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Centre. This proposed retail component is comprised of a department store (10,000m2), a discount
department store (6,500m?), a full-line supermarket {3,500m?) and mini-majors/specialty stores (10,000m?).

The purpose of this letter is to review the material provided and provide a detailed assessment as to the merits
of the proposed Noosa Civic Stage 3 development at the Shire Business Centre.

1 provide this assessment following previous economic advice by Urban Economics that was undertaken on
behalf of Noosa Shire Council (now subsumed by Sunshine Coast Regional Council), including a Strategic Review
Report for the future direction of the Shire Business Centre, as well as development assessment advice to
Council for the proposed ‘Noosa Lifestyle Centre’ development. We also provided Council an initial letter of
advice for the proposed Noosa Civic Stage 3 development as part of Council’s Information Request to the
Applicant.

As stated within our previous advice given to Council on this matter, it is my opinion that the Applicant has
provided a sufficiently robust analysis of the economic need and impact and strategic planning issues in
assessing the proposed development. Furthermore, it is my opinion that subsequent information provided by
the Applicant also contains generally sufficient additional material for the proposal in response to Council’s
Information Request stage.

Review

| provide the following detailed review of the proposed development in receipt of this latest information from
Council as it is relevant to assess whether or not the supporting material provided by Applicant has adopted
appropriate and reasonable assumptions as part of the economic impact and needs analysis in order to reach
their final conclusions in support for the proposed development.

| raise the following points of detail in relation to the assumptions that have been relied upon in support of the
proposed development and builds upon previous advice we have provided to Council in relation to this matter
concerning the direction of future retail and commercial development at the Shire Business Centre.

As Urban Economics have already conducted an in-depth review of the proposed Noosa Civic Stage 3 as part of
the conclusions within our Strategic Review Report that was provided to Noosa Shire Council (March 2008), | do
not wish harp on these matters of detailed assumptions but rather briefly identify the key areas of conjecture
that still remain.

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Economic Impact Assessment (EIA)

Urban Economics has critically reviewed the Economic impact Assessment and subsequent Information
Response (Economic: Item 3) material accompanying the Noosa Civic Stage 3 application. With a couple of

>

exceptions, the analysis is considered robust. In particular:

The EIA has correctly identified the relevant competitive network of retail centres situated within the
region that satisfies the needs of the local Noosa and Maroochy north populations. Furthermore, this
analysis also provided a thorough review of each centres functional role within the centres hierarchy
prescribed through the relevant planning schemes and other regional planning documents (i.e. The
Noosa Pian, Maroochy Plan 2000 and the South East Queensland Regional Plan).

The defined main trade area for the proposed Noosa Civic Stage 3 development is considered to be
reasonable and appropriate for this assessment. However, it is my opinion that the inclusions of the
tertiary trade areas slightly overstate the drawing capacity for the proposed development.

it is considered that the EIA Report has appropriately adopted reasonably modest population growth
rates for the defined Main Trade Area, generally consistent with our projections that were adopted as
part of the Strategic Review Report.

As stated within our Strategic Review Report, Urban Economics has critically reviewed the economic
impact analysis undertaken by the EIA, in which we consider that the impacts upon Noosa Junction,
Noosaville and Tewantin would be in the order of 13% rather than the 10-11% calculated by the EIA
due to EIA measuring the impact in 2013 rather than 2012 (when it is proposed to open) and the
assumed turnover growth of existing centres from 2007 to 2012 has been slightly overstated.

| am in agreement with a number of community need and demand benefits argued in support of the
proposed development including growth in retail market demand, capacity at the Shire Business Centre
to accommodate new retailers, increased level of retail choice of goods and services, price point
competition, travel time and costs savings, employment opportunities, etc.

We have reviewed the subsequent information in relation to the escape expenditure and note that the
Information Response provides a thorough account of retail escape expenditure and the re-capturing
of expenditure as a result of the proposed Noosa Civic Stage 3. However, the quantum and
proportional escape expenditure estimates appear to be on the conservative side in which it is
considered that the current level of escape expenditure would be higher than that suggested within the
response. Furthermore, the reduction amount in escape expenditure as a result of Noosa Civic Stage 3
opening is considered to be slightly larger than that suggested within the response.

