Background_E_Market_Assessment - Shoalhaven City Council ...

Nowra CBD Master PlanMarket AssessmentPREPARED FORARUP & Shoalhaven CityCouncilJanuary 2011Hill PDAABN 52 003 963 7553 rd Floor 234 George Street SydneyGPO Box 2748 Sydney NSW 2001t. +61 2 9252 8777f. +61 2 9252 6077e. sydney@hillpda.comw. www.hillpda.com

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QUALITY ASSURANCEREPORT CONTACT :SIMON ADAMSB. Property EconomicsConsultantSimon.Adams@hillpda.comQUALITY CONTROLThis document is for discussion purposes only unless signed and dated by a Principal of Hill PDA.REVIEWED BYVICTORIA TOMPSETTB. Land Econ./B. Arts International StudiesPrincipal, Property EconomicsVictoria.Tompsett@hillpda.comJanuary 2011C09143 Page 3 Hill PDA

Nowra CBD Master Plan – Market AssessmentCONTENTS1. EXECUTIVE SUMMARY .............................................................................................82. INTRODUCTION .....................................................................................................122.1 Study Background .................................................................................................................... 122.2 Study Brief and Methodology ................................................................................................. 133. PLANNING & POLICY CONSIDERATIONS ....................................................................143.1 South Coast Regional Strategy (2006-2031)....................................................................... 143.2 Nowra-Bomaderry Structure Plan (2006)............................................................................. 154. ANALYSIS OF LAND USE TRENDS ............................................................................184.1 Retail Trends ............................................................................................................................. 184.2 Other Trends ............................................................................................................................. 245. DEMOGRAPHIC & EMPLOYMENT PROFILE ..................................................................265.1 Population Growth .................................................................................................................... 265.2 Key Resident Demographic Characteristics......................................................................... 275.3 Resident Workforce by Occupation ....................................................................................... 285.4 Resident Workforce by Industry ............................................................................................. 285.5 Where do Residents Work? .................................................................................................... 295.6 Where do the Workers Come From? .................................................................................... 306. TOURISM.............................................................................................................316.1 Visitors to Shoalhaven LGA .................................................................................................... 316.2 Tourism Businesses in Shoalhaven LGA ............................................................................. 326.3 Implications for Nowra CBD.................................................................................................... 337. RETAIL & COMMERCIAL MARKET ANALYSIS ..............................................................347.1 Existing Retail Floorspace in Nowra CBD ............................................................................ 347.2 Existing Retail Floorspace in Surrounding Centres ............................................................ 367.3 Proposed Retail and Commercial Developments ............................................................... 387.4 Retail and Commercial Market Considerations ................................................................... 398. RETAIL AND COMMERCIAL DEMAND .........................................................................418.1 Trade Area Analysis ................................................................................................................. 418.2 Population Projections ............................................................................................................. 418.3 Retail Spend by Residents...................................................................................................... 428.4 Tourism Expenditure ................................................................................................................ 448.5 Supply versus Demand............................................................................................................ 459. RESIDENTIAL MARKET CONSIDERATIONS ..................................................................469.1 The Market Context.................................................................................................................. 469.2 The Housing Market ................................................................................................................. 469.3 Land Values............................................................................................................................... 489.4 Proposed Residential Developments .................................................................................... 489.5 Implications for Nowra CBD.................................................................................................... 49C09143 Page 4 Hill PDA

Nowra CBD Master Plan – Market AssessmentAppendix 1 – Resident Demographic Characteristics (2006 ABS Census Data)Appendix 2 – Existing Retail Floorspace Supply in Nowra CBD by Street (GLA)Appendix 3 – Existing Number of Shopfronts in Nowra CBDAppendix 4 – Existing Number of Shopfronts in Nowra CBD by StreetLIST OF FIGURESFigure 1 - Study Area .....................................................................................................12LIST OF TABLESTable 1 - Forecast Demand for Retail Floor Space in Nowra CBD (2011-2036) ...............................10Table 2 - South Coast Centres Hierarchy .............................................................................15Table 3 - Shoalhaven City LGA Population Projections (2006-2036).............................................26Table 4 - Population Projection Comparisons (2006-2036) ........................................................27Table 5 - Resident Workforce by Occupation .........................................................................28Table 6 - Resident Workforce by Industry 1996-2006 ...............................................................29Table 7 - Where do Residents Work? (2006) .........................................................................29Table 8 - Where do Workers come From? ............................................................................30Table 9 - Summary of International and Domestic Travel to the Shoalhaven (2007) ..........................32Table 10 - Tourism Business Classifications..........................................................................33Table 11 - Summary of Tourism Businesses in Shoalhaven LGA (June 2007) .................................33Table 12 - Existing Reta il Floorspace Supply in Nowra CBD 2010 (GLA sqm) .................................35Table 13 - Land Values – Business Zoned Land .....................................................................40Table 14 - Population Forecast by Planning District by Census Year (2006-2036) ............................41Table 15 - Per Capita Expenditure in 2008-09........................................................................42Table 16 - Assumed Nowra CBD Capture Rates.....................................................................43Table 17 - Forecast Expenditure Captured in Nowra CBD by Store Type ($2009) ............................43Table 18 - Target Turnover Levels ($/sqm)* to 2036 ................................................................44Table 19 - Forecast Demand for Retail Floor Space in Nowra CBD to 2036 ....................................44Table 20 - Comparison of Demand versus Supply (sqm) ...........................................................45Table 21 - Residential Dwelling Mix (2006) ...........................................................................46Table 22 - Median Residential Values (2009).........................................................................47Table 23 - Median Residential Values by Suburb (2009)*..........................................................47Table 24 - Shoalhaven Residential Vacant Land Values (2010) ..................................................48C09143 Page 5 Hill PDA

Nowra CBD Master Plan – Market AssessmentABBREVIATIONSThe following abbreviations may be found in this report:ABS Australian Bureau of StatisticsANZIC Australia and New Zealand Industry CodeCBD Central Business DistrictDDS Discount Department StoreGLA Gross Lettable AreaGST Goods & Services TaxHES Household Expenditure SurveyIRIS Illawarra Regional Information ServiceLEP Local Environmental PlanLGA Local Government AreaPCA Property Council of AustraliaSOHO Small Office Home OfficeSD Statistical DivisionGLOSSARY OF TERMSNet Selling Area: Net Selling Area (NSA) is defined as that area involved in the selling process comprising all areas thatcustomers can go to, plus display cases, display areas and spaces around checkout counters. It excludes the back ofhouse area, which is generally “out of bounds” for customers. To the best of our knowledge IBECON (which has nowceased trading) was the only retail economics consultancy that used NSA in its assessments.Gross Leasable Area: Gross Leasable Area or Gross Lettable Area (GLA) is the common measure used for lease andfor other descriptive purposes in retail centres and shops. It is usually defined as the total area of the lease and includesback of house, storage, offices and mezzanine levels but usually excludes loading docks and common mall spaces. GLAis more commonly used in the industry because it defines the area of the lease. Shopping centre owners report rentsand turnover figures on the leased area and benchmarking is usually made on the GLA. For the purpose of Hill PDA’sdemand modelling all floor areas expressed are in GLA.Gross Floor Area: Gross Floor Area is Gross Leasable Area plus common mall spaces (including amenities), centremanagement area and plant rooms. In a typical indoor centre with at least one department store and supermarket theGLA makes up around 72% to 75% of the GFA.Retail Space or Retail Floorspace: For the purpose of the demand modelling Hill PDA have defined retail space asGLA used primarily for the selling of goods and certain services. Therefore, Hill PDA classifies retail space into thefollowing types:• Supermarkets and grocery stores;• Specialty food stores such as bakeries, confectionary stores, tobacconists, butchers, seafood, liquor (takeaway),etc;• Take-away food stores;• Cafes and restaurants;• Department stores;• Bulky goods stores (includes “Fabric and Soft Goods Stores, Furniture and Floor Coverings Retailers,Domestic Hardware and Houseware Retailing and Electrical Appliances Stores” as defined under ANZIC);• Specialty non-food stores; and• Selected Personal Services (defined under ANZIC to include hair and beauty, laundry, clothing hire andalterations, shoe repair, optical dispensing, photo processing and hire of videos)C09143 Page 6 Hill PDA

