AECOM Market Analysis and Capacity Assessment - June 2011 Ref:0008 - Cairns Regional ...
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Attachment No. 6 - Edmonton Town Centre Market Analysis and Capacity Assessment Report
Market Analysis and Capacity Assessment
Edmonton Town Centre , Queensland
AECOM
June 2011 Ref:0008
Contents
Executive Summary ............................................................................................... i
1 Introduction .................................................................................................. 1
1.1 Scope ............................................................................................. 1
1.2 Strategic Considerations ................................................................ 2
2 Economic Impact Review ............................................................................ 3
2.1 Key Outcomes ................................................................................ 3
2.2 Critical Assumptions ....................................................................... 4
2.3 Implications for The Edmonton Town Centre ................................. 7
3 Economic Update ........................................................................................ 11
3.1 Tourism .......................................................................................... 11
3.2 Building Approvals ......................................................................... 12
3.3 Unemployment ............................................................................... 13
3.4 General Economic ImPlications ..................................................... 14
3.5 Population Growth Implications ...................................................... 15
4 Retail Scope and Timing.............................................................................. 16
4.1 Retail Assessment Assumptions .................................................... 17
4.2 Retail Need .................................................................................... 19
4.3 Retail Format .................................................................................. 20
4.4 Retail Staging Implications ............................................................. 21
5 Commercial analysis.................................................................................... 23
5.1 Cairns Commercial Market ............................................................. 23
5.2 Town Centre Bench marks ............................................................. 24
5.3 Commercial Forecasts ................................................................... 25
5.4 Commercial Assessment Assumptions .......................................... 26
5.5 Commercial Need .......................................................................... 28
6 Residential Demand .................................................................................... 29
6.1 Implications .................................................................................... 31
7 Staging Plan ................................................................................................ 32
Appendices
A. CICV Standard Terms of Business
EXECUTIVE SUMMARY
1. This report provides an updated economic analysis and market due diligence into the proposed staging and timing
of the Edmonton Town Centre. Its outcomes are to assist defining deliverable land budgets and refining the town
centre MasterPlan. In this regard the analysis is based on place making outcomes and activity centre network
considerations which aim to deliver:
i. Multi-purpose trip generation;
ii. Comparison shopping at the one location;
iii. Support other uses including office, entertainment and community services; and
iv. Higher housing densities.
2. The majority of the historical analysis for the corridor from a centres perspective was undertaken pre-GFC and
based upon residential development and population growth assumptions which have changed the current
development landscape. As such, it is imperative that changes to development timing, take-up and the
retail hierarchy within this area be considered for their impacts on Edmonton.
3. In this regard the report considers the implications of five key factors influencing the ETC project delivery,
including:
i. Timing and status of the Mt Peter MasterPlan;
ii. QLD Health resumption of 20ha of the subject site;
iii. Retail supply additions;
iv. Changes to residential take-up and population growth; and
v. Wider macroeconomic and property market conditions.
4. In regards to retailing on the subject site, successful delivery early in a town centres lifecycle ensures delivery of
early community benefits, catalyst investment and a platform on which a mix of uses can be based. In this
instance, getting the retail right at the ETC will help underpin the future successful delivery of complimentary
employment land uses, public transport usage and increased residential densities.
Successful retail is dependent on a strategic location, market demand and from a centre perspective a key anchor
tenant. From a staging perspective key anchor tenants in the early stage of delivery are typically supermarkets,
which if well located and timed, generate high levels of visitation, expenditure capture and strong returns for
centre owners.
5. Analysis of market potential indicates that a full-line supermarket would be sustainable by 2015/2016. At this time,
a full-line DDS allowing for the proposed Kmart at Mt Sheridan could also be sustained.
In addition to these major tenants a range of mini-major and specialty tenants will be included as a part of the
town centre. Typically these will contribute approximately 30-50% of the total tenancy floorspace mix.
6. Based on the retail modelling undertaken, the initial development catalyst stage of development should include
approximately 20,000sqm of core retailing, 5,000sqm of entertainment uses and 10,000sqm of small format bulky
goods / niche showrooms. These showroom uses could form the basis of an interim uses strategy, supporting the
development of the town centre, delivering early net community benefits before later transitioning into higher
density and employment delivering land uses.
Stage 2 of the development is ultimately dependent upon residential take-up however based on the revised
population forecasts undertaken would be viable in 2025/26. This is likely to include an additional 20,000sqm of
core retailing, 5,000sqm of bulky/showroom and an additional 5,000sqm in entertainment uses such as a tavern
and a cinema complex.
At completion it is envisaged that the ETC would contain approximately 40,000sqm of core retailing, 15,000sqm of
bulky goods and 10,000sqm of entertainment uses. This represents approximately 40% of the total floorspace
demand for the corridor at capacity, and allows for significant other retail opportunities including Cooper Road,
Maitland Road, Gordonvale and additional convenience centres.
i
7. In terms of office and community service opportunities the proposed delivery of the Edmonton Health Precinct is a
major employment generator and will go a long way to ensuring the ETC success as a mixed use node. In
addition to this and based upon a demand led employment land model approach, the bottom line from a town
centre office space requirement is a total demand at capacity for approximately 30,000sqm of commercial office
floorspace on the ETC site.
8. From a staging perspective and based on our analysis of changes to the drivers of office demand we forecast that
the ETC could support around 3,000sq m – 4,000sqm of office space by 2016/17. It is important that the amenity
of the town centre is well established before commercial development proceeds. Having looked at successful
suburban office precincts, as well as the critical mass required for an office precinct, we suggest that an initial
stage of 3,000sq m of net lettable area (NLA) would be appropriate.
Beyond this level of critical mass, the delivery of additional commercial floorspace will need to be driven by a
range of factors including:
i. Government initiation or incentive
ii. Cost driven (rents needs to be low enough to attract occupiers but high enough to be feasible for
development)
iii. Lack of supply in the CBD (of the right size and quality)
iv. Large pool of qualified labour
v. Proximity to clusters of like or compatible industries (Hospital and health related demand)
vi. Accessibility and amenity
vii. Staff retention
9. The variety of retail and commercial catalyst uses identified for the site will deliver the amenity, access and
economics to support a significant amount of residential development. The ETC site in particular is well suited to
deliver a variety of dwelling types to meet this demand.