 

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Other Reports

Jackson Planning and Giles Consulting International have provided strategic planning and economic and
. employment impact Reports, respectively, in support for the proposed Noosa Civic Stage 3 development. In
particular, their advice has been relied upon in response to the Information Request (Economics: Items 1 & 2)
material, in which we have reviewed and provide the following comments:

> Urban Economics in general agreement with a number of qualitative arguments provided by Jackson
Planning, including the remaining capacity for future office-based employment opportunities within the
Shire Business Centre, the community benefits of satisfying future retail demand, as well as the ability
for the Shire Business Centre to achieve a critical mass of retail activities in order to increase the
likelihood of attracting non-retail functions that deliver a diversity of activities and employment
opportunities that the Centre is seeking to establish.

> Notwithstanding the above, it is my opinion that the additional potential floorsapce and employment
capacity estimates for office-based employment within the Shire Business Centre, that have been
prepared by both lackson Planning and Giles Consulting International are overstated. Our review of
remaining ‘uncommitted lands’ (land not occupied by Noosa Civic Stages 1, 2 and 3) indicated that
there is only capacity for some 41,000m? of additional commercial office space (GFA) remaining within
the Shire Business Centre that is estimated to provide some 2,500 office-based employment
opportunities. These are well below the estimates stated within the Applicant’s supporting material.

> It is evident that both Jackson Planning and Giles Consulting International both rely upon justifying the.
future opportunity for knowledge-based activities through outlining the remaining development
potential for commercial office space within the Shire Business Centre and its capacity to accommodate
future office-based employment. This is in contrast to justifying the future need and demand for
knowledge-based activities through a more rigorous approach of detailed projections as to the future
performance and composition of Noosa’s economy and employment base. It was Urban Economics
" expectation that this justification from an employment demand and needs perspective would be
provided in response to the Information Request (Economic) Items 1 and 2, however, this did not
eventuate. We refer to the findings of our Strategic Review Report, which are addressed in forthcoming
sections of this letter of advice.

> Indeed, it is acknowledged that the physical and locational requirements for knowledge-based
industries remains largely hard to quantify and the fragility in this sector to grow is often dependent
upon other key variables including the significant vision, investment and effort required by major
stakeholders, strong community support, rigorous marketing and implementation strategies, etc.

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> We are in general agreement that the proposed Noosa Civic Stage 3 development will foster a number
of economic and employment injections for Noosa and the surrounding region through the proposals
resulting construction activity, economic flow-on effects to the wider economy and income generation
from the workers employed at the new development. However, it is my opinion that these estimates
are slightly over-stated.

Items 4 and 5
These items of the Information Request concern the assurances of the preserving the remaining uncommitted

lands (and proposed commercial floorspace as part of Noosa Civic Stage 3) for non-retail uses and have been
addressed by the Applicant. It is evident that no assurances have been provided by the Applicant at this stage.

Urban Economics’ Strategic Review Report

Urban Economics undertook a comprehensive review of the projected higher-order needs of Noosa in terms of
employment, retail and commercial office and in order to help guide the future development of lands situated
within the Noosa Shire Business Centre, The outcomes of this Report were as follows:

> “Significant additional retail floorspace should be allocated to the Shire Business Centre over the next 20
years, in the order of 40,000m? due to:

(a) significant demand for retail floorspace in the Catchment Area;
(6) significant projected growth in retail employment in the Shire;

(¢) retail floorspace in the Shire Business Centre is currently well below that of Noosa Junction, despite
being designated the Shire’s highest order cenire;

{d) the potential of the Shire Business Centre to deliver in-demand tenants, such as a department store
and a discount department store;

(€) apart from Cooroy, other centres have limited capacity to accommodate additional retail facilities; and
(8 the inclusion of some further retail showroom floorspace.

> the land set aside for office uses within the Shire is far in excess of the land required to satisty projected
demand tor this industry sector.

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> there is an increasing demand for tertiary education facilities, which should be provided for within the Shire
Business Centre.

> there is an increasing demand for heaith services, some of which should be Provided for within the Shire
Business Centre.