Nowra CBD Master Plan – Market AssessmentExcluded uses (which are generally excluded under ANZIC) are hotels, clubs, entertainment uses (e.g. cinemas, icerink), automotive retailers, wholesaling businesses and non-retail commercial uses such as banks, travel agents, medicalsuites and real estate agents.Commercial Space: Commercial space generally refers to any non-residential space used by business in employingpeople and producing goods and/or services. For the purpose of the modelling Hill PDA have used the term to refer tonon-retail office use including travel agents, real estate agents, medical suites, government administration, financialservices, business services, personal services, etc whether or not the space is shop front or not. Commercial spaces incommercial centres that are not shop front space are either in stand alone office buildings or above shop front space(shop-top).Specialties: In the industry specialties generally refer to shop front premises that are less than 400sqm in size. For thepurpose of this report specialties refer to all shop front premises that are neither supermarkets, department stores norbulky goods. This includes non-retail shop front space and vacant shops.Vacant Shop: Vacant shop refers to shop front space that is vacant. That space has been designed and constructed toaccommodate a retailer but could equally be let to a non-retail commercial user such as a bank or real estate agent.Shop Front Space: Shop front space is GLA that is occupied by retailers plus non-retail users that occupy shop frontspaces (such as banks, travel agents, medical services, real estate agents, etc) and vacant shop front space.C09143 Page 7 Hill PDA

Nowra CBD Master Plan – Market Assessment1. EXECUTIVE SUMMARYHill PDA has been engaged as sub-consultants to ARUP for the preparation of a Master Plan for Nowra CBD. The 25-year planning period of the Master Plan will also inform a Draft Development Control Plan and a Draft ContributionsPlan. In the first instance, Hill PDA has provided a demographic and market assessment of potential land uses toinform urban design options for the site considering the potential viability of proposed land uses.Planning and Policy ConsiderationsOne of the key relevant objectives of the South Coast Regional Strategy 2006-2031 to Nowra is to increase the amountof housing in existing centres, in particular smaller households and housing for the ageing population and focusing newurban development in existing identified growth areas such as Nowra-Bomaderry.The Regional Strategy also identifies a typology for centres within the subregion. Along with Bega and Batemans Bay,Nowra-Bomaderry is identified as a ‘Major Regional Centre’. These Centres will provide for the majority of growth overthe next 25 years and are characterised by a concentration of medium and higher density living.Shoalhaven Council’s Nowra-Bomaderry Structure Plan (2008) aims to provide a framework for the future developmentof the area for the next 20 to 30 years. It provides guidance, strategic direction and identifies land that will beinvestigated for possible rezoning and future development. The Structure Plan indicates that urban consolidation andmedium density housing is required in Nowra-Bomaderry to accommodate the increased demand for urban growth dueto forecast population growth. The Structure Plan also indicates that the commercial primacy of Nowra CBD as a majorsub-regional centre should be maintained and enhanced.Demographic and Employment TrendsAs part of this study, Hill PDA undertook a demographic analysis and employment profile of Nowra (suburb), Nowra-Bomaderry Statistical District and Shoalhaven LGA. NSW and non-metro NSW were used as benchmarks. This analysisprovides a better understanding of employment, economic, lifestyle and social characteristics of the area, and thereforerequirements for future commercial and residential land uses. Key characteristics impacting on the future developmentof Nowra CBD include:• The Nowra-Bomaderry Structure Plan Area is forecast to grow by 12,213 people between 2006 and 2036,equating to an annual growth rate of 1.09%. Shoalhaven LGA is forecast to grow by 39,775 people over thesame period, equating to an annual growth rate of 1.20%;• Compared to surrounding areas such as Shellharbour LGA (0.71%) and Kiama LGA (0.72%), Shoalhaven LGAexperienced strong population growth;• The population of Shoalhaven LGA is forecast to age significantly into the future;• Home ownership levels are lower in Nowra compared to Nowra-Bomaderry and the wider LGA;• The majority of households are family households;• The majority of dwellings are separate houses;• Incomes in Nowra are lower than both Nowra-Bomaderry and the LGA; andC09143 Page 8 Hill PDA

Nowra CBD Master Plan – Market Assessment• The majority of Shoalhaven residents live and work within the LGA. In addition, the majority of jobs located inthe Shoalhaven are filled by Shoalhaven residents i.e. the Shoalhaven has a very high worker containmentTourismrate.Based on the Tourism Research Australia (TRA) data, approximately 1,057,000 domestic overnight tourists and1,158,000 domestic day tourists travel to Shoalhaven LGA annually (based on a three to four year average to June2007). There are a further 21,000 international visitors. International visitors stay for an average of 8.1 nights (lowerthan NSW average of 19 nights) and domestic visitors stay for and average o f 3.5 nights (in line with NSW average).Whilst there is sufficient tourism accommodation in coastal areas of Shoalhaven, it is apparent that there is a lack ofgood quality tourist accommodation in and around Nowra CBD. There are a number of lower-grade hotels and motelsthat satisfy the basic needs of overnight tourists, however, there is a shortage of boutique quality hotels, self-cateredapartments/units or holiday homes. Given Nowra’s central location, amenity to the Shoalhaven River and touristattractions, there are definite opportunities to improve the tourism accommodation offer in proximity to the CBD.Retail and Commercial Floorspace SupplyHill PDA reviewed previous retail and commercial reports and background information for Nowra CBD. This informationhas been supplemented by Hill PDA’s own floorspace survey of Nowra CBD (completed in April 2010) and othersources where indicated. The total amount of existing shop front floorspace (GLA) attributed to Nowra CBD by retailcore, fringe and out of centre location has been calculated.The floorspace data results indicate that:• Total retail and commercial shop front floorspace accounts for around 59,421sqm. As expected the majority ofthis is located in the retail core (62%), compared to the fringe and Stockland Nowra;• There is around 48,682sqm of retail shop front floorspace in Nowra CBD and a further 9,124sqm ofcommercial and medical shop front floorspace;• Around 4,400sqm of associated floorspace is located within the fringe but within the 2b(1) Residential Zone.The majority of this being used by the likes of medical practitioners, accountants, financial planners, solicitorsand some community services (e.g. legal aid, community counselling services etc); and• Nowra CBD has a low number of vacancies with only around 1,600sqm of vacant shop front floorspace at thetime of survey, representing 2.7% of all shop front floorspace.Retail and Commercial DemandA centre’s trade area is generally referred to as the geographical boundary of influence that that the centre draws itstrade from. The Shoalhaven LGA provides both a practical and simple boundary for any supply demand analysis.North of the Shoalhaven localities are more drawn towards the larger centres in Shellharbour, Warrawong, Wollongongand Campbelltown. South of Shoalhaven is better served by Batemans Bay. Within the Shoalhaven LGA however thelevel of influence that Nowra has varies considerably between localities due to varying distances to the administrationcentre.The Nowra CBD trade area will generate $434m of retail expenditure in 2011, increasing to $500m in 2016, and so on.Of the $434m generated, $144.6m relates to supermarket and grocery stores, $48.3m to specialty food stores, and soC09143 Page 9 Hill PDA