Given the mix of uses that will be within a walkable catchment, it is particularly suited for medium/high density
residential
10. Assuming current rates of underlying demand for medium/high density dwellings, there will be demand for an
additional 2,500 townhouses and apartments across the corridor. If the proportion of low density to medium/high
density product was to mirror rates of underlying demand across the wider Cairns region, this demand would
represent some 4,500 dwellings.
In either scenario, the quantum of underlying demand for residential density is significant, and as previously
stated, the ETC is ideally suited to satisfy some of this demand.
The exact quantum of units for the site is constrained by the residual land area, however by analysing the
proposed centre hierarchy for the southern corridor and assuming an unconstrained quantum of land it is
reasonable to assume that the ETC could capture up to 25% - 30% of the base medium/high density dwelling
demand; or approximately 600 - 750 dwellings.
11. In terms of staging, development feasibility constraints will dictate that the initial stages of residential will be
medium density / townhouse type product of 15 – 40dwg/ per ha. As development increases and the ETC matures
as an activity centre, underlying land values will increase and support the development of increased densities and
ultimately replace interim uses at latter stages of development.
ii1 INTRODUCTION
1.1 SCOPE
Colliers International has been engaged by AECOM to undertake a review of floorspace need and provide updated
sustainable floor space modelling for the Edmonton Town Centre.
The majority of the analysis for the corridor from a centres perspective was undertaken pre-GFC and based upon
residential development and population growth assumptions which have changed the current development landscape.
While short to medium term market fluctuations do not alter the long-term vision and quantum of floorspace from a
planning perspective, they can affect project timing, staging and commercial viability.
This report updates the capacity analysis and provides economic and market due diligence into the proposed staging and
timing of the town centre, in order to assist in plan refinement, deliverable land budgets and sustainable development
outcomes.
It considers an activity centre hierarchy that encourages town centre development which delivers:
Multi-purpose trip generation
Comparison shopping at the one location
Support other uses including office and community services
Higher housing densities adjacent to activity centres (which requires critical mass)
In preparing this report Colliers International has undertaken a detailed review of the key economic assumptions
underlying the existing planning frameworks and provided updated sustainable floorspace modelling for the site. Key
report formulation elements include:
Economic review
Detailed market due diligence
Up-dated capacity modelling
Development of appropriate land-use budgets
Staging, timing and implementation plan
The information in this report has been obtained from, and opinions herein are based on, sources believed to be reliable.
Although great care has been taken to ensure accuracy and completeness in this report, Colliers International has not
independently verified and does not accept responsibility for its completeness and accuracy of the factual information on
which its opinions and assumptions are based.
Further, as the report involves future forecasts, it can be affected by a number of unforeseen variables. It represents for
the party to whom or which it is addressed the best estimates of Colliers International, but Colliers International can give
no assurance that any forecasts will be achieved.
Page 1 of 321.2 STRATEGIC CONSIDERATIONS
In addition to the macro–economic and GFC market effects, which relate to timing rather than quantum impacts, two
further considerations need to be factored into the updated analysis;
1. Timing and status of the Mount Peter Master planning process; and
2. Queensland Health land resumption of 20ha of the subject site for a new hospital
Mt Peter MasterPlan
In November 2006 the then Cairns City Council resolved to undertake the master planning for the Cairns Southern
Corridor (former name for the Mount Peter Master Planned Area), including the establishment of the Master Planning
Taskforce.
On 9 May 2008, the Deputy Premier and Minister for Planning formally declared Mount Peter a Master Planned Area in
accordance with section 2.5B.3 of the Integrated Planning Act 1997 (IPA). This action required the Council to prepare a
Structure Plan for the Mount Peter Master Planned Area in accordance with Schedule 1A of IPA.
On 9 August 2010 Cairns Regional Council received a coordinated State agency response from the Department of
Infrastructure and Planning (DIP) as part of the First State Interest Review. Council has now completed its review of the
State interests and completed the required changes to the Mount Peter Structure Plan.
The finalised Structure Plan for the Mount Peter Master Planned Area is due for completion in March 2011 (adoption by
Council).
The implications of the Structure Plan for the Edmonton Town Centre from a timing and capacity perspective needs to be
considered in regards to residential land release and the sequencing of proposed district centres at Coopers Road and
1
Maitland Road. Note that a recent peer review of the Mt Peter retail sequencing undertaken by Foresight Partners
recommends:
... that development commences on the Maitland Road South site first so as to ensure that there is no adverse
impact on the development of the Edmonton Town Centre into a Major Regional Activity Centre. This differs from
the Draft Structure Plan which recommends that some development of the Coopers Road site occurs first.
Throughout the planning process, including the development of key background technical reports, the growth and
development of the Mt Peter area has been a key driver of demand for the Edmonton Town Centre. In this regard, it is
imperative that changes to development timing, take-up and retail hierarchy within this area be considered for
their impacts on Edmonton.
Hospital Site Acquisition
Queensland Health as resumed 20ha of the subject site, including road easement across site for the future development
of an additional public hospital.
The hospital would ultimately be a significant generator of employment, a town centre investment catalyst and significant
driver of retail demand.
No development timing or scope for the future hospital has been indicated.
Given the recent state investment of $446M in the redevelopment and expansion of the Cairns Base Hospital and the joint
federal funding ($7.5M) of the Edmonton Super Clinic it is envisaged that health related demand will be satiated in the
medium to long term across the area.
These factors need to be considered when allocating and planning for social infrastructure provisions across the balance
town centre area.
1
REVISED PEER REVIEW OF ECONOMIC DEVELOPMENT AND EMPLOYMENT STUDY, FORESIGHT PARTNERS; SEPTEMBER 2010.
Page 2 of 322 ECONOMIC IMPACT REVIEW
Colliers International has undertaken a review of the key documents and supporting needs assessments of relevance to
the Town Centre. In addition to the Cairns Centres Planning Strategy (1998) and the Centres Planning Strategy – Review
of Selected Aspects, 2001, two key reports have been identified which have underpinned the historical planning of the
Edmonton Town Centre (ETC). These reports include:
MacroPlan Australia, Edmonton Town Centre, Economic Impact Assessment, 2007
Conics, Edmonton Town centre, Centre Assessment, October 2008
Both of these reports were market scoping studies for the Edmonton Town Centre, outlining the potential land use mix,
quantum and timing.
