As Melbourne grows, the supply of appropriately located, zoned and serviced land for industrial development is tightening, and brings new challenges to acquire and/or develop land. Here are some key legal considerations we have seen recently when working on these types of projects.
LAND TAX SQUEEZE
Land values go up, and so does land tax. The amount of land tax can be value managed to an extent, by scrutinising and/or challenging land tax valuations when land tax assessments are issued. Just remember to do it in time.
Would you like an absentee land tax surcharge with that? In a global world, this surcharge is affecting more and more groups in Victoria with foreign shareholders and investors. Speak to us to check whether you are eligible for an exemption.
Industrial developments are evolving to include lower impact uses, such as e-tailing warehouses, data storage and dark supermarkets. It can be challenging to identify where those uses sit in the applicable planning scheme.
There are a number of potential zones that might apply to an industrial site, from Industrial 1 to Commercial 1 to the new Commercial 3 Zone. Developers also have to grapple with antiquated car parking requirements designed for traditional heavy manufacturing. Careful consideration is needed to identify if the proposed uses of the site will fall within the applicable planning scheme.
SECTION 173 AGREEMENTS and DCPs/ICPs
Section 173 agreements are becoming more complex, particularly in growth areas.
What DCPs have been paid? What DCP credits remain or are available? What works in kind projects are available or have been undertaken? Will the new ICP regime be relevant?
The proper management of these regimes can save money and time in development delivery.
Older sites may be burdened with covenants. It is important to review and understand those covenants and obtain a clear understanding of the restrictions on use.
As precincts evolve, and the types of industrial uses evolve, there may be scope to either modify or remove any covenants which are no longer relevant or desirable.
CONSTRUCTION AND SITE CONDITIONS
Understanding site conditions is always important. That is particularly relevant for newer types of warehousing such as high bay warehousing, and the requirements for increasingly complex tenant fit-outs.
Risk allocation in the construction contract between the developer, builder and any future occupier in terms of any design and any fit out needs to be clear. It is also important that any requirements from an agreement for lease that have been negotiated with a proposed tenant are passed through clearly to the builder in the construction contract.
|Nick Sparks | Partner
T +61 3 9258 3523