Nowra CBD Master Plan – Market Assessmenton. Required retail floorspace was calculated by dividing the above expenditure by target turnover levels per squaremetre. Dividing total expenditure by the above target turnover rates results in the following demand for floorspace inNowra.Table 1 - Forecast Demand for Retail Floor Space in Nowra CBD (2011-2036)Store Type 2011 2016 2021 2026 2031 2036Supermarkets & Grocery Stores 14,363 16,066 17,848 19,597 21,284 22,959Specialty Food Stores 6,327 7,077 7,862 8,633 9,376 10,114Restaurants and Fast Foods 4,711 5,269 5,854 6,427 6,981 7,530Department Stores 16,238 18,078 20,003 21,907 23,745 25,563Clothing Stores 6,601 7,349 8,131 8,906 9,653 10,392Bulky Goods Stores 5,640 6,279 6,947 7,609 8,247 8,879Other Personal & Household Goods Retailing 17,757 19,794 21,923 24,027 26,055 28,065Selected Personal Services 3,519 3,936 4,372 4,801 5,214 5,624Total Retailing 75,154 83,848 92,941 101,907 110,555 119,126The above table shows that Nowra CBD requires around 75,000sqm of retail floorspace to meet demand in 2011.Supply versus DemandGiven that there will be demand in the CBD for around 75,000sqm of retail floorspace in 2011 and that there is currentlyaround 48,682sqm of retail shop front floorspace the CBD, there is currently considerable undersupply of over26,000sqm. The condition of undersupply is reflected in the lower than average vacancies recorded in the CBD and thehigh performance of Stockland Nowra (turnover per square metre).Examining supply versus demand in more detail:• There is a considerable undersupply of department store, specialty food, and specialty non-food (other personaland household goods retailing) retailing.• Supermarket and grocery store supply and demand is roughly in equilibrium. The CBD provides around14,000sqm of supermarket and grocery store floorspace (3,700sqm Coles, 3,100sqm Woolworths, 4,200sqmWoolworths and 1,500sqm ALDI). By 2021 there will be demand for another 3,500sqm supermarket.• There is an existing undersupply of department (including discount department floorspace) in Nowra. This is notunexpected given there is only provision of a small Target County and a larger Kmart (as part of Stockland).There is sufficient demand in 2011 to warrant an additional discount department store of a similar size to theexisting Kmart of say around 5,000-7,000sqm. By 2031 there will demand for another similar store around thesame size.Notwithstanding the above, expansions are planned for Stockland Nowra which will provide an additional 16,000sqm ofretail floorspace. Should this be developed, demand for supermarket and additional department store floorspace wouldbe satisfied to 2021.Residential Market ConsiderationsAn analysis of the current residential market and discussions with local agents has indicated that:• Shoalhaven is a growing residential area mainly due to its high residential amenity and affordability;C09143 Page 10 Hill PDA

Nowra CBD Master Plan – Market Assessment• As a whole, the region predominantly consists of separate houses compared to units. There are a greaterproportion of rental properties in Nowra compared to the remainder of Shoalhaven;• Despite unfavourable economic conditions, the Shoalhaven residential property market performed relativelywell in 2009, mainly driven by government grants and lower interest rates. There were some gains in medianvalues;• Shoalhaven LGA experienced a 4.1% growth in house values and an 8.3% decrease in unit values in the yearto December 2009;• Median sales prices achieved in the LGA vary greatly between individual suburbs. Suburbs with high amenity,such as coastal living, achieved greater sales values. This is apparent in Mollymook, Ulladulla, etc;• The majority of sales in Nowra in 2009 were house sales, suggesting as healthy demand for properties of thisnature and a limited supply of unit developments. Residential properties spend little time on the market inNowra compared to surrounding areas, again suggesting healthy demand levels;• There are a diverse range of residential sites available in the Shoalhaven, ranging from small acreages andlarger farms to suburban blocks. New subdivisions are continuously being released to accommodate the everincreasing population of the region. Suburbs with high amenity, such as coastal living, achieved greater landvalues. Nowra generally achieves land values between $150/sqm to $250/sqm;• In the 12 months to December 2009, the volume of housing approvals in Shoalhaven increased by 23.7% to470. The number of medium/high density approvals was down 21% to 89 – still a greater number of approvalsrecorded than the surrounding LGA’s.C09143 Page 11 Hill PDA

Nowra CBD Master Plan – Market Assessment2. INTRODUCTION2.1 Study BackgroundThe NSW State Government predicts the Nowra-Bomaderry area will double in population over the next 30 years. As aresult, how and where those homes and subsequent demand on retail floorspace capacity could be located is one of thechallenges facing Shoalhaven City Council.Nowra is the largest coastal urban centre between Wollongong and the Victorian border with a population of around31,000 persons. The Shoalhaven’s proximity to coastal beaches, and the larger metropolitan centres of Sydney (2hours), Canberra (2.5 hours) and Wollongong (1 hour) make the area subject to significant growth pressures. The retailcentre was historically dissected by the Princes Highway. In the 1980’s, the Highway was deviated around the retailcentre. Nowra Fair (now Stockland Nowra) was constructed shortly after (1983) on its eastern side. This meant that theCBD was once again dissected by the Highway.As a result of increasing development pressure, and significant forecast population growth, Hill PDA has been engagedas sub-consultants to ARUP for the preparation of a Master Plan for Nowra CBD. The Master Plan and outer study areaboundaries are illustrated below.Figure 1 - Study AreaSource: ARUP July 2010C09143 Page 12 Hill PDA

Nowra CBD Master Plan – Market AssessmentThe Master Plan area boundary for Nowra CBD is bound by the Shoalhaven River in the north, Osborne Street in thewest and Douglas Street to the south. The eastern boundary is more irregular in shape, extending to Brererton Streetand also including Stockland Nowra and the land located to the east of the existing shopping centre.The 25 year planning period of the Master Plan will also inform comparison documents a Draft Development ControlPlan and a Draft Contributions Plan could be developed. The Master Plan presents a unique opportunity to instigaterevitalisation, growth and economic development in a local context. In the first instance, Hill PDA is providing apreliminary demographic and market assessment of potential land uses to inform urban design options for the siteconsidering the potential viability of potential land uses.2.2 Study Brief and MethodologyIn order to fulfil the requirements of the brief, Hill PDA has completed the following key tasks:• Examined population and household growth forecasts from Council, NSW Government, and other sources;• Conducted a review of data derived from the 1996 and 2006 ABS Census data (e.g. sectoral change,occupational change, dwelling change, household change, employment skills etc);• Noted specifically those demographic characteristics impacting on household expenditure and land uses forthe precinct including household formation, family types, and household weekly income levels;• Identified patterns of supply and demand for residential, retail, commercial and mixed use, noting end salevalues, rents, development site sales, general demand (etc);• Considered surrounding and comparable developments within the catchment of the subject site, noting theirattributes and competiveness to Nowra;• Established the principle land use opportunities and constraints which may influence the viability ofdevelopment now and in the future;• Reviewed of the retail role, trade area and forecast demand of retail and commercial floorspace in Nowra CBD;and• Identified priority or opportunity sites for future development within the Master Plan study area.• Assessed the feasibility of draft built form controls for up to 2 sites within the Master Plan study area whereproposed land uses may differ substantially from existing.C09143 Page 13 Hill PDA

Nowra CBD Master Plan – Market Assessment3. PLANNING & POLICY CONSIDERATIONSThe purpose of this Chapter is to identify those policy directions which impact on retail, commercial and residential landuses within the South Coast and particularly Nowra. Assumptions regarding rates of population or dwelling growth,centre size (floorspace), retail hierarchy, and anticipated worker populations are of particular significance.3.1 South Coast Regional Strategy (2006-2031)The South Coast Regional Strategy, as developed by the NSW Department of Planning, sets out the long term goalsand strategies for the region over a 25 year (2006-2031) planning period. The Strategy covers the local governmentareas of Shoalhaven, Eurobodalla and Bega Valley.The Strategy recognises that the population in the South Coast is likely to increase by 60,000 from 2006 to 2031.Accordingly, to accommodate future housing growth the Strategy sets a target of an additional 45,600 dwellings by2031. An additional 25,800 jobs will also be required in the Region to support the projected population growth.Additionally, the Strategy:• Protects sensitive coastal areas, productive agricultural land and natural resources including water resourcesand threatened flora and fauna;• Locates new development in the right places by promoting growth of existing centres rather than any newtowns or villages, and reviewing urban lands in sensitive locations;• Supplies well-located employment lands to support an extra 25,800 jobs, particularly in the tourism and agedcare sectors; and• Protects the unique character of the South Coast - its rural and coastal towns and villages and pristine naturallandscapes.More specifically, Shoalhaven LGA is projected to grow by an additional 34,000 people. This equates to an additional26,300 dwellings in the LGA over the next 25 years, of which potentially 15,800 can be accommodated in existingvacant urban land and investigation areas. The majority of the new dwellings will be concentrated in Nowra-Bomaderryand the major towns of Ulladulla and Vincentia.The Strategy anticipates that further dwellings will be accommodated through medium density development within thetown centres, including at least 6,700 dwellings in the Nowra area (as identified in the Nowra-Bomaderry Structure Plan)It is recognised that the region has an undersupply of employment and land capacity to accommodate the forecastpopulation increase. Around 25,800 jobs will need to be provided to service the new population. Shoalhaven LGA is toprovide 14,400 of these new jobs.The Strategy also identifies a typology for centres within the subregion as indicated in the following table.C09143 Page 14 Hill PDA

