Metro brought North Sydney to life. One decision could ‘devastate’ it

Developers are fighting North Sydney Council’s proposal to lift rates by nearly 90 per cent over two years, arguing the financial strain could cripple businesses and force tenants to abandon the CBD.

Property giants Stockland, Mirvac, and Lendlease – which is building a billion-dollar office tower above Victoria Cross metro station – have written to the council expressing their strong opposition to a dramatic increase in property owners’ rates.

Developers say North Sydney Council’s proposal to increase its rates will jeopardise the fledgling revival of the CBD. Credit: Wolter Peeters

Stockland has voiced “serious concerns” that the proposed jump in levies was unreasonable and would jeopardise the fledgling revival of North Sydney’s office precinct as community frustration about the prospect of skyrocketing bills grows before councillors debate the plan at a meeting on Monday.

“[This will make] North Sydney less attractive as a place to do business, which is further compounded by the challenging market conditions as well as broader cost of living and affordability issues,” Stockland said.

Council staff recommended the organisation increase its rates for property owners by 87.05 per cent over two years after inviting feedback on four scenarios to lift levies by between 65 and 111 per cent over three years.

The council is also proposing to increase its minimum rates for businesses from $715 to $1400 in 2025-26, and to $1800 in 2027-28. It has largely blamed its budget woes on cost blowouts and delays to the North Sydney Olympic Pool revamp, which is forecast to cost $122 million.

Mirvac, which owns and operates Greenwood Plaza and the 101 Miller Street building, said North Sydney’s commercial property market had already suffered post-COVID due to the rise in remote work and growing office precincts in Parramatta and Macquarie Park.

“This situation is expected to continue to decline with the already high North Sydney office vacancy rate of 26 per cent to grow to circa 35 per cent once Victoria Cross Tower is completed in 2025,” Mirvac said in a submission to the council.

“Given the highly correlated relationship between commercial property occupancy and retail in North Sydney, and the fact that approximately 86 per cent of the working population in North Sydney live outside the area, the effect of the previous point of increased office vacancy rate will lead to devastating results for retail businesses.”

Stockland, which owns four buildings on Walker Street and the Pacific Highway, said lifting rates would have a “significant commercial impact on our operations” and on small business tenants.

Construction on North Sydney Olympic Pool is due for completion in May. Credit: Dean Sewell

Stockland argued the levy increase would bring “considerable commercial risk” to the development feasibility of its approved $1.5 billion Affinity Place office tower on Walker Street and “directly counter the council’s commitment to revitalise the North Sydney CBD”.

Lendlease, which is building the $1.2 billion Victoria Cross Tower and owns the Blue & William block on Blue Street, said in its submission the council’s ambition to “significantly increase council rate charges on commercial property owners and their tenants cannot be supported on any basis”.

Liberal councillor Jessica Keen is “100 per cent against” the rates rise and said the council should consider a smaller increase, or sell off assets, rather than “just putting this onto our residents”.

“We should put everything on hold and revisit it all again in a year’s time,” Keen said.

Greens councillor Angus Hoy didn’t know how he would vote on the proposal to lift rates, but said the council was “starting from a really low [rates] base, and things have been allowed to slide for a really, really long time”.

“We can’t just shirk our responsibility and burden future generations with an even worse situation.”

North Shore state MP Felicity Wilson slammed the plan as “extortionate”, and said only 5 per cent of residents who answered a survey supported the option staff recommended.

North Sydney Federal MP Kylea Tink said ratepayers could not be “left carrying the can”.

“I call on the current council not to resort to astronomical rate rises,” she said.

If most councillors support the recommendation, the council will apply to the NSW Independent Pricing and Regulatory Tribunal for a “special rates variation”. This would allow the council to charge businesses and households higher rates than the annual rate “peg”.

Councils must prove the financial ramifications on ratepayers are reasonable. Most councils across NSW had until last Monday to apply; North Sydney was granted an extension until February 14.

A tribunal spokesman said all councils’ applications would be published for community feedback by the end of February.

“IPART will assess each application one on a case-by-case basis, taking community feedback into account,” the spokesman said.

The decisions will be published in May. Any changes would come into effect from July.

North Sydney’s plan to hike its rates follows widespread outrage directed at the Northern Beaches Council last month after most councillors voted to support a 39.6 per cent rates rise over three years.

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