Written by
14/10/2024
Willoughby City Council is rethinking the future of Chatswood’s CBD, with the release of a discussion paper aimed at exploring new land use strategies in response to evolving market forces and government policies.
At the heart of the discussion is the balance between maintaining the CBD’s traditional role as a commercial and employment hub and accommodating the growing demand for housing, particularly through the lens of build-to-rent housing.
For the past 20 years, Council has strictly prohibited residential developments in the commercial core of the Chatswood CBD to preserve its economic integrity and ensure a steady supply of employment spaces. This prohibition applies to all land zoned E2 Commercial Centre, which is what a large chunk of Chatswood CBD land is zoned.
However, with the introduction of new planning reforms by the NSW Government, particularly the State Environmental Planning Policy (Housing) 2021, build-to-rent housing is now permitted in areas previously restricted to commercial use, including Chatswood’s E2 Commercial Centre zone. This is a game-changer for the CBD.
Chatswood CBD zoning map
An obvious driver for this re-evaluation is the changing demand for commercial office space. Vacancy rates in the Chatswood CBD have soared from under 5% prior to the pandemic to over 20% today. This sharp increase in office vacancies is not unique to Chatswood – it reflects broader trends across metro Sydney, where hybrid work models and shifting preferences for smaller, more flexible workspaces have diminished demand for large, long-term commercial leases.
What this means is that many tenants are reluctant to sign long-term and costly leases because the demand for larger floor plates has waned. Office developments have therefore slowed significantly, as they are clearly no longer the highest and best use.
Council has received multiple build-to-rent housing proposals for sites in Chatswood CBD’s commercial core, raising the question of whether residential development should be allowed in areas previously designated for office and commercial use. Council’s concern is that allowing too much residential in the commercial core could undermine the long-term health of the CBD.
The discussion paper invites feedback from the industry until Sunday, 27 October 2024.
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