Nowra CBD Master Plan – Market AssessmentTable 2 - South Coast Centres HierarchyHierarchy Centres Key functionsRegional CityMajor RegionalCentreMajor TownsTownVillagesWollongong and CanberraNowra-Bomaderry, Bega,and Batemans Bay.Ulladulla, Moruya, Narooma,Merimbula, Vincentia districtExamples include Eden,Pambula, Berry, Milton andBermaguiExamples include Tilba Tilba,Mogo, Kangaroo ValleySource: South Coast Regional Strategy 2006-2031, NSW Department of Planning.Although located outside of the Region, the regional cities provide the Regionwith higher order administration, education and health services, cultural andrecreational facilities, and higher density commercial and residentialdevelopment. These centres have a commercial focus with large retail andcommercial floor area, including department store/s.Provide for the majority of growth within the Region. A concentration of mediumand higher density living, business, employment, professional services,specialised shops and associated warehouses, transport logistics and bulkygoods operations. Focal point for subregional road and transport networks.Existing smaller centres identified for a lesser proportion of growth. Provide ashopping and business centre for the district, including warehouses, transportlogistics, bulky goods operations, health and professional services, mixed withme dium density residential.Small centres that vary in size. Small-to-medium concentrations of retail, healthand other services with lower density residential. Reliance on higher ordercentres for shopping and employment.Small centres with local retail and specialty tourism retail.Of relevance to this study, the Regional Strategy indicates objectives as relevant to Nowra are to:• Increase the amount of housing in existing centres to ensure the needs of future households are better met, inparticular the needs of smaller households and an ageing population;• Ensure adequate supply of land to support economic growth and provide capacity to accommodate new jobs,especially in the areas of finance administration, business services, health, ages care and tourism; and• Manage environmental impact of settlem ent by focusing new urban development in existing identified growthareas such as Nowra-Bomaderry.The Regional Strategy also indicates that no new towns or villages will be supported unless compelling reasons arepresented and they satisfy the Sustainability Criteria. Furthermore, additional development sites will only be consideredif it can be demonstrated that they satisfy the Sustainability Criteria.3.2 Nowra-Bomaderry Structure Plan (2006)The Nowra-Bomaderry Structure Plan was prepared by Shoalhaven City Council and The Planning Group in 2006. Thepurpose of the Structure Plan is to provide a framework for the future development of the Nowra Bomaderry area for thenext 20 to 30 years. The Structure Plan is not a legal document, rather it is a document that provides guidance andstrategic direction and identifies land that will be investigated for possible rezoning and future development. Thebackground report provides the rationale and technical support to the Strategic Direction.Residential AreasThe main findings relating to Shoalhaven and Nowra Bomaderry include:• Recent population growth can be attributed to in-migration;• There has been an increase in the number of older people moving to the Shoalhaven, resulting in a greaterneed for retirement living and aged care housing;C09143 Page 15 Hill PDA

Nowra CBD Master Plan – Market Assessment• Property prices are increasing, resulting in affordability issues and housing stress among some households;and• The potential yields of large underdeveloped residential sites are diminishing due to development constraints,such as flooding.To accommodate the increase demand for urban growth due population growth, the Structure Plan considers a newurban centre, urban expansion and urban consolidation.Previous feasibility studies have indicated that in most areas in Nowra Bomaderry it is not viable to replace existingdwellings will medium density housing. The market has generally resisted medium density housing and smaller lotsizes. However there has been a shift to smaller household sizes in recent years, with this trend expec ted to continue inthe future. This has meant that various forms of medium density housing and mixed use development would now beappropriate in the Nowra Bomaderry area. Therefore Council should take opportunities to increase densities whereverpossible, with consideration given to affordability, heritage and environmental factors.The Structure Plan identifies 6 areas within the existing Nowra Bomaderry urban area and has assessed their potentialfor urban consolidation – Bomaderry, North Nowra and Nowra CBD (north, south, east and west). In total these 6 areascould provide 8,624 new dwellings, a net increase of 6,670 dwellings. Nowra CBD could provide 4,480 new dwellings, anet increase of 3,383 dwellings.Retail and Commercial CentresBased on a 2005 Leyshon study, the Structure Plan recognised there were around 349 retail establishments in NowraCBD, of which 295 were in the CBD West and 54 in the CBD East. This equated to around 48,000sqm of retailfloorspace. In addition, there is was around 8,640sqm of bulky goods floorspace within the CBD.The Leyshon study indicated that in 2006, there was an existing shortfall of 12,410sqm of retail floorspace in the NowraBomaderry trade area. Furthermore, around 27,800sqm to 29,630sqm of additional retail floorspace be demanded bythe trade area to 2021. Coupled with the existing shortfall, the trade area requires an additional 40,210sqm to42,034sqm by 2021 to meet demand.There are 3 main bulky goods areas in Nowra Bomaderry, being South Nowra, Bolong Road and The John Bull Centrein Bomaderry. South Nowra attracts bulky goods retail spending from beyond the Shoalhaven. Leyshon indicatedaround 15,000sqm of additional bulky goods floorspace is required in the Nowra Bomaderry trade area by 2021 to meetdemand. Of this, around 10,000sqm to 12,000sqm of additional bulky goods floorspace should be provided in SouthNowra by 2021.The Structure Plan provided the following objectives for commercial areas:• Maintain and enhance the commercial primacy of Nowra CBD as a major sub-regional centre;• Maintain and enhance the economic viability of existing neighbourhood centres, such as Bomaderry, EastNowra, North Nowra and Lyndhurst; and• Provide for the development of new viable neighbourhood centres.The Structure Plan also provided the following information regarding retail expansions:C09143 Page 16 Hill PDA

Nowra CBD Master Plan – Market Assessment• Traditional retail floorspace in Nowra Bomaderry is projected to increase by around 40,000sqm between 2006and 2021;• An allowance has been made for the development of an anchoring discount department store (DDS) andassociated shops in the CBD;• The demand for future retail floorspace to 2021 in the CBD can be provided within the existing zoned areas;and• Two new 10,000sqm neighbourhood centres will be developed in the new urban areas (i.e. Moss Vale RoadNorth Nowra, and Cabbage Tree Lane).Development Constraints and Opportunities of Nowra CBDThey key constraints to Nowra CBD are:• The key physical constraints in the broader Nowra Bomaderry area are landform, acid sulphate soils, floodingand riparian corridors;• The eastern boundary of the CBD is classified as flood prone land, which includes the Stockland site and JaneStreet/Nowra Lane site;• The Stockland site also appears to be affected by acid sulphate soils (low probability);• The bushfire prone lane buffer extends to the western edge of the outer study area; and• The availability of affordable developable land, poor urban design quality, increasing traffic on the Highway,constraining the ability to cater to strong forecast population growth.The objectives for the further development of Nowra CBD are to:• Provide the main focus for shopping, community, cultural, entertainment and recreation facilities;• Provide opportunities for business investment and employment;• Encourage a mix of land uses, including residential uses;• Provide a simple, legible and flexible urban structure;• Maintain environmental amenity and consistent urban design; and• Encourage street-level activities and social interaction.C09143 Page 17 Hill PDA

