As Australian retail giants pivot to large-scale, high density residential housing projects by leveraging their massive land assets, they are also competing with traditional developers to invest in sites earmarked for mixed-use development.

Supported by fast-track approval schemes from various state governments, thousands of apartments are currently being planned by leading supermarket chains including Woolworths, Coles and Westfield above their stores in key cities across Australia. While supermarkets have always been integrated into mixed-use developments as part of broader amenities for residents, supermarket-anchored developments where residential apartments are built above retail spaces to maximise land use and long-term value are a recent trend.

Legislative reforms in New South Wales are seeing existing planning controls being overhauled to increase housing supply, especially around urban centres and transport hubs through faster and simpler approval processes. The NSW Government’s Transport Oriented Development (TOD) program, for instance, addresses the housing crisis by leveraging the potential of eight key transport hubs in Greater Sydney to accommodate high density mixed-use developments.

The Low and Mid-rise housing policy allows terraces, townhouses and residential apartments to be built within 800 metres of town centres and train stations, where residents can conveniently access shops, services and amenities as well as public transport and existing infrastructure, and easily commute to their jobs while allowing greater housing diversity and affordability, unlocking opportunities for shoptop housing.

While the TOD program is expected to add more than 60,000 new homes over the next 15 years, the Low and Mid-rise policy is set to deliver 112,000 homes across NSW over the next five years. Shoptop housing also received a boost recently with nine State Significant Development (SSD) proposals receiving approval from NSW Planning through the HDA pathway.

Among shoptop housing projects and proposals by Woolworths’ development arm, Fabcot are The Albion in Brisbane’s inner-north, with approved plans for 456 build-to-rent apartments across two 18-level residential towers above a shared retail podium; another supermarket-anchored 17-storey mixed-use project with 130 apartments on a vacant site in Kangaroo Point, also in Brisbane; a 110-apartment project across a part-eight, part-six storey building in Waterloo and a boutique apartment development with just 14 units in Rose Bay, both in Sydney; an approved dual tower, 11-storey, 148-apartment building in Melbourne’s inner city suburb of Elsternwick as well as another in Glen Iris, which will deliver 60 apartments across five storeys above a full-line Woolworths supermarket.

Woolworths Waterloo Bates Smart.jpg — *Woolworths Waterloo (Image credit: Bates Smart)*

Mixed-use developments anchored by Coles supermarkets include the Caringbah Pavilion, a 188-apartment project across two residential towers in the heart of Caringbah, NSW, which has received SSD approval; White & Weston, a 45-unit, three-level boutique apartment project in Balwyn in Melbourne’s inner-east; and a seven-storey residential tower with 72 dwellings in Neutral Bay, Sydney.

Another leading retail operator, Scentre Group, which operates 37 Westfield stores in Australia, has revealed ambitious plans for residential development at Westfield Hornsby in Sydney with a proposal for about 2,300 homes across towers up to 53 storeys, as well as Westfield Belconnen in Canberra, having received rezoning approvals for both sites. Scentre has also lodged an SSD application for a mixed-use precinct in Westfield Warringah Mall in northern Sydney to deliver 1,500 apartments across eight towers.

Rival shopping centre owner Vicinity Centres is also redeveloping its retail assets in Buranda Village in Queensland, Box Hill Central and Victoria Gardens Shopping Centre in Victoria, and Bankstown Central in New South Wales as mixed-use precincts, delivering more than 6,000 apartments across the four properties.

While these retail operators are looking to leverage their landholdings for higher returns through residential development that would also increase footfalls into their stores and lead to greater activation of the precinct, the proposals for mixed-use developments are facing opposition from local communities as they fear the traffic congestion, noise and overshadowing problems from the height, scale and massing of these buildings could turn calm residential areas into busy commercial areas. With supermarkets co-located with other services and stores in the same precinct, small businesses also fear competition.

Another pain point is that these high-density development proposals are bypassing local council rules and using fast-track planning laws and development facilitation programs offered by various state governments to undermine council decisions and veto community objections.

With fast-track approval schemes incorporating a mandatory affordable housing component, developers are integrating affordable rental units as a compliance add-on rather than a key outcome, defeating the intent and leading to accusations that the supermarket operators are gaming the system by exploiting this requirement to push for approval.

Even as retail giants grapple with council and community acceptance – hurdles typically faced by traditional property developers – there are voices of support for the idea of supermarket-anchored mixed-use developments that deliver everyday convenience to residents.

“Solving the housing crisis doesn’t just mean building more homes. It means being strategic about where these homes are built, close to transport lines and retail hubs so that people can move around the city with ease and have greater access to amenities and essential services,” says advocacy and urban policy thinktank Committee for Sydney.

Main image: Woolworths’ The Albion in Brisbane (Image credit: Cottee Parker Architects)

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