2.1 KEY OUTCOMES
The MacroPlan report was written specifically for the subject site post completion of the 2007 Enquiry-by-Design, while the
Conics report was authored in October 2008 and is the most up-to-date analysis of Edmonton Town Centre development
opportunities.
Key findings from these reports from a development scope and quantum perspective include:
Figure 1: Proposed Retail and Commercial Budgets
Stage 1 Stage 2
RETAIL
MacroPlan Core - 15,000sqm (2011)
Bulky Goods – 10,000sqm(2011) 40,000sqm (at capacity: 2021)
Conics Core – 20,000sqm (2011 – 2016) Core (45,000sqm)
Bulky Goods – 10,000 – 20,000 (2009) Bulky goods to be replaced by high density office
and residential
COMMERCIAL
MacroPlan
n/a 62,170 sq m (2021)
Conics 40,000 sq m (2011 – 2016) 100,000 sq m at capacity
Source: KPMG (2006). MacroPlan (2007). Colliers International 2011.
A detailed analysis of key assumptions and implications are outlined in the following sections.
Page 3 of 322.2 CRITICAL ASSUMPTIONS
Assumptions MacroPlan Conics Variability
1. Trade Area Delineation No staging. No Staging. Conics have four areas of the catchment
Primary catchment Area 1 MacroPlan maintain the same MTA structure
Immediate populations surrounding the subject North of the Subject site covering the area north of throughout their modelling (i.e. no staging)
site. Includes Mt Sheridan, east to Bruce Hwy, Forester Road in Mt Sheridan and South of
south to Peterson Rd and west to edge of urban Anderson Road in Bayview Heights.
development
Area 2
Secondary catchment North Immediate population surrounding the subject site
Bounded by Anderson Rd to the north, Foster including Bentley Park and Edmonton.
Rd to the south, mountain range to the west and
floodplain to the east. Area 3
The Mt Peter Study Area south of the subject site.
Secondary catchment South
Represents the southern growth corridor and Area 4
extends to include the township of Gordonvale. Includes the towns of Goldsborough and Gordonvale
Area is currently undeveloped. south of the Mt Peter Study Area.
2. Trade Area Population MTA: Total Area MTA for Conics as at 2011 was 42,318. For
Growth 2001: 26,764 2008: 37,352 MacroPlan it was 39,788.
2006: 32,596 (4.02%) 2011: 42,318 (4.25%)
2011: 39,788 (4.07%) 2016: 52,868 (4.55%) MTA for Conics as at 2021 is 61,568. For
2016: 45,346 (2.65%) 2021: 61,568 (3.09%) MacroPlan it is 50,303.
2021: 50,303 (2.10%)
Area 1:
PTA: 2008: 7,949
2001:16,061 2011: 8,898 (3.83%)
2006: 19,859 (4.34%) 2016: 8,791 (-0.24%)
2011: 24,556 (4.34%) 2021: 8,686 (-0.42%)
2016: 27,986 (2.65%)
2021: 31,045 (2.10%) Area 2
2008: 20,837
STA North 2011: 22,341 (2.35%)
2001: 5,776 2016: 24,879 (2.18%)
2006: 7,314 (4.84%) 2021: 27,354 (1.91%)
2011: 9,262 (4.84%)
2016: 10,556 (2.65%) Area 3
2021: 11,710 (2.10%) 2008: 467
2011: 666 (12.56%)
STA South 2016: 6,129 (55.88%)
2001: 4,928 2021: 11,461 (13.34%)
2006: 5,424 (1.94%)
2011: 5,970 (1.94%) Area 4
2016: 6,804 (2.65%) 2008: 8,099
2021: 7,548 (2.10%) 2011: 10,413 (8.74%)
2016: 13,068 (4.65%)
Cairns (C) Trinity 2021: 14,067 (1.48%)
2001: 30,096 Source: 2006 ABS Census, Conics
2006: 36,088 (3.04%)
2011: 40,930 (3.17%)
Page 4 of 32 2016:46,647 (2.65%)
2021:51,746 (2.10%)
Source: PIFU estimates revised upwards by MP
3. Retail spend per capita/ For 2005/06: Per h/hold MacroPlan use Market Info based on 2001 Census
house hold PTA STA North STA
South Area 1 Area 2 Area 3 Area 4 Conics use Market info based on 2006 Census and
Supermarket $2,688 $2,859 $2,691 the 2003/2004 Household Expenditure Survey.
Restaurant/cafe $1,112 $1,171 $1,067 Convenience $12,501 $12,243 $12,243 $11,985
Clothing/access $1,160 $1,336 $1,002 Bulky Goods $5,657 $5,504 $5,504 $5,351
Furniture/white gds $1,041 $1,183 $932 Clothing/access $1,885 $1,808 $1,808 $1,732
Electrical $852 $932 $673 Food and Beverage $3,305 $3,225 $3,225 $3,146
Houseware/soft gds $573 $668 $521 Other $1,982 $1,908 $1,908 $1,833
Hardware $312 $344 $257
Sports/hobbies $478 $498 $402
Services $387 $386 $298
Newsagent/chemist $353 $402 $351
Bottle shop $641 $738 $647
Supermarket $469 $505 $421
Total catchment $10,066 $11,022 $9,261
4. Market share For proposed development: Market share averages Conics market share for the ETC is a applied as a
major regional activity centre of 21% to 33%t. It
2007 – 2016 CBD and Main Street – 10%-30% assumes a market share of the total trade area and is
Supermarket 21% Regional Centres – 8% to 15% not staged.
Specialty 26% Sub- regional Centre – 13%-18%
Bulky goods 8% Supermarket Centres – 20% to 30%
Overall 13% Convenience Centres – 8% to 15%
Bulky Goods (Precinct and centres) – 20% to 30%
5. Competition Existing
Within the MTA Approved Mount Sheridan Plaza to a 26,479 sq m
Mt Sheridan Plaza (7,620 sqm) and Piccones centre with an additional 4,030 sq m supermarket
(2,500 sqm). Total retail floorspace of and 6,100 sq m DDS.
approximately 10,120 sqm. 4,738 sq m centre anchored by a 3,200 sq m Coles
in Edmonton opened in 2009.