Nowra CBD Master Plan – Market Assessment4. ANALYSIS OF LAND USE TRENDS4.1 Retail TrendsOver the past three decades significant changes have occurred in the retail industry such as the introduction of newtechnologies, the ageing of the population, increased female participation in the workplace and changing consumerpreferences. These changes have placed increased pressure on many existing retail centres to either adapt or losemarket share.In the 1980s, Australian retail floorspace totalled approximately 1.8sqm per person (excluding commercial space andautomotive retailing), which was roughly divided into equal components of regional, district and neighbourhood/localcentres. Today we have around 2.1sqm per capita due to increasing affluence and consumerism.The retail industry’s innovative nature is driven largely by the need to respond to, and anticipate, its customers’ needsand desires. Changing demographics and lifestyles require individual retailers and shopping centres to constantlymonitor these often subtle shifts and respond by repositioning their retail offer, presentation and mode of operation. Thefactors that are driving the changing face of retailing in Australia are described as follows:• The increase in the proportion of working women;• The increase in the proportion of part-time and casual employment and the reduction in full-time employment;• The reduction in the proportion of households that match the ‘traditional family’ model and an increase in thenumber of single persons and single parent households;• The increasing disparity of household income, ranging from high double income households to households thatrely on welfare;• The ageing of the population; and• Increasing working hours for those in full-time employment.In particular economic rationalism over the past three decades has resulted in increasing household income disparity.Today there are many families with high disposable incomes and many families that struggle in poverty. Families aretypically cash-rich / time-poor or time-rich / cash-poor. Very few families are both time-rich and cash-rich, whichprovides interesting challenges for the retail industry.Population growth, rising real disposable incomes and innovation and change within the retail industry haveunderpinned a rapid increase in the supply of retail floorspace throughout Australia. Population growth and increasinglevels of disposable income have provided the means to support new retail development, but it is the innovative natureof the industry itself that has generated major increases in more and larger centres.Without a doubt the ‘Global Financial Crisis’ has had an impact on the Australian retail property market in the pastcouple of years. The period from late 2007 to 2009 was characterised by weaker consumer sentiment and poor leasingand investment markets (i.e. weak income and capital returns). This trend was common to most commercial marketsnationwide.C09143 Page 18 Hill PDA

Nowra CBD Master Plan – Market AssessmentThe Federal Government’s stimulus package in 2009 was successful in reversing the downward trend in retailexpenditure. There are now clear signs that consumer sentiment is improving on the back of a strengthening economy,with a slow and steady recovery now underway.The long term trends of rising affluence, consumerism and technological change are likely to ensure that retailexpenditure will continue to increase over the long term owing to real growth in retail spend per capita. The currenteconomic climate is viewed as a short term condition rather than a long term one. In the future it is inevitable that therewill be periods of economic growth and adjustment.Recent retail trends and their implications are explained further below.Greater Size and DiversificationTraditionally retailing has followed a hierarchy from regional through district to small neighbourhood centres. In the1950s Australia’s first planned suburban shopping centres replaced the traditional strip centres that had built up aroundrailway stations. The ample, off-street parking and shopper amenity offered by these new enclosed malls appealed tocustomers, especially as motor vehicle usage increased and became more widely affordable. The first of thesesuburban centres to open was in Top Ryde in 1957.The introduction of the discount department store in the mid 1960s spawned a wave of new centre development andexpansion, which continued throughout the 1970s and early 1980s. In the late 1980s and early 1990s, retailinnovations such as food courts, in-centre cinemas, family entertainment centres, library, medical and other servicesand larger supermarkets further fuelled increases in centre size and numbers.Regional centres of more than 60,000sqm of floorspace began to evolve during this time. These centres generallyincorporated a department store, large major tenants and supermarkets. Roselands was the first of these to be built in1965 and today there are approximately 35 indoor centres in NSW with retail floor areas over 30,000sqm. The closestregional centre to Nowra is Stockland Shellharbour, which has a retail area of almost 34,000sqm.Somewhat later super-regional centres developed in NSW comprising both a David Jones and a Grace Brosdepartment store and having a total floor area of more than 100,000sqm. Such centres in NSW include Castle Towers,Erina Fair, Warringah Mall, Westfield Bondi Junction, Westfield Hornsby, Westfield Miranda and Westfield Parramatta.More recently these centres are housing a range of ‘category killers’ or ‘mini-major’ stores. Category killers are largestores, typically from 400sqm to 3,000sqm, that provide an extensive range and depth of competitively pricedmerchandise within a single market segment. Examples include Borders, JB-Hi-Fi, Dick Smith, Lindcraft and Rebel.Due to com petition between centres, there continues to be plans for expansion. Macarthur Square and WestfieldPenrith were recently expanded to more than 80,000sqm each. Even the super-regional centres like Macquarie Centre,Castle Towers, Warringah Mall are proposing further expansion. Top Ryde, the first suburban indoor centre, is beingredeveloped into a centre of 70,000sqm – almost four times its previous size.New UrbanismNew urbanism has gained popularity in the United States. The recent example of it here is the Rouse Hill Town Centre.Principally new urbanism refers to a return to a grid road pattern, more intense residential and employment related useswithin walking distance to centres and a return to a ‘main street’ theme rather than enclosed mall within the towncentres.C09143 Page 19 Hill PDA

Nowra CBD Master Plan – Market AssessmentRouse Hill Town Centre core is divided into four quadrants. Within each quadrant there are malls, streets, andlaneways, some of which are enclosed. The remainder of the future floorspace attributed to the town centre includesfurther commercial and residential floorspace around the perimeter of the core. Rouse Hill Town also incorporates theprinciples of ecologically sustainable design.Convenience ShoppingThe concept of retail convenience for the consumer has expanded considerably, particularly over the past two decades.Previously it meant physical proximity, usually to home. With two income families where partners might work in quitedifferent locations, and where an increasing choice of time-consuming activities compete with shopping, the concept ofretail convenience is becoming far less location-specific and more performance oriented. Consumers want one-stopshopping at hours convenient to them.One response from the retail industry has been the development of ’convenience community centres’. These areusually dominated by a supermarket to meet daily and weekly shopping needs but they also include a range of specialtyshops such as butcher, fruit shop, liquor shop, take-away food, video rental and petrol station. Where they differ fromtraditional neighbourhood centres around railway stations is that a large proportion of their turnover comes fromcommuters in the PM peak on the way home and so they have generally located themselves on the PM peak side ofmain roads. They also provide ample parking and convenient access in and out to the main road.Another response has been the emergence of ‘convenience service centres’ which are petrol stations on main highwaysbut also offering a ‘just-in-time’ shop with a range of groceries and fast foods (e.g. 7 Eleven, Quix, Ampol Shop Stop,BP Shop). Typically the size of the food, groceries and take-away foods component is around 150-500sqm.Highway service centres have been gaining in popularity largely due to convenience and time-savings.Generallythese stores are not the main destination for food and grocery shopping but they offer a range of products for ‘just-intime’shoppers. They can include several operators such as McDonalds Family Restaurant, Burger King, KFC, Quix.Deregulation of HoursOne of the biggest changes the retail industry has made recently to meet the changing needs of consumers is theintroduction of seven day trading. More people are juggling careers and family and increasingly must squeezeshopping in where they can rather than adhere to a standard schedule.Busy shoppers today are also less inclined to spend as much time as they once did wandering through vast shoppingcomplexes. While younger shoppers, and especially teenagers, do stay longer in shopping centres, the trend is towardsa decline in average time spent shopping – particularly in relation to what is considered ‘chore’ shopping – shopping forfood and groceries.In addition, most forms of activity in centres now operate with extended shopping hours. This is evident in Coles andWoolworths Supermarkets which open until 10pm and midnight. K-Mart has commenced operating 24 hours a day/7days per week in some locations, such at Stockland Nowra. Most other K-Mart stores open until midnight on mostnights during the week.Changes in SupermarketsBeginning in the 1980s the suburban supermarket increased in size and diversity of retail offer. The objective was toprovide for a large choice of food and groceries under one roof with one convenient check-out. Over time supermarketsC09143 Page 20 Hill PDA