It is noted that should the 40,000m? of retail floorspace projected as part of the demand analysis be spread
over the next 20 years, it is expected that the economic impact of these adaltions upon other centres within the
defined network would not be significant.

However, it should also be noted that development of the retail sector is inherently humpy. This is due to the
large sizes of major tenants, the need for significant specialty retail support, the high infrastructure and
headworks costs. As a result, the lumpy’ nature of retail development leads to the real potential of significant
adverse economic impacts,

Many anchor tenants are willing to open ahead of time to secure market position and locationat advantages.
This can accentuate potential adverse economic impacts. However, it is noted that such a process provides
some significant benefits to the public by offering increased variety, choice, range, lower prices, convenience
and accessibility.

Mt is noted that the current Noosa Civic Stage ? Development Application ts proposing to develop some
30,000n? of retail Roorspace for pening in late 2012, which is almost some 5 ‘years away. It ls also noted that
S&L Developments have proposed 7,600n¥ of retail showrooms as part of a mixed use development within
Precinct E5.

Urban Economics has critically reviewed the impact analysis undertaken by the Economic impact Assessment
(EIA) accompanying the Noosa Givic Stage 3 application. With a couple of exceptions, the analysis is considered
robust. Urban Economics considers that the impacts upon Noosa Junction, Noosaville and Tewantin would be jn
the order of 13% rather than the 10-11% calculated by the EIA due to the ElA measuring the impact in 2013
rather than 2012 (when it is proposed to open) and the assumed turnover growth of existing centres from
2007 to 2012 has been slightly overstated.

(mpacts of this magnitude would result in these three existing centres trading at or slightly below 2007 levels
akter the Noosa Civic Stage 3 opening in 2012, This would be likely to cause distress to some retailers and lead
to an increased level of re-tenanting during 2012 and 2013. However, these impacts would not be sufficient
enough as fo undermine the role and function of each of these centres.

Amelioration measures that could assist in reducing the effects of these impacts include:

 

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(a) _ adoption of a moratorium on future growth at existing centres to create an over-trading situation prior
to the impact:

(6) communicating details of the proposal widely to ensure that existing owners and developers are fully
informed, with four and a half years for them to take amelioration measures;

(fo facilitate local strategies to improve the branding, marketing, streetscape and amenity of existing
centres; and

{d) _ possible staging of the Noosa Givie Stage 3 proposal

At fs Urban Economics’ view that the likely quantum of impacts are not sufficient to warrant further staging of the
Noosa Civic Stage 3 proposal if the first three-mentioned amelioration measures are adopted However,
ultimately this is a matter for Council in consultation with the Applicant.

Therefore, from a strategic point of view, the scale and nature of the two Proposals {including Noosa Civie Stage
3] matches the opportunity identified in this Report.” (pages 41 to 43)

it was the recommendations of this Report that both the E1 and E6 Employment Precincts of the Master Plan for
the Shire Business Centre be changed to accommodate the retail extensions to Noosa Civic due to the
community benefits expected from the extensions and its conformity to the findings of our Strategic Review.

Conduding Comments

It is my opinion that given the findings of our Strategic Review Report, Urban Economics is supportive of the
proposed Noosa Civic Stage 3 development. | also consider that with a couple of exceptions, the supporting
analysis and information provided by the Applicant is considered robust and sufficient for Council’s decision
making purposes,

lt is evident that there is a need and community benefit in approving the proposed retail extensions at the Shire
Business Centre. This is despite the encroachment on designated business and office-based lands, in which
from our analysis it is our opinion that these lands that have been originally set aside for office uses within the
Shire Business Centre is far in excess of the land required to satisfy projected demand for this industry sector,
Furthermore, while it is my opinion that the Applicant has overstated the available capacity that remains for
additional office-based activity and employment within the Shire Business Centre, our analysis indicates that
there is still sufficient opportunity to more than salisfy projected employment demand in this industry sector.

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| have had the opportunity to discuss these major issues that have been discussed above with my Director, Jon
Norling, in which he is in agreement with these over-arching issues.

| trust that this information meets your requirements at this stage. Please do not hesitate to contact me should
you have any queries regarding this information.

Yours faithfutly
Urban Economics

 

Ashley Perkins
Senior Research Analyst