are in good health and performing well as evidenced by a low vacancy rate

of 2% total floorspace, a broad range of retail and other services on offer, the presence of a variety of

anchors including IGA, Lone Pine Tavern and the rail station and a diversif ied shopper base which

includes both local residents and commuters. The impact of the proposed ECBH on this centre is not

expected to render it financially viable and none of the anchors are expected to close.

The SGS Peer Review Summary (February 2014), which was not based on any site visits, concluded that Myrtle

Street, Holbeche Road and Rainbow Shopping Centre would all be trading poorly and in 2016 at 14% to 18%

below their expected benchmark RTD.

Based on the evidence from our site visits it is clear that these centres, with the exception of Evans Road, are in

fact currently trading well which suggests the Benchmark RTD’s used by SGS to assess trading performance are

far too high. Hill PDAs findings are consistent with those of the Blacktown Commercial Centres Study (SGS, 2007)

which found that these centres were all trading strongly at above benchmark levels and with low vacancy rates.

The evidence presented in this Section also suggests these five centres could absorb the modest levels of impact

identified without their financial viability being threatened or any major anchors being forced to close.

3. Rental Data

Introduction

This Section derives rental data for the five centres under consideration. The previous Section established that

these centres are all trading well. The purpose of this Section is to estimate the appropriate Benchmark RTD

against which they should be assessed in this context.

Data in this Section has been sourced from

Property Information Monitors;

RP Data;

RealCommercial.com.au;

MEMORANDUM


CommercialView.com.au; and

Local agents and advertised listings.

Rental Data

The table below sets out derived rental data for the five centres under study, insofar as this information could be

derived.

Table 1 - Comparative Retail Rental Analysis (2014)

Centre Address Size Rent ($/sqm)

Status / Comments Source

Myrtle Street

Retail properties are held tightly with minimal leasing transactions occurring. Hill PDA’s survey of leasing portals has indicated that there are currently no retail leases on the market in the centre and further investigations indicates a lack of recorded retail leases. 1A/6 Myrtle Street which comprises roughly 197sqm of building space was advertised for lease in early 2010; however the agent has not disclosed any leasing details.

Holbeche Street

Upper Floor Arndell Park 78 $212 Vacant

Office Use

Advertised Listing

109/ 69 Holbeche Road 110 $250 Vacant

Office Use

Advertised Listing

Unspecified / 69 Holbeche Rd 127 $348 For Lease PIM

1/69 Holbeche Road 78 $256 Advertised for Lease 2013

RP DATA

106/69 Holbeche Road 71 $225 Advertised for Lease 2013

RP DATA

Size Range (sqm) 71 – 127

Rental Range ($/sqm) $212 - $348

Rainbow Shopping Centre

3B/60 Rosenthal Street 55 $455 Advertised for Lease March 2014

RP DATA

Hill End Road Centre 60 $300 Advertised for Lease March 2014

This lease is not in the centre but North of Doonside Train Station

Advertised Listing

Size Range (sqm) 55 - 60


Evans Road

Retail properties are held tightly with minimal leasing transactions occurring. Hill PDA’s survey of leasing portals has indicated that there are currently no retail leases on the market in the centre and further investigations indicates a lack of recorded retail leases. Hill PDA is aware of one lease for 7 Orcam Street in June 2010 however the calculated $/sqm value of $49/sqm does not seem accurate and has not been used in this analysis.

Rooty Hill

5/39-45 Rooty Hill Road North 120 $500 Advertised for Lease March 2014

Advertised Listing

2 Rooty Hill Road South 50 $437 Advertised for Lease March 2014

Advertised Listing

Size Range (sqm) 50 - 120


Source: Property Information Monitors (2014), RP Data (2014), RealCommercial.com.au (2014), CommercialView.com.au (2014) & Hi ll PDA Research & Analysis (2014) Note: Rents exclude outgoings

MEMORANDUM


Based on Table 1 the rental range varies from around $200 – $500/sqm for the larger centres (Rainbow Shopping

Centre, Holbeche Road and Rooty Hill) with limited data being available for the smaller centres (Myrtle Street and

Evans Road). This range is commensurate with the findings of the Eastern Creek Supplementary Report: Review

of Market Assumptions (October 2013) which Hill PDA prepared for NSW Treasury on behalf of the Western

Sydney Parkland Trust, This established an indicative rental range for newly constructed retail premises in this

Eastern Creek area of between $400 – 500/sqm. The centres are all tightly held with little leasing activity being

recorded as a result of low vacancies and low tenant turnover. This in itself is indicative of strong demand.

By comparison the average specialty store rents recorded by Westfield across all their centres were $1,537/sqm in

20135. This is 3 times greater than the maximum specialty store rents being achieved in the five centres. This is

important because the Benchmark RTD’s currently used by SGS to assess the trading performance of the five

centres are sourced from the Urbis Retail Averages which are based on internalised shopping centres largely

operated by the big property trusts like Westfield, Stockland and AMP Capital rather than the type of

neighbourhood centres provided in the five centres, none of which is internalised. It is therefore inappropriate to

apply the Urbis Retail Averages to centres of this type.

Other rental data is published by Colliers and Savills as follows:

The latest Colliers Report6 estimates the rental level for Neighbourhood Centres of $250 – $1,500/sqm;

and

The latest Savills Report7 estimates a rental level of $350 – $850/sqm for specialty retailers in

Neighbourhood Centres.