Nowra CBD Master Plan – Market Assessmentbegan to expand the range to include fresh foods, meats, delicatessen, pharmaceuticals and even some non-food itemssuch as toys, clothing, manchester and small appliances.More recently there has been some return to smaller supermarkets and corner stores, particularly in inner city areas.This has resulted largely from the need to increase supply to meet an expanding, more affluent, inner city market. Butwith the logistical difficulties in acquiring large sites it has resulted in smaller supermarkets – sometimes in mixed usedevelopments combined with a stronger reliance on patrons shopping by foot – particularly in high density areas.Woolworths, and to a lesser extent Coles, have dominated the supermarket industry. Woolworths continue to outperform other supermarket operators. The linking of supermarket operations to discounted petrol has also benefited thetwo main operators. More recently Woolworths and Coles have been acquiring category killers such as Dick Smith, DanMurphys Liquor, Liquorland and the like. This along with ownership of the major discount department stores iscontinuing to strengthen the quasi-duopoly in the industry.Notwithstanding we have seen ALDI opening up numerous food stores in NSW over the past decade providing somecompetition to Coles and Woolworths. However ALDI has also provided some complementary role since ALDI storeshave fewer product lines at discounted prices and can attract shoppers from further area by having a wider thinner tradearea than the full-line supermarkets.Supabarn is also beginning to open some other supermarkets in metropolitan areas after already establishing itselfthrough 3 stores in the ACT. Supabarn, which has operated a supermarket in Five Dock for some time, is alsobeginning to open some other supermarkets in the metropolitan area including the one under construction in Sutherlandand one planned for San Souci. Supabarn features a complete gourmet delicatessen and seafood department.Supabarn will be a fairly direct competitor to Woolworths and Coles.US discount retail giant Costco has identified the Asia-Pacific Region as a key area of growth, particularly in Australia.Costco is a membership warehouse club that provides a wide selection of merchandise at a substantially lower price toboth businesses and individuals. Costco Warehouses provide groceries, electrical appliances, automotive supplies,hardware, sporting goods, homewares, apparel, health & beauty goods, furniture and office supplies. It operates 7 daysa week for its members.Costco’s first warehouse in Australia opened in August 2009 in the Docklands in Melbourne. It is understood that asecond Australian warehouse is currently in the planning approval process. The 14,000sqm (approximately) warehousewill be located on Parramatta Road in Auburn in Sydney’s West. The NSW Department of Planning will recommend theconstruction of the warehouse within the coming weeks.Under the current NSW planning laws the type of store Costco builds is not allowed as their retail operations are withinpremises more in line with warehouse-style bulky goods outlets. Westfield Group, AMP and the Shopping CentreCouncil of Australia submitted objections to the proposed development.Costco plans to open 5-6 new warehouses in Australian over the next 3 years. The emergence of Costco in Australiawill likely intensify the battle between Coles and Woolworths.Out of Centre RetailingIn the late 1980s new forms of retail centres emerged such as the ‘category killer’ and ‘power centres’. Bunnings, ToysR Us, IKEA, Officeworks, Babyco, Baby Kingdom, Harvey Norman, Borders, The Good Guys and various beddingC09143 Page 21 Hill PDA

Nowra CBD Master Plan – Market Assessmentspecialists are notable examples of category killers in Australia. The financial success of these stores has been mixedas demonstrated by the failure of Coles Myer ‘World 4 Kids’ and ‘Megamart’ and the strong performances of otherssuch as JB-HiFi and Bunnings.Whilst many category killers locate in ‘out of centre’ locations others can be found in regional shopping centres and aregenerally classified as ‘mini-majors’. Borders and JB Hi-Fi are successful examples generally found in the large majorregionaland super-regional centres.Beginning in the 1980s and expanding considerably through the 1990s were power centres. Power centres, also knownas ‘big box’ centres, consist of a collection of category killers and other specialist retailers (often retailers of bulkygoods) and are usually located in secondary areas such as light industrial zones. Fit out is minimal and rents persquare metre are significantly lower than in traditional centres.Some power centres have a theme, such as a homemaker centre (hardware, carpets, tiles, furniture, kitchen/bath, etc).Examples include Moore Park SupaCenta and Norwest Homemaker Centre. Power centres however can also tradesuccessfully with a wide mix of traders (auto accessories, toys, sports, clothing). These are destination shoppingvenues and people are prepared to travel further to access a larger range at more competitive prices than can beoffered by traditional department, discount department and specialty stores.Bulky goods retailing, factory outlets and clearance centres in traditional industrial areas integrating warehousing withretail space are also recent innovations. As with power centres, they rely on low rents. While purpose-built factoryoutlets are common in the United States, most of Australia’s major factory outlet centres occupy premises formerlyoccupied by traditional retailers, factories or other uses – eg Birkenhead Point and DFO Homebush.Bulky Goods RetailingBulky goods retailing is often described as low cost / high bulk retail goods and ancillary products. Retailers of thesegoods and products have identified financial benefits in lower occupancy costs and economies of scale outside ofestablished high-rent and high-cost retail centres.Bulky goods retailing first appeared as showrooms attached to distribution and warehousing industries. Over time bulkygoods strip retailing and centres have attracted a number of furniture, appliance retailers and hardware stores such asHarvey Norman, Domayne, Bing Lee, BabyCo, Bunnings, bedding shops, lighting shops, etc. In NSW, bulky goodsretailing has been one of the fastest growing sectors, doubling in size over the last 6 years.Bulky goods can take the form of strip retailing along a major highway or it can be in a stand alone building or “powercentre”. There are 3 main bulky goods areas in Nowra Bomaderry, being South Nowra, Bolong Road and The John BullCentre in Bomaderry.More recently there have been non-bulky goods retailers attracted to these peripheral locations including for exampleThe Warehouse Group which is a discount variety store, video rental stores, large liquor stores, and factory outlets.Fast foods (such as McDonalds, Pizza Hut and KFC) and highway based convenience stores have also located in bulkygoods precincts.Changing Shifts in TradeThe trends discussed in this Chapter are polarising the retail hierarchy with the larger regional centres positioningthemselves for a more dominant role in the provision of entertainment and customer services matched with increasedC09143 Page 22 Hill PDA

Nowra CBD Master Plan – Market Assessmentretail floorspace. The more successful smaller centres have moved towards the concept of convenience centres withgreater emphasis on food retailing, just-in-time shopping, fast foods, local services and petrol. Examples include theWoolworths Market Place concept.More and more we are witnessing shifts in trading patterns in a number of areas. In competing for consumer dollarssome centres are winning and others are losing. The trends can be summarised as follows:• Regional and super-regional centres are expanding and taking trade away from district centres and even someneighbourhood centres. These regional centres are capturing a larger proportion of trade by increasing theirretail offer and providing a range of activities including entertainment, comparative goods shopping andconvenience shopping with larger supermarkets;• Convenience centres on major roads are taking trade away from the traditional neighbourhood centres that arebased around public transport nodes. This is evident with some traditional retail centres that have experiencedrising vacancies and the introduction of “low rental” tenants without fitout costs to fill the vacancies (egliquidators, etc);• Bulky goods retailers on the fringe of large shopping centres and in industrial areas are taking trade in bulkygoods away from the traditional retail centres. In 1990-91 40% of department stores’ turnover was in bulkygoods commodities (furniture, floor coverings, electrical appliances, hardware, homeware, sports and campinggoods, soft furnishings). This figure fell to 25% by 1998-99 and is probably less than 20% today. The largenational department stores are also continuing to lose trade to the rise of discount department stores;• Older style centres typically located at train stations have lost market share. This is particularly the case withcentres that shoppers experience difficulty in access and parking and where there is a poor retail mix and lackof major tenants by contemporary standards; and• Some traditional centres have become successful through reinvention of their role / theming, marketing andimprovement programs – in some cases developing into an ‘eat street’ theme or ethnic theme (eg Asian orArabic).Internet ShoppingInternet shopping (also called e-tailing and electronic retailing) is a retail format in which the retailer and customercommunicate with each other through an interactive electronic network. A growing proportion of Australians haveaccess to the internet at home. The rate of access has quadrupled in recent years, from 16% of households in 1998 to64% in 2006-07.In 2006-07, 61% of the 11.3 million people who used the internet at any site reported using it in the past 12 months tobuy goods or services for private use. Among all age groups, people aged between 25-34 years were most likely tohave used the internet for this purpose (71%).Despite increasing household access to the internet, the growth in internet shopping has not been as dramatic aspredicted by some futurists in the early 1990s. Currently internet shopping accounts for no more than about 5% of totalretail sales. Most sales have been made by higher socio-economic households and only with commodities that aresuited for that type of shopping including second hand items, music, computer hardware and software and officedurables. In many cases internet shopping is used to acquire knowledge, rather than make purchases.C09143 Page 23 Hill PDA