Beyond the trade area 3,193 sq m with a 2,523 sq m supermarket planned
7 centres of various size. Total retail in Edmonton named Bentley Park Shopping centre.
floorspace of approximately 179,267 sqm.
6. Retail turnover density For proposed centre:
2006 N/A
Supermarket $8,966
DDS $4,500
Retail specialty $4,500
Total centre $5,691
Bulky goods $3,200
7. Staging and sustainable No staging. No Staging MacroPlan’s short term forecast for sustainable floor
floorspace space is 24,500 sq m for 2011
Sustainable floor space for proposed development: Retail floor space demand for 2011:
Conics floor space demand is assessed for t he total
2011 Area 1 trade area rather than for the subject site. There is
Supermarket 4,000 Convenience: 19,268 capacity for 84,643 sq m of retail floor space required
Specialty 10,500 Bulky goods: 6,153 in the trade are by 2011.
Bulky goods 10,000 Clothing & footwear: 2,050
Page 5 of 32Total 24,500 Food & beverage: 3,081
Other: 2,156
Area 2
Convenience: 13,136
Bulky goods: 13,779
Clothing & footwear: 4,527
Food & beverage: 6,922
Other: 4,776
Area 3
Convenience: 491
Bulky goods: 515
Clothing & footwear: 169
Food & beverage: 259
Other: 179
Area 4
Convenience: 6,324
Bulky goods: 6,589
Clothing & footwear: 2,132
Food & beverage:3,321
Other: 2,257
Total
Convenience: 25,779
Bulky goods: 27,036
Clothing & footwear: 8,879
Food & beverage:13,582
Other: 9,368
TOTAL: 84,643
8. Commercial office space Commercial floor space demand 2021: Commercial floor space Demand Conics Containment Rate 80% assuming 15sq m per
white collar worker.
20% Containment: 31,085 2008: 74,705
40% Containment: 62,170 2011: 84,636 MacroPlan assumes 20 sq m per white collar worker
60% Containment: 93,255 2016: 105,736
2021: 123,136
9. Conclusions 15,000 sqm of GLA possible at Edmonton Town Centre by ETC should have 45,000 sq m of retail floors pace at
2011 capacity.
The bulky goods component represents a further 10,000 ETC should include 10,000 to 20,000 sq m of bulky goods
sqm, mentioned within the report at 2011. space.
Commercial office space at 2021 should be 62,170 sq m. ETC should have 110,000 sq m of office space at capacity.
40,000 sq m of office space in initial development.
Page 6 of 322.3 IMPLICATIONS FOR THE EDMONTON TOWN CENTRE
Assessment and review of the key economic analysis documents for the Southern Corridor, highlights three (3) key issues
relevant to the development and timing of the Edmonton Town Centre. Each of these are discussed in further detail
following.
Retail Supply Additions
The MacroPlan (2007) report does not factor from a retail demand assessment perspective some of the more recent and
significant retail additions, and whilst the Conics report acknowledged some of the more major planned additions it does
not deal with potential impacts and implications on the proposed ETC.
These additions are highly relevant to the Edmonton Town Centre, given both proximity to the subject site and the wider
implications for the southern corridor retail hierarchy.
The developments need to be factored into the retail modelling and sequencing plans for the ETC, and specifically include:
The recently constructed and opened neighbourhood centre (Coles Sugarworld); comprising 4,400sqm of retail
floorspace (including 3,200sqm Coles and 1,200 specialty) opposite the subject site
Extension and redevelopment of existing Piccones Shopping Centre, including a new 1,600sqm IGA,
redevelopment of the existing supermarket, including addition of 342sqm of specialty and 732sqm tavern and
bottle shop.
The approved Mount Sheridan Plaza expansion; comprising an additional 18,905sqm of floor space (inc. 14,500
retail). Major tenant additions include a Woolworth supermarket, K-Mart department store, mini major (The Reject
Shop) and 38 additional specialty stores. Construction is set to commence in December 2011.
From a spatial perspective, the location of each of these supply additions is illustrated in Figure 2 below.
Figure 2: Current Supply
Source: MapInfo 2010. Colliers International 2011.
Page 7 of 32As illustrated, each the completed and approved retail additions are proximate to the ETC site. While the Sugarworld
Coles and Piccones IGA additions are convenience based, servicing the local surrounding residential population, the
addition of full-line discount department store at the Mt Sheridan Plaza effectively elevates its functionality, from a natural
catchment perspective to a district/sub-regional role.
This has direct implications on the natural trade catchment achievable at the ETC and ultimately the timing and staging of
delivery. This will be analysed in more detail in Section 4.
In addition to the above, it is important to note future pipeline projects that are currently not yet approved but mooted.
These include the supermarket at Draper Road, Gordonvale where Woolworths have recently purchased a development
site.
More importantly, the planned district centres at Cooper Road and Maitland Road have significant implications on the
viability and timing of the ETC. Given the approval at Mt Sheridan, the ETC will rely heavily on trade from the Mt Peter
catchment and as such, appropriate sequencing and scoping of the planned district centres is imperative.
Trade Area Delineation
Given the retail additions outlined above, the trade areas utilised in both MacroPlan and Conics report have been revised
to accommodate retail and employment floorspace staging. While the implications are relatively minor from a corridor wide
capacity assessment, a more segmented trade area analysis including primary, secondary and tertiary areas is deemed to
better reflect the trading reality and subsequently better inform ETC project delivery.
Given the impending expansion and inclusion of DDS level retailing at Mt Sheridan, retailing within the Edmonton area will
not draw significant market shares beyond Bentley Park until it develops the critical mass and retail and employment mix
that is significantly greater and more diverse than Mt Sheridan.
As additional stages of the development incorporating a mix of retail, entertainment and employment generators are
delivered, such as the hospital, the trade area and employment catchment can be expected to expand. The timing of this
is analysed in more detail in Section 4.
