With the opening of the Sydney Metro Northwest in June 2019 and the Southwest Metro planned for 2024, Sydney has commenced the process of establishing an underground metro network. Planning is well underway for the Metro West connecting the Sydney CBD to Parramatta/Westmead via the Bays Precinct, Sydney Olympic Park and Camellia. The second half of the 2020s will likely see the extension of the Sydney Metro Northwest and the connection to Badgerys Creek through Sydney’s west.
As with other global cities, the extension of the Metro network is likely to continue to develop a comprehensive underground metro grid to serve the Sydney basin. The Metro will ease the gridlock on Sydney’s roads and facilitate passenger travel across suburbs by integrating into other transport networks such as the existing rail network, the light rail, bus and ferry.
Metro development provides various development opportunities for the property sector and often increases residential density and amenities along the metro corridor. The establishment of a metro system will be transformative for the Sydney urban landscape and will drive future economic development in the region. Developments will likely include medium to high density residential apartments with retail and commercial inclusions. Higher density developments may then occur in the immediate vicinity of station precincts providing pedestrian connectivity and amenity.
Although the introduction of a metro corridor will increase property values directly, it is the rezonings that follow metro corridors that amplify property values and drive redevelopment. This is known as the ‘metro effect’. The ‘metro effect’ reflects the rise in property realisations throughout the metro implementation process, particularly at the time where planning authorities approve rezoning.
These rezonings are generally initiated at the state level with reference to local Councils and provide opportunity at the State Government level to guide development outcomes. Rezonings encourage higher density development that deliver the optimal mix of residential, retail and other commercial inclusions which respond to market imperatives in terms of usage, mix and scale.
Over station development (OSD) will most likely be initiated at stations located where high density commercial and residential developments already exist or are in planning such as the Sydney CBD, CBD fringe and major town centres. OSD utilises the airspace over and around the Rail / Metro stations. This is because these locations can sustain the high cost of OSD development. An OSD, over local metro or ‘on-ground’ rail stations, is not likely to be financially sustainable due to the prohibitive costs of closing the railway and re-construction through limited and ‘out of hours’ worktimes.
Since OSDs are usually large scale, complex, mixed-use developments and often State Significant Developments they will generally require a Tier One developer. This is the case in Sydney with the Waterloo Metro Quarter over the new Waterloo Metro station. The proposed OSD will be for a mixed-use development with three high rise apartment buildings ranging between 23 and 29 levels, as well as several mid-rise apartment and mixed-use buildings (which are typically below 15 levels). The main component of the Waterloo OSD will be 700 residential apartments including affordable housing plus considerable commercial and retail space.
Some large scale OSDs may be associated with or a catalyst for nearby urban renewal project. Such is the case with the Waterloo Metro OSD and the nearby Waterloo Estate development on State Government owned land. The Metro station and associated OSD development supplements the proposed urban renewal of Waterloo Estate.
Metro stations that have related retail spaces below ground require careful consideration by the design team to ensure that they are properly integrated with the above ground retail offerings. Below ground retail will usually stay in the possession of the Metro with the above ground retail being in private ownership or control either through long term leases or sale.
As our major cities grow and the capacity of our roads reach saturation there is little alternative but to provide a comprehensive metro grid where traversing the city in any direction will be quick and convenient.
OSD and other metro-driven property opportunities will require innovative approaches that not only respond to market demand but also integrate the work and lifestyle requirements of the community. For example, appropriate consideration for the provision of car-parking space, electric vehicle charging stations (EVCS), e-bikes and other shared transportation alternatives are required.
It is anticipated that over the next 25 years there will be continued increases in OSD and metro transit development in all major Australian cities.
For more information on infrastructure development or the impacts of OSD and metro-transit, please contact one of Colliers Strategic Advisory experts today.
My early career was in Banking and later in trading with a Japanese Trading House where I imported equipment, established distributorships as well as providied financing for importers of our products. My entry into property was through the funding of real estate development projects with the Japanese Trading Houses and General Contractors. In this role I became the financial project manager and asset manager of over 40 commercial, retail, industrial and residential projects throughout Australia.
This opened the opportunities for development management, portfolio management, project marketing, feasibility studies and strategic analysis and in conjunction with my business partner we established a property consultancy, which we operated succesfully for over 20 years servicing our Japanese clients as well as government and private clients. I joined Colliers in 2015 when my business partner retired.