Nowra CBD Master Plan – Market AssessmentElectronic retailing is thus generally considered to have some growth potential. But this will be dependent on whether ornot it can, and is perceived to be able to, provide superior benefits over existing retail formats. The critical benefit thatelectronic retailers can offer is the opportunity for consumers to search across a broad range of alternatives, develop asmaller set of alternatives based on their needs, and get specific information about the alternatives they want.Whilst there may be some opportunity for internet shopping to capture an increasing proportion of total retail sales, theimpact will not be as dramatic as initially forecast as shoppers still preferring to shop physically as the best method ofcomparing goods, brands, stores and prices and as a means of entertainment / leisure and socialising. Accordingly theimpact to traditional bricks and mortar retailers is not likely to be as significant or detrimental as initially forecast.4.2 Other TrendsHome Based BusinessEmployment generation is no longer simply a matter of attracting new businesses and large companies, but ratherattracting mobile workers who run their own businesses or subcontract their labour from home. Home based businessesmake up a significant proportion of the total small business population in Australia.As at June 2004, it was estimated that 67.5% of all small business were home based, compared to 58.3% in February1997. These businesses were operated by 1.04m people, representing 62.6% of all small business operators. Thisreflected annual increase in the proportions of home based businesses and operators 1.0% and 0.5% respectivelybetween 1997 and 2004. It can be expected that this growth has accelerated between 2005 and 2010, mainly due toimproved methods of communication, such as broadband internet 1 .Employment generation is no longer simply a matter of attracting large companies, but rather attracting mobile workerswho run their own businesses or subcontract their labour from home. Furthermore, there is evidence that the proportionof home based employment is continuing to increase under the combined influences of existing firms encouragingemployees to increase the proportion of time they spend working at home, and the ‘out sourcing’ of services by manylarger firms. Both are creating opportunities for home based businesses.Other Trends Influencing Future Residential Development• Population growth in NSW and Sydney - the primary driver of demand for residential dwellings is populationgrowth. The most recent population forecasts for Sydney have increased growth expectations anticipating anadditional 1.7 million people will be living in Sydney by 2031;• Affordability – the impact of low housing supply in comparison to high demand will be to drive the cost ofhousing upwards, exacerbating concerns regarding housing affordability. This will necessitate the approval ofhigher density and smaller (1 and 2 bedroom) apartment dwellings to maintain affordability;• Changing lifestyle and social trends – such as the ageing of the population and declining family sizes (coupleonly families). This will reduce household occupancy rates and in turn increase demand for particular types ofhousing, such as unit developments, over 55’s living and other smaller housing types;1Source: ABS Cat. 8127.0 Characteristics of Small Business Australia (2004)C09143 Page 24 Hill PDA

Nowra CBD Master Plan – Market Assessment• The growing popularity of mixed use developments – allowing more than one type of use in a building. Morespecifically, the combination of residential, office and/or retail in a single building;• Adaptable residential units – a structure that is capable of being modified (at minimum cost) to suit thechanging needs of its occupants. It basically means not having to move as needs change i.e. developing adisability with age. Living in an adaptable home that can be modified to suit changing needs ensures that theresident will not need to move to more accessible accommodation. Adaptable features can also improve theresale value and marketability of the property; and• Environmental concerns – the need for concerted efforts to incorporate the principles of ecologicallysustainable design into residential development.C09143 Page 25 Hill PDA

Nowra CBD Master Plan – Market Assessment5. DEMOGRAPHIC & EMPLOYMENT PROFILEAs part of this study, Hill PDA undertook a demographic analysis and employment profile of Nowra (suburb), Nowra-Bomaderry Statistical District (SD) and Shoalhaven Local Government Area (LGA). This was undertaken to provide abetter understanding of employment, economic, lifestyle and social characteristics of the area, and thereforerequirements for future commercial and residential land uses.5.1 Population GrowthShoalhaven City Council adopted revised population projections in May 2008 for the LGA and by Planning Area to2036. It can be seen from the table below that the population of the LGA is forecast to increase from 92,195 people to131,970 people by 2036. This equates to an annual compound growth rate of 1.20% per annum.Table 3 - Shoalhaven City LGA Population Projections (2006-2036)Location 2006 2011 2016 2021 2026 2031 2036AnnualCompoundGrowthPlanning Area 1:Nowra-Bomaderry StructurePlan Area31,891 34,019 36,498 38,844 40,863 42,566 44,104 1.09%Balance of Area 1 (Berry,Kangaroo Valley and11,360 12,706 14,626 16,616 18,480 20,176 21,775 2.19%Shoalhaven Heads)Sub Total Planning Area 1 43,251 46,725 51,124 55,460 59,343 62,742 65,879 1.41%Planning Area 2 (Culburra,Currarong, Callala Bay, Callala 6,688 6,644 6,620 6,610 6,579 6,505 6,358 -0.17%Beach)Planning Area 3 (St. GeorgesBasin, Vincentia, Sanctuary 18,479 19,935 21,336 22,669 23,894 24,985 25,996 1.14%Point, Erowal Bay)Planning Area 4 (SussexInlet, Cudmirra, Berrara)4,365 4,741 5,191 5,611 5,988 6,306 6,579 1.38%Planning Area 5 - (Ulladulla,Milton , plus others)19,412 20,713 22,025 23,424 24,855 26,102 27,188 1.13%Total 92,195 98,758 106,296 113,774 120,659 126,640 131,970 1.20%Source: Shoalhaven City Council, March 2008.More specifically, it can be seen that the Nowra-Bomaderry Structure Plan Area is forecast to increase by 12,213persons to 2036. This equates to an annual compound growth rate of 1.09% per annum . The remainder of PlanningArea 1, which includes Kangaroo Valley, Berry and Shoalhaven Heads, will grow strongly by an estimated 2.19% perannum.Comparing growth forecasts to surrounding locations, the results indicate the Shoalhaven LGA is to cater for much ofthe growth in the South Coast and Illawarra Regions. By comparison to Shoalhaven LGA’s 1.20% compound annualgrowth, Shellharbour and Kiama are forecasting population growth of around 0.70% per annum, and Wingecarribeearound 1.10% growth per annum. Bega Valley and Eurobodalla are forecast to increase by around 1.11% and 1.36%per annum respectively.C09143 Page 26 Hill PDA

Nowra CBD Master Plan – Market AssessmentTable 4 - Population Projection Comparisons (2006-2036)Location 2006 2036Annual CompoundGrowthNowra-Bomaderry 31,891 44,104 1.09%Shoalhaven LGA Remainder 60,304 87,866 1.26%Shoalhaven LGA 92,195 131,970 1.20%Shellharbour LGA 63,400 78,400 0.71%Kiama LGA 20,000 24,800 0.72%Wingecarribee LGA 44,400 61,100 1.07%Wollongong LGA 194,500 235,800 0.64%Illawarra Statistical Division 414,700 529,100 0.82%Bega Valley LGA 32,500 45,300 1.11%Eurobodalla LGA 36,600 54,900 1.36%Source: Shoalhaven City Council (March 2008) and NSW Department of Planning (April 2010)5.2 Key Resident Demographic CharacteristicsBased on an analysis of Shoalhaven LGA’s demographic data from 1996 to 2006, the key demographic characteristicsand trends impacting on Nowra were:• In 2006, the population of Nowra was 8,905 people. Nowra-Bomaderry had a population of 30,955 people andShoalhaven LGA had a population of 88,405 people;• Between 1996 and 2006, the population of the Nowra-Bomaderry increased by 3,966 people, equating to acompound growth rate of 1.39%. This can be compared to the LGA where the population increased by 10,156people over the same period, equating to a compound growth rate of 1.29%. By comparison, the population ofKiama and Shellharbour LGA’s grew by 0.49% and 1.36% per annum respectively between 1996 and 2006;• In 2006 the median age of Nowra residents was 40 years. Nowra-Bomaderry and Shoalhaven LGA had medianages of 35 years and 44 years respectively. Both median ages have increased significantly since the 1996census. Despite this, there are a high proportion of younger people (i.e. 0-14 year’s age bracket);• Home ownership levels are at there lowest in Nowra with 51.6% of dwellings either owned or being purchased.This can be compared to the Nowra-Bomaderry (66.3%) and the LGA (72.7%). As a result, rental levels are atthere highest in Nowra with 43.8% of dwellings rented, compared to Nowra-Bomaderry (30.6%) and the LGA(23.8%). Home ownership levels have increased since the 1996 Census;• In 2006, 93.4% and 92.7% of private dwellings were occupied in Nowra and Nowra-Bomaderry respectively.This is significantly higher than the LGA, which had an occupancy rate of 73.2%. This is mainly due to thehigher number of holiday homes in coastal areas of the LGA, such as Ulladulla and Mollymook;• The majority of households are family households; however, when compared, there are a lower proportion offamilies recorded in Nowra compared to Nowra-Bomaderry and the LGA;• 79.9% of dwellings in Nowra were separate houses and 15% were units. This can be compared to the Nowra-Bomaderry (86.5% houses and 7.9% units) and the LGA (90.3% houses and 4.1% units); and• In 2006, the median weekly household income of Nowra was $576/week, compared to Nowra-Bomaderry($776/week) and the LGA ($659/week). Incomes have increased significantly since the 1996 Census. Bycomparison, Kiama and Shellharbour LGA’s had median incomes of $1,052/week and $983/week respectively.C09143 Page 27 Hill PDA