A revised trade area acknowledging the recent and impending supply additions has been illustrated overleaf in Figure 3.
Note that as residential development occurs to the south within the Mt Peter catchment, these initial release areas will
become part of the ETC primary catchment until significant critical mass exists to deliver a retail offering at Coopers Rd.
Page 8 of 32Figure 3: ETC Staged Trade Area
Source: Colliers International 2011.
Page 9 of 32Population Projections
In the MacroPlan report the assumed initial delivery and completion dates for Stage 1 of the ETC have passed. The
reasons for this are no doubt numerous and not the subject of this paper, however poor market conditions and a lack of
wider development industry momentum are no doubt partially responsible.
This ’down cycle’ in project delivery has been prevalent across the wider development industry, including residential
growth and development. The extent of this slow-down will be discussed in more detail in section 3, however the ultimate
impact on the ETC is that population growth and residential take-up in the corridor has not occurred at the rates projected.
The assumed rates of growth for the corridor and how they relate to the ETC have been outlined in Figure 4 below.
Figure 4: Population Growth Assumptions
2006-2011 2011-2016 2016-2021
MacroPlan MTA 4.07% 2.65% 2.10%
Conics 4.40% 4.55% 3.09%
PIFU Trinity SLA 3.17% 2.65% 2.10%
Source: Colliers International 2011.
As illustrated both the Conics and MacroPlan reports applied stronger rates of growth for the 2006 to 2011 period based
on observed rates of growth at the time. Post-2011 MacroPlan applied PIFU forecasts for the period to 2021, while Conics
assume continued strong rates of residential development.
3
Based on the above rates of growth the Conics forecast assumed an annual household formation rate of approximatley
550 homes and the MacroPlan analysis, a household formation rate of 480 per annum.
Analysis in section 3.5 illustrates that these levels of household formation, based on analysis of new dwelling approvals
and land sales in the southern corridor while readily acheived in the 2005-2007 period, have not been acheived since.
While the ultimate population for the Mt Peter corridor remains as planned, the short to medium term implications of a
cyclical downturn for the southern corridor has been delayed take-up and hence delayed retail and commercial demand.
The implications of reduced population growth rates in the short-to-medium term from a development timing perspective
will be analysed in more detail in Section 4.
3
BASED ON HISTORICALLY OBSERVED HOUSEHOLD SIZE RATIOS FOR THE TRINITY SLA; AT 3.0 PERSONS PER DWELLING.
Page 10 of 323 ECONOMIC UPDATE
The Cairns economy experienced a tough year during 2010 which has largely carried into the first half of 2011, with the
world wide slowdown in tourism due to the state of global economic conditions and the impact of natural disasters
affecting the local tourist industry and the economy generally.
Similarly the Cairns residential building and unit development industries which contributed to a buoyant economic situation
in recent years have also experienced a slowdown in activity with no new substantial private sector projects being brought
to market.
Together these factors led to a large increase in the unemployment rate within the Cairns region, which peaked at 13.8%
in September 2009. While the number of jobs in the region increased considerably over 2010, the lack of construction
together with the flow-on effects of Cyclone Yasi continues to show effect in 2011.
3.1 TOURISM
The Tourism Industry is a major component of the Cairns economy, and whilst domestic tourist visitation to Tropical North
Queensland held up well during the economic downturn, the number of international tourists visiting the Far North
Queensland tourism region has been less resilient than their domestic counterparts.
Passenger numbers at the international terminal to March 2011 have struggled to maintain the levels that were achieved
during 2010 and are on a reducing trend. International passenger numbers are likely to remain soft due to a reduction in
tourist numbers from Japan following the earthquake and tsunami and the surge in the Australian dollar.
Figure 5: Domestic and International Visitors to Far North Queensland, 1999/00 to 2009/10
2,500,000
2,000,000
Number of visitors
1,500,000
1,000,000
500,000
0
1999–00 2000–01 2001–02 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10
Source: Tourism Research Australia. Colliers International 2011.
Page 11 of 323.2 BUILDING APPROVALS
Building approval figures for the Cairns urban area continue to languish, with latest figures showing only 22 new houses
and no new units approved in April 2011, down significantly on the long-term average and back to a level not vastly
different from the GFC-affected lows of January- February 2009. There have been no new units approved in Cairns City
since July 2010.
Historically, Cairns experienced a sharp increase in number of residential building approvals in 2006-2007 with total
number of building approvals reaching approximately 2,500, before a sharp decline in 2008 – 2009 to 784 (remaining
approximately one third of approvals during 2006 – 2007). Building approvals again started to increase gradually during
2009 –2010 reaching approximately 953.
Figure 6: Number of Residential Building Approvals in Cairns
3000
2500
2000
1500
1000
500
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Separate Dwellings Other Dwellings
Source: ABS, Colliers International 2011.
4
Cairns Trinity makes up an average of approximately 30% of total building approvals in Cairns. Cairns Trinity experienced
the similar trend during 2006 – 2007 with number of building approvals reaching approximately 913 before declining to
approximately 229 during 2008 – 2009.
Figure 7: Number of Residential Building Approvals in Cairns Trinity
1000
900
800
700
600
500
400
300
200
100
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
Separate Dwellings Other Dwellings
Source: ABS, Colliers International 2011.
4
CAIRNS (C) - TRINITY (STATISTICAL LOCAL AREA) – INCLUDES AREAS BETWEEN W OREE IN THE NORTH AND GORDONVALE IN THE
SOUTH.
Page 12 of 323.3 UNEMPLOYMENT
An uncertain outlook and weaker business sentiment over the past few years has contributed to subdued economic
activity, low levels of employment growth and rising levels of unemployment. In the year to October 2010, the number of
employees in Far North Queensland rose by 7,800 to 141,600. However, there has been a significant impact from the
recent weather and the downturn in tourism caused by the strength of the Australian dollar. This has seen employment
numbers fall dramatically by 12,585 to 129,100.
