In a recent article by Bates Smart, according to Plan Melbourne, the population is likely to hit 10 million by 2051, thus the need for 1.5 million jobs to accommodate the changing workforce.

This, says the firm, has spurred the demand for new and the revitalisation of older commercial developments with Melbourne City Council’s data showing that 25 buildings are currently under construction within the Hoddle Grid.

The planning controls introduced last year relating to the permissible size of developments in the CBD and Southbank however, are having a significant impact on Melbourne’s skyline.

The controls, notes Bates Smart, were brought in to arrest construction of a wave of towers that display little regard for liveability for their inhabitants or the public on the north and western edges of the city.

The Victorian Government’ says that it will “provide improved public amenity and deliver consistency and certainty that will ensure our city grows in a way that enhances all that make it the world’s most liveable city”.

Of late, completed developments in the CBD have been up to four times larger than these new controls would allow.

The new provisions state that for every square metre of site area, a maximum of 18 square metres of floor area can be developed. So a 2,000sqm site can deliver a maximum of 36,000sq m of floor area.

More floor area will be granted if additional public or strategic benefit is provided such as public open space or affordable housing.

According to the Bates Smart research, developers and tenants are looking for floorplates sized no less than 1,500sqm NLA in CBD zones. There are several factors driving this area requirement.

“The challenge with the planning controls is that rather than stimulating commercial development in the CBD, it stifles it. A floorplate of 1,500sqm under these controls requires a site area of around 3,000sqm. However, by the time you factor in the setbacks and other height controls, there are very few developable sites remaining,” says Bates Smart director, Julian Anderson.

“In recent months, our team has conducted research establishing that there are fewer than six potential sites in the CBD that will support development over 80m in height, with floorplates not less than 1,500sqm in area,” he says.

“We concur with various industry sources on predictions that the commercial pipeline could be exhausted in the next decade,” Anderson says.

Roger Teale, Property Council of Australia, Victorian president agrees says that, “It’s predicted that demand for commercial office space in the CBD will almost double over the next 30-35 years – this means Melbourne’s city will need an additional 4 million sqm of commercial space to match demand, largely driven by a booming population and forecast jobs growth.”

“This is a major challenge for Melbourne and we continue to work with the Victorian Government and the City of Melbourne to ensure that our planning processes not only reflect the needs of the market but can support the needs of our growing city into the future,” says Teale.

In terms of outcomes, landowners will realise many sites simply can’t be developed. This will trigger the amalgamation of adjoining sites to maximise development potential.

Similarly, we may see more developments relying on the purchase of “air rights” — the underutilised space above a building. An adjacent owner can purchase those “air rights” to enable construction of part of their building into that space.

Another potential corollary is the delivery of more slender residential towers because the controls also dictate that the taller a building, the further it must be set back from its boundaries.

In New York, amalgamated sites or those subject to development resulting from the purchase of air rights brought about a raft of super-slim towers. These are very costly because of additional structural requirements and the effects of wind on their slender forms.

As well, the proportion of structure to floor area cuts the net saleable area. This drives developers to build higher in an attempt to claw back profit forgone from lost floor space.

Melbourne has its own example of this new tower form. On the Collins House site at 466 Collins Street, approved under the previous planning scheme, a 57-storey apartment building is under construction that when complete, will be the world’s fourth slimmest tower.

To further support construction of this type of benchmark tower, where design excellence is demonstrated, the new provisions could be relaxed to allow increased floor area in the form of additional levels.

This approach has already been successful in other cities, including Sydney, where a 10 percent increase in either height or floor area is offered for design excellence.

These planning controls will bring about a reduced flow of capital in Melbourne’s heart. Less opportunity there should lead to the support and promotion of an increase in density on the city edge.

“We must find opportunities to relax our planning controls to allow for major urban regeneration projects to flourish and accommodate our future needs,” says Anderson.