Nowra CBD Master Plan – Market AssessmentNote employment trends are further analysed in the following sections of this chapter. A comparison of Nowra, toNowra-Bomaderry and Shoalhaven LGA (benchmarked against NSW and non-metro NSW) is provided in Appendix 1 ofthis report.5.3 Resident Workforce by OccupationThe characteristics of the resident workforce are an important factor in defining a region’s employment strengths andweaknesses. The term ‘resident workforce’ refers to the workforce within a particular area. According to the 2006 ABSCensus, a persons place of usual residence is the place where a person lived or intended to live for a total of sixmonths or more in 2006. It is important to note that the resident workforce (or labour force) need not necessarily workwithin that area, but may travel outside the local government boundary to work.The resident workforce by occupation for Nowra-Bomaderry and Shoalhaven LGA is summarised in the table below.Analysing the occupation trends of residents from 1996 and 2006 Census data shows that the occupations of residentshave not changed significantly since 1996.Table 5 - Resident Workforce by OccupationNowra-BomaderryShoalhaven LGAOccupation1996 2006 1996 2006Managers 1,170 11.80% 1,297 11.00% 3,541 14.50% 3,887 12.70%Professionals 1,453 14.60% 1,997 16.90% 3,523 14.40% 4,994 16.30%Technicians and trades workers 1,772 17.80% 2,036 17.30% 4,387 17.90% 5,424 17.70%Community and personal service workers 955 9.60% 1,318 11.20% 2,215 9.00% 3,365 11.00%Clerical and administrative workers 1,399 14.10% 1,548 13.10% 3,303 13.50% 3,840 12.50%Sales workers 1,080 10.90% 1,290 10.90% 2,487 10.20% 3,333 10.90%Machinery operators and drivers 851 8.60% 751 6.40% 1,833 7.50% 1,793 5.90%Labourers 1,029 10.40% 1,357 11.50% 2,593 10.60% 3,506 11.50%Inadequately described/Not stated 221 2.20% 188 1.60% 617 2.50% 472 1.50%Total 9,930 100.00% 11,782 100.00% 24,499 100.00% 30,614 100.00%Source: 1996, 2006 ABS Census DataNowra-Bomaderry and Shoalhaven LGA both have a fairly even spread of residents working across most occupations.There has been a slight increase in the number of residents working as professionals, community and personal serviceworkers and labourers since 1996. T here has been a slight decrease in the number of residents working as managers,machinery operators and drivers over the same period.5.4 Resident Workforce by IndustryThe 2006 ABS Census shows that the industries that employed the most residents in Shoalhaven LGA included: retailtrade (14.3%), health care and social assistance (11.9%) and construction (10%). More specifically, the major industriesof employment for the Nowra-Bomaderry SD are retail trade (14.0%), health care and social assistance (13.1%) andpublic administration and safety (12.8%). Overall, working residents are fairly spread across industries of employment.Since 1996, there has been an increase in the proportion of working residents employed in the retail, health care andsocial assistance and construction industries. There has been a decrease in the proportion of working residentsemployed in the manufacturing and wholesale trade industries.C09143 Page 28 Hill PDA

Nowra CBD Master Plan – Market Assessment5.6 Where do the Workers Come From?Journey to work data also indicates where employees working in Shoalhaven LGA live (i.e. who fills the jobs locatedwithin the LGA). Results indicate around 26,885 jobs are located within Shoalhaven LGA. Almost 94% of these jobs arefilled by local residents. Around 2.5% of remaining workers come from Kiama and 0.9% of workers come fromWollongong.Table 8 - Where do Workers come From?Usual Residence (LGA) Number Percent (%)Shoalhaven ( C ) 25,152 93.6Wollongong ( C ) 249 0.9Kiama ( A ) 670 2.5Eurobodalla ( A ) 56 0.2Shellharbour ( C ) 211 0.8Other areas 547 2.0Total 26,885 100.0Source: ABS, Journey to work, unpublished data, 2006.Working Residents vs. JobsWhen comparing the number of working residents in Shoalhaven LGA (31,289) to the number of jobs available in theLGA (26,885), there is a shortfall of some 4,404 jobs.C09143 Page 30 Hill PDA

Nowra CBD Master Plan – Market Assessment6. TOURISMIn terms of the number domestic overnight visitors and day-trippers, the South Coast of NSW is the second mostpopular tourist destination in NSW after Sydney. The majority of domestic travellers come from within NSW, inparticular, Sydney. The South Coast region comprises the Local Government Areas of Shoalhaven, Eurobodalla andBega Valley.The Shoalhaven has substantial areas of national park, state forest, bushland, and beaches, making it a very populartourist destination. Popular destinations in the Shoalhaven include Jervis Bay, Ulladulla, Mollymook and KangarooValley. Nowra itself attracts a number of tourists, many of which are passing through to other destinations in theShoalhaven. Attractions in Nowra and surrounds include:• The Shoalhaven River – river cruises, fishing, photography, etc;• Scenic walks, such as ‘Bens Walk’ which follows the Nowra Creek;• A number of nearby wineries, such as Cambewarra Estate Winery;• Australia’s largest aviation museum – the ‘Museum of Flight’;• Nowra Wildlife Park;• Historical buildings, and• Kangaroo Valley (only around 20 minutes north of Nowra CBD).6.1 Visitors to Shoalhaven LGATourism Research Australia (TRA) currently produces a wide range of tourism research information at the National,State/Territory and Regional level. Data is gathered from the two primary surveys conducted by TRA – the InternationalVisitor Survey and the National Visitor Survey. Tourism Profiles for each LGA are created only when the surveysprovide an adequate sample size. TRA survey data is averaged over three or four years to June 2007. This minimisesthe impact of variability in estimates from year to year. The profiles are based on 2006 Local Government boundaries.The tourism profile of Shoalhaven LGA includes data on the number of domestic day and domestic overnight tourists aswell as international visitors.Based on the TRA Data, 1,057,000 domestic overnight tourists and 1,158,000 domestic day tourists travel toShoalhaven LGA annually (based on a three to four year average to June 2007). There are a further 21,000international visitors. International visitors stay for an average of 8.1 nights (lower than the NSW average) and domesticvisitors stay for an average of 3.5 nights (in line with the NSW average).C09143 Page 31 Hill PDA

Nowra CBD Master Plan – Market AssessmentTable 9 - Summary of International and Domestic Travel to the Shoalhaven (2007)Shoalhaven LGANSW AverageCharacteristicInternationalDomesticOvernightDomestic DayTrippersInternationalDomesticOvernightDomesticDayTrippersVisitors 21,000 1,057,000 1,158,000 n/a n/a n/aVisitor nights 174,000 3,651,000 n/a n/a n/a n/aTourist Spend $14m $358m $99m n/a n/a n/aAverage stay 8.1 nights 3.5 nights n/a 19 nights 3.5 nights n/aAverage spend per trip $640 $339 $86 $1,837 $433 $99Average spend per night $79 $98 n/a $97 $124 n/aSource: Tourism Research Australia 2007TRA also provides data on the estimated expenditure in local areas for international, domestic overnight and domesticday visitors. All expenditure estimates are estimated at the Statistical Local Area level and then