Figure 8: Employment in Far North Queensland, Nov 2007 - Mar 2011
10000 145,000
140,000
5000
Number of empoyed persons
Growth in employed persons
135,000
0
130,000
-5000
125,000
-10000
120,000
-15000 115,000
Jan-2008
Jul-2008
Jul-2009
Jul-2010
Apr-2008
Jun-2008
Jan-2009
Jun-2009
Jan-2010
Jun-2010
Jan-2011
Oct-2008
Apr-2009
Oct-2009
Apr-2010
Oct-2010
Dec-2010
Mar-2011
Nov-2007
Dec-2007
Mar-2008
Aug-2008
Sep-2008
Nov-2008
Dec-2008
Mar-2009
Aug-2009
Sep-2009
Nov-2009
Dec-2009
Mar-2010
Aug-2010
Sep-2010
Nov-2010
Feb-2008
Feb-2009
Feb-2010
Feb-2011
May-2008
May-2009
May-2010
Growth in employed persons
Source: ABS, Colliers International 2011.
Unemployment in Far North Queensland increased from 4.3% in August 2008 to 12.4% in February 2010, however over
the past seven months the unemployment rate has declined substantially and was recorded at 6.9% for October 2010
(refer Figure 9). The unemployment rate is incredibly volatile to market conditions as in March 2011 unemployment stood
at 10.6%, mainly due to recent weather activity and the continued downturn in tourism in the region.
In the near term, we expect there to be growth in employment in the construction services as rebuilding of cyclone
damaged areas begins. Activity in the private sector is expected to strengthen due to rising business investment and
moderate levels of consumption growth, which combined should lead to stronger employment growth.
Page 13 of 32Figure 9: Unemployment in Far North Queensland, 2007-10
Number of unemployed persons ('000) 25 16
14
20
Unemployment rate (%)
12
15 10
8
10 6
4
5
2
0 0
Aug-2008
Aug-2009
Aug-2010
Feb-2008
Feb-2009
Feb-2010
Feb-2011
May-2008
May-2009
May-2010
Nov-2007
Nov-2008
Nov-2009
Nov-2010
Unemployed persons Unemployment rate (RHS)
Source: ABS, Colliers International
3.4 GENERAL ECONOMIC IMPLICATIONS
Understanding the local market and its positioning within the broader economic cycles is a critical input to project staging.
In this regard, key findings from the economic analysis include;
Whilst the Australian economy remained highly resilient, a period of slow and gradual recovery is expected
The Cairns economy has slowed significantly, given a heavy reliance on a depressed tourism, construction and
property industry
Despite the buffering effects of the FHOG, residential building activity has decreased significantly over the past
12-18 month period, with the average monthly dwelling approvals down -30% to -40% from the long term average.
Unemployment rose significantly to almost 14% on the back of high levels of employment vulnerability in the
region; and while job growth gained some momentum over 2010 year to date, they have again been impact by the
impact of flooding and Cyclone Yasi.
Tourism numbers remain resilient on the back of continued domestic demand, however international demand has
reduced.
In terms of the property cycle, Colliers International sees the Cairns market approaching if not at the bottom of the
cycle.
General consensus would suggest that the economy now appears to have been through the worst of the downturn and is
on a slow recovery path. Extra confidence has also arisen from the introduction of additional air services into Cairns earlier
this year, which increased total inbound seat capacity by approximately 15%.
Nevertheless, the Cairns economy is continuing to lag the national economic recovery and we expect relatively soft
economic conditions to remain in place in Cairns for the remainder of 2011.
Going forward, job generating major projects remain a key component of any economic recovery, with the Edmonton
Town Centre site strategically positioned to help meet this end
Page 14 of 323.5 POPULATION GROWTH IMPLICATIONS
The implication of increasing unemployment and decreased construction activity is decreased new housing demand and
reduced population growth. This is critical for the timing of Greenfield / fringe urban town centres such as Edmonton.
In order to recast retail demand projections and development timing, an updated review of population growth to-date and
revised projections need to be undertaken. In this instance, analysis of the most recent population growth has been based
on Estimated Residential Population statistics prepared by the ABS for the Trinity Statistical Local Area (SLA).
The current ERP estimates undertaken by the ABS are based on 2006 Census data and updated based on changes in
dwelling approvals, Medicare enrolments and counts of people on the Australian Electoral Roll. This data is illustrated in
Figure 10, showing significantly reduced population growth post the peak in 2007.
Going forward Colliers has undertaken near term projections based upon, a range of inputs including:
Timing for completion of the Mt Peter MasterPlan;
Historical analysis of the relationship between building approvals, new lots sales and household formation;
Cairns property trends and cyclical growth rates; and
Analysis of the lot production pipeline.
The projections are illustrated in Figure 10 below. These figures will form the basis of revised retail demand modelling in
5
the following section. Post 2016 analysis of trunk infrastructure for the Mt Peter area and PIFU and forecasts will be
utilised.
Figure 10: Short-Medium Term Population Forecasts
8.0%
ABS ERP DATA COLLIERS INTERNATIONAL
FORECASTS
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2002 2003 2004 2005 2006 2007r 2008r 2009p 2010p 2011p 2012p 2013p 2014p 2015p 2016p
Source: ABS, Colliers International
5
MOUNT PETER MASTER PLANNING PART 4 – TRUNK INFRASTRUCTURE REPORT APPENDIX A: GROWTH AND SEQUENCING
Page 15 of 324 RETAIL SCOPE AND TIMING
The challenge for the Southern Growth Corridor is to consolidate and grow appropriate retail formats across a distribution
of centres that encourage mixed activity and minimise the number of private vehicle trips out of the areas to access
services which could and should be provided locally.
It is critical therefore to consider a retail hierarchy that encourages town centre development which delivers:
Multi-purpose trip generation
Comparison shopping at the one location
Support other uses including office and community services
Higher housing densities adjacent to activity centres (which requires critical mass)
This section of the report provides an updated analysis of the existing and forecast supply and demand conditions within
the region in order to assess the quantum, mix and staging of sustainable retail floor space in the area.
The model used to quantify and update the understanding of retail demand for the Edmonton Town Centre is outlined
below.
Figure 11: Retail Assessment Model
•Analyse exisiting actual trading patterns with exisiting competitive framework
Trade Area •Define trade area based on a range of convenience and accessibility factors
Delineation
• Quantify growth in population in the trade area as the primary driver of increased retail demand
• Assess and test estimations and projections are relevant and realistic to the trade area
Population
• Who are they, what do they demand, how do they shop and how much do they spend.