The rents recorded in the five centres are at the lower range of the estimated rents provided by Colliers and

Savills; however with the exception of Evans Road they are clearly trading well based on the evidence provided in

Section 2 of this briefing note. As such the Benchmark RTD turnovers used in the SGS Peer Review should be

reduced to reflect this situation.

4. Summary and Conclusion

This briefing note has established that:

With the exception of Evans Road, all of the centres examined are currently trading well with high

occupancy rates and low vacancy rates, good quality retail floorspace with a number of centre anchors

and high shopper patronage rates. Evans Road is a poor quality and small centre which does not well

serve the needs of local residents at the current time;

The conclusion of the SGS Peer Review Summary (February 2014) that Myrtle Street, Holbeche Road

and Rainbow Shopping Centre are currently trading at significantly below benchmark levels and will

continue to do so to 2016 is unsubstantiated by the evidence from out site visits. These centres appear

to be performing well and their trading level can only be expected to grow to 2016 as a result of

5 Source: Shopping Centre Operational Performance Report, Westfield Retail Trust (2014) 6 Source: Retail Research and Forecasting Report Second Quarter 2013, Colliers International (2014) 7 Source: Sydney Retail Q4/2013, Savills Research (2014)

MEMORANDUM


population and real retail expenditure growth. This is consistent with the findings of the Blacktown

Commercial Centres Study (SGS, 2007) which found that these centres were all trading strongly at

above benchmark levels and had low vacancy rates; and

Analysis of the rental levels achieved in the five centres indicates that despite their strong performance

rental levels are fairly low compared to the ‘average’ neighbourhood centre in Sydney and at least 3

times lower than the Westfield average specialty store rental. This is likely to be reflective of the below

average socio-demographic characteristics of their residents in the localised trade areas of the five

centres and their comparatively lower levels of retail expenditure.

Based on the above, it is inappropriate to use the Urbis Retail Averages which are based on internalised shopping

centres in order to assess the trading performance of these centres. There is justification to lower the RTD

Benchmarks used by SGS in this instance.

SGS advised the P&I in March 2013 on an 8,000sqm neighbourhood centre in Leppington East, comprising

4,000sqm of supermarket floorspace and 4,000sqm of specialities upon full development. The advice was detailed

in the East Leppington Employment & Retail Study / Final Report (SGS, 2013) and an overall Benchmark RTD of

$5,261/sqm in 2016 for a future centre was derived. This was based on the following split of RTDs:

Table 2 - SGS Assumed RTD’s for Neighbourhood Centres ($/sqm)

Supermarket Other Food

Clothing H’hold Goods

Other Retail

Hospitality & Services

East Leppington

Ave. 2016

RTD $6,488 $7,630 $3,470 $3,145 $3,647 $6,229 $5,281

Additional 20% $8,110 $9,538 $4,338 $3,931 4,559 $7,786 $6,601

Source: East Leppington Employment & Retail Study / Final Report, SGS (March 2013) ^ Note: The SGS Study included a 20% discount to reflect lower rents for street side shops compared to shops within an enclosed centre, although even allowing for this additional 20% the Benchmark RTD used in the East Leppington Study is well below that used to assess centres in the Peer Review

We believe that a Benchmark RTD commensurate that used by SGS for East Leppington is justified in this

instance.



DISCLAIMER

1. This report is for the confidential use only of the party to whom it is addressed ("Client") for the specific

purposes to which it refers and has been based on, and takes into account, the Client’s specific

instructions. It is not intended to be relied on by any third party who, subject to paragraph 3, must make

their own enquiries in relation to the issues with which this report deals.

2. Hill PDA makes no representations as to the appropriateness, accuracy or completeness of this report

for the purpose of any party other than the Client ("Recipient"). Hill PDA disclaims all liability to any

Recipient for any loss, error or other consequence which may arise as a result of the Recipient acting,

relying upon or using the whole or part of this report's contents.

3. This report must not be disclosed to any Recipient or reproduced in whole or in part, for any purpose not

directly connected to the project for which Hill PDA was engaged to prepare the report, without the prior

written approval of Hill PDA. In the event that a Recipient wishes to rely upon this report, the Recipient

must inform Hill PDA who may, in its sole discretion and on specified terms, provide its consent.

4. This report and its attached appendices are based on estimates, assumptions and information provided

by the Client or sourced and referenced from external sources by Hill PDA. While we endeavour to

check these estimates, assumptions and information, no warranty is given in relation to their reliability,

feasibility, accuracy or reasonableness. Hill PDA presents these estimates and assumptions as a basis

for the Client’s interpretation and analysis. With respect to forecasts, Hill PDA does not present them as

results that will actually be achieved. Hill PDA relies upon the interpretation of the Client to judge for

itself the likelihood of whether these projections can be achieved or not.

5. Due care has been taken to prepare the attached financial models from available information at the time

of writing, however no responsibility can be or is accepted for errors or inaccuracies that may have

occurred either with the programming or the resultant financial projections and their assumptions.

6. This report does not constitute a valuation of any property or interest in property. In preparing this report

Hill PDA has relied upon information concerning the subject property and/or proposed development

provided by the Client and Hill PDA has not independently verified this information except where noted

in this report.