The glut of residential apartments that have been going up at a furious pace in Melbourne’s CBD are putting the pressure on commercial space.
While those looking for an apartment to live in in the city centre wouldn’t have much trouble right now finding one, those looking for commercial space might find it a different story as a result.
At the moment there are a 20,000 dwellings being constructed in the Melbourne municipality with the majority being in the CBD itself.
There are also another 31,000 that have been approved but haven’t started yet and another 25,000 in the pipeline after having their application lodged.
After claiming the world’s most liveability city title again this year, Melbourne is expected to experience healthy jobs growth and will need the commercial space in the city to accommodate it.
Ten years ago the split between residential and commercial development in the city was around half each. Now residential development is around five times commercial.
Lord Mayor Robert Doyle told The Australian Financial Review the figures were worrying.
“We’re really at the tipping point,” he said.
“It’s not just the apartments under construction, and not just the ones with permits. We can see the ones in the pipeline.”
“The disparity is growing. It’s no good waiting for five or so years so that the gap is so large we can never recover.”
In Sydney, town planners have released a draft strategy to reduce the residential property in their CBD to address a similar problem.
Mr Doyle would prefer not to have to interfere in the market in such a way but said they might have to if things don’t change.
“We are at the point where, if the market doesn’t start to self-correct, there will have to be an intervention,” he told The Australian Financial Review.