Customer • Project per capita retail spends over the analysis period
Analytics
• Assess total quantum and mix of retalining on the ground and in the pipeline?
Compettive •Confirm performance KPI's
Framework
•Forecast retail need
Need and •Quantify mix and timing
Viability
•Test outcome for commercial viability
•Outline stagining and implementation stratgey
Delivery
Source: Colliers International 2010.
Page 16 of 324.1 RETAIL ASSESSMENT ASSUMPTIONS
1. Trade Area Delineation
The trade area catchment used in the assessment of market potential for the ETC is
illustrated in Figure 3. This trade area is driven by convenience and need,
acknowledging the recent and impending supply additions at Coles Sugarworld,
Piccones and Mt Sheridan Plaza. It also considers typical accessibility factors
including:
Road networks and traffic flows;
Natural and man-made physical boundaries such as rivers, rail, freeways etc;
Co-location with higher order facilities and/or services
Level of employment and journey-to-work patterns; and
Population distribution
2. Population Growth
The population forecast used in the analysis include:
Assumptions
- Short-term (2010-2016) - Colliers International projections outlined in Section
3.5
- Long-Term – PIFU and growth and sequencing data from the Mt Peter Master
Planning Pt4 – Trunk Infrastructure Report.
3. Customer Analysis Analysis of per capita retail expenditure characteristics of trade area residents is based
on MarketInfo data developed by MDS. This data has been generated by combining
and updating data from the Population Census and the ABS Household Expenditure
Survey (HES) on a micro level, using micro simulation modelling techniques.
That data is based upon the 2006 Population Census and the latest Household
Expenditure Survey 2003/2004. The data is benchmarked and updated to the
Australian National Accounts and dollar values inflated to 2010 dollars.
No allowance has been made for inflation in forecasting future retail. However a small
increase of 1% per annum has been factored into the expenditure estimates to reflect
expected real increases accruing in household spending over this period.
4. Competitive Supply Based on floor space audits undertaken by Colliers International in November 2010.
5. Need and Viability A trade area aggregate demand approach has been undertaken, so that a detailed
understanding of people movements, expenditure flows and ultimately floor space
distribution can be assessed.
The advantage of analysing demand from a net oversupply/undersupply perspective is
that from a catchment perspective, negative impacts are avoided because growth in
floor space need is in-line with population growth and threshold triggers.
Retention potential and sales productivity levels based on analysis of expenditure
retention, escape expenditure and sales levels achieved at comparable locations. Data
sourced from Colliers International internal databases, UrbisJHD retail averages and
background reports analysed in Section 2 of this report.
Market Potential is the net aggregate demand based on the difference of total
sustainable floor space and existing supply by retail category. Market potential by
category has been tested against realistic market shares achievable at the relevant
store categories.
Page 17 of 32Figure 12: ETC Trade Area Retail Assessment
Source: Colliers International 2011.
Page 18 of 324.2 RETAIL NEED
From a trade area demand perspective the fundamental bottom line from a net supply/demand perspective is that there is
currently a retail supply of 21,375sqm across the total study area and a total market potential (assuming some retention of
the current high levels of escape expenditure) of approximately 56,700sqm.
This level of market potential allows for continued escape expenditure of higher order shopping to other major sub-
regional and regional centres (including the Earlville and Cairns CBD).
The result is a current shortfall across the trade area of some 40, 000sqm of retail floor space. Note though the expansion
of Mt Sheridan Plaza does absorb a proportion of this need on its assumed opening in 2013. This is illustrated in Figure 13
below.
Figure 13: Aggregate Retail Demand
Mt Sheridan Plaza
Expansion
Source: Colliers International 2011.
Based on the continued infill in Edmonton and residential take-up at Mt Peter, additional floorspace demand across the
study area going forward equates to approximately;
2015 – 30,000sqm
2020 – 40,000sqm
2030 – 65,000sqm; and
100,000sqm at capacity.
Page 19 of 32Note that the quantum outlined above also includes additional potential floor space at Gordonvale, and the planned
centres within the Mount Peter Area. As such, in order to ensure the commercial viability of the ETC, strategic timing and
sequencing of additional retail within the Mt Peter area needs to be carefully considered.
4.3 RETAIL FORMAT
It is impossible to forecast the exact future composition of retailing in the southern corridor and the ETC, as new retail
concepts will continue to evolve over time. Many of the retail concepts that exist in the Australian retail environment now,
such as super regional centres, dedicated bulky goods centres, factory outlets etc did not exist 20 years ago.
Over the period to 2020 however, more certainty exists to the type of tenants that will be available for expansion of retail
facilities.
In particular, one of the key components of any future retail expansion within the ETC trade area will be the addition of
further supermarket floorspace. In terms of major grocery offers, the trade area is currently served by one full line Coles at
Edmonton, and three IGA’s located at Piccones, Centenary Marketplace and Gordonvale. Note that while outside of the
trade area, the proposed full-line Woolworths at Mt Sheridan Plaza will generate visitation and market share from ETC
trade area residents.
Total supermarket floorspace within the trade area is equal to approximately 13,500 sqm. This provision currently serves a
population of some 30,317 residents. As such, supermarket floorspace provision is approximately 323 sqm per 1,000
persons, which is slightly lower than the Queensland average of 350 sqm per 1,000 persons. The lower supermarket
provision confirms the demand for additional supermarket floorspace outlined in Figure 12, and would support the strong
trading performance at existing supermarkets within the corridor.
Given the high population growth, the supermarket floorspace requirement increases significantly, clearly indicating the
potential for further supermarket floorspace in the future. As illustrated in Figure 12, the level of additional supermarket
floorspace required is approximately 7,300sqm by 2020.
Based on full-line offerings of 3,000 – 3,500sqm this equates to an additional two supermarkets. Given the existing
provision, this is likely to include at least one major supermarket (Woolworths) and potentially a secondary offering such
as an Aldi at the ETC.
