There will be winners and losers in the move, writes Simon Johanson.
Retailers in street shopping strips and apartment developers may be the big losers under far-reaching changes to Victoria's planning laws that take effect this week, planners and estate agents say.
The changes - which delete nine existing zones, replace them with five new ones and alter 12 others - came into effect on Monday.
They resulted in the former business 1, 2 and 3 zones being rolled into a Commercial 1 zone and the old business 3 and 4 zones becoming a Commercial 2 zone.
As well, local councils will have 12 months to implement the three new residential controls - growth, general and neighbourhood zones.
The radical shift in the state's planning emphasis may have unforeseen consequences, consultant Urbis said.
The new residential zones had the potential to significantly constrain development and the two commercial and other zone changes will allow anchor tenants in retail strips to shift to alternative locations, director Sarah Emons said.
Larger tenants, such as a supermarket, that attract foot traffic to other shops in a retail strip such as Glenferrie Road will now be able to move around the corner and set up shop in an alternative location, such as Burwood Road, a move previously restricted.
"Glenferrie Road is probably going to be fine but for Centre Road, Bentleigh, where there's one supermarket, if that relocates, the viability of the rest of the strip will come into question," she said.
Other key effects include:
■Allowing retail development in industrial sites.
■Removing floor-space caps on shopping centres to allow unlimited retail expansion.
Geoff Underwood, the head of the committee that overhauled the planning laws, said the intent of changes was to open up retail competition but also to limit where that could occur.
The new residential zones will likely favour residents opposed to large-scale apartment developments.
They have the "potential to significantly constrain residential development", particularly if local councils seek to maximise their use of the most restrictive neighbourhood residential zone, Ms Emons said.
Future residential development activity was likely to become concentrated in specific areas, Jones Lang LaSalle's James Kaufman said.
"There will be large chunks of suburban Melbourne where you will not be allowed to build apartments any more," he said.
That would push up the value of sites with existing permits and suppress values of surrounding locations, he said.
"The value of sites where you can do multi-unit developments will go up, and the value of sites where you can't because it's designated single dwelling or two units, might go down or, more likely, won't have growth in value. That is a huge change."
Boroondara mayor Jack Wegman said the council would protect areas of neighbourhood character.
"We'd be very keen to make sure those were protected when the new zones are introduced," Cr Wegman said.
"We're being realistic, we're not going to wrap it up [the municipality] in cotton wool as there are some areas that can take more intensive development."
The new residential growth zone will offer certainty to councils, the development industry and communities about what areas are identified and accepted as those for substantial change, Planning Minister Matthew Guy said.
Another key beneficiary of the zone changes will be smaller supermarkets. Under the new regulations they can set up in big-box retail precincts and industrial zones as long as they are under 1800 square metres and near major roads.
"It's the Aldi amendment. It really does suit that small-format store," Jones Lang LaSalle director Stephen Bolton said.
Mr Underwood said the floor space requirements of major supermarkets were generally larger than 2000 square metres.
Aldi did not respond to BusinessDay for comment on the zone changes.