In addition to supermarket floorspace, the ETC is likely to contain a discount department store (DDS). In Australia, there is
typically one major discount department store (6,000 – 8,000sqm) provided for every 40,000-45,000 residents. In non-
metropolitan region, such as Cairns, the provision is generally one store for every 30,000-35,000 residents.
Given a capacity population of approximately 95,000 persons at capacity within the defined region indicate that 3 discount
department stores would be supportable in this area. Given the impending development of a full-line Kmart at Mt Sheridan,
which is likely to draw up to 50% of its DDS trade from the ETC trade area, one full-line DDS, such as Big W or Target
would be recommended for the ETC site in the initial stages. Timing and staging of the development will be discussed in
the following section
The addition of both discount department store and supermarket floorspace will attract further food and non-food specialty
shops, who will co-locate with the DDS and supermarkets, feeding off the customer flows generated by these tenants.
Furthermore, small bulky goods/homemaker showrooms should be added as extension of the town centre to deliver a
range of interim uses and catalyst development opportunities, ultimately supporting larger free-standing homemaker
centres at more appropriate locations.
From the above, it is clear that there will be significant demand for a wide range of retail facilities with the major tenants
being discount department stores and supermarkets. The timing of these types of facilities is discussed in the following
section.
Page 20 of 324.4 RETAIL STAGING IMPLICATIONS
Successful delivery of retail early in a town centres lifecycle ensures delivery of early community benefits, catalyst
investment and a platform on which a mix of uses can be based. In this instance, getting the retail right at the ETC will
help underpin the future successful delivery of complimentary employment land uses, public transport usage and
increased residential densities.
Successful retail is dependent on a strategic location, market demand and from a centre perspective a key anchor tenant.
From a staging perspective key anchor tenants in the early stage of delivery are typically supermarkets, which if well
located and timed, generate high levels of visitation, expenditure capture and strong returns for centre owners.
Analysis of market potential indicates that a full-line supermarket would be sustainable by 2015/2016. In this case the
operator is likely to be Woolworths give the new Coles located opposite the subject site and a new Supa IGA at Piccones.
At this time (2015/2016), a full-line DDS allowing for the proposed Kmart at Mt Sheridan could also be sustained.
In addition to these major tenants a range of mini-major and specialty tenants will be included as a part of the town centre.
Typically these will contribute approximately 30-50% of the total tenancy floorspace mix.
The recommended staging for the retail component of the ETC is outlined below.
Figure 14: ETC Recommended Retail Staging
2015/16 2025/26
Edmonton Town Centre Stage 1 Stage 2 Total Centre
4,000 4,000 8,000
Supermarket
7,500 7,500 15,000
DDS
2,500 2,500 5,000
Mini-major
6,000 6,000 12,000
Specialty
10,000 5,000 15,000
Bulky Goods
30,000 25,000 55,000
TOTAL
Entertainment (Cinema / Tavern) 5,000 5,000 10,000
Source: Colliers International 2011.
The initial development catalyst stage of development should include approximately 20,000sqm of core retailing and an
addition 10,000sqm of small format bulky goods / niche showrooms. These showroom uses could form the basis of an
interim uses strategy, supporting the development of the town centre, delivering early net community benefits before later
transitioning into higher density and employment delivering land uses.
Stage 2 of the development is ultimately dependent upon residential take-up however based on the population forecasts
undertaken would be viable in 2025/26. This is likely to include an additional 20,000sqm of core retailing, 5,000sqm of
bulky/showroom and an additional 5,000sqm in entertainment uses such as a tavern and a cinema complex.
Page 21 of 32At completion it is envisaged that the ETC would contain approximately 40,000sqm of core retailing, 15,000sqm of bulky
goods and 10,000sqm of entertainment uses. This represents approximately 40% of the total floorspace demand for the
corridor at capacity, and allows for significant other retail opportunities including Cooper Road, Maitland Road, Gordonvale
and additional convenience centres.
Page 22 of 325 COMMERCIAL ANALYSIS
The retail staging outlined in the previous section is based on delivery of a retail hierarchy that encourages successful
town centre development at the subject site. As previously discussed, critical components of this success include:
Multi-purpose trip generation
Comparison shopping at the one location
Support for other uses including office and community services
Higher housing densities adjacent to activity centres (which requires critical mass)
In terms of office and community service opportunities the proposed delivery of the Edmonton Health Precinct is a major
employment generator and will go a long way to ensuring the ETC success as a mixed use node.
5.1 CAIRNS COMMERCIAL MARKET
Prior to discussing other opportunities it is important to understand the broad hierarchy of commercial floor space as it
exists in Queensland and Cairns. Across Cairns there are three key forms of office accommodation:
In Centre or City Centre office (principally provided as multi-tenant office developments in activity centres) mainly
confined to the Cairns City Centre.
Out of Centre Campus style office: Mainly provided on Business Zoned land in business parks (there is limited
supply of this product in Cairns but it is emerging)
Out of Centre Ancillary office: Provided to accommodate management and administrative functions of
manufacturing and distribution companies on Industrial Zoned land
The Cairns office market is almost totally CBD centric. There is an estimated 150,000 sq m of office space located in the
cairns CBD, with some periphery offices located in Earlville, Westcourt and Edmonton in suite accommodation.
Government is the major occupier of office space in the region followed by mining companies, solicitors and financial
advisors. Government generally occupy larger floor plates. However, the average for the Cairns CBD is between 200-300
sq m.
During 2007-08 the Cairns CBD saw a number of new office buildings commence construction, including the $79.5 million
State Government office tower with 9,500 m2 of lettable area. These have largely been completed and are mostly fully let.
This has resulted in the addition to the market of a number of quality buildings with 4 star green ratings.
Since the State Government office tower has commenced occupation, there has been an increase in vacancy levels in
backfill space. Whilst this is mainly secondary space, there is likely to be continued downward pressure on secondary
rents, and the potential emergence of incentives. It is however considered that modern, good quality office buildings will
remain in high demand and sustain existing rental levels.
Gross effective office rents in Cairns have remained stable since the market peak; when prime rents reached around
$350/m2 per annum, up from around $275/m2 in early 2007. While the softer market conditions have eased upward
pressure on rents, there does not appear to have been any significant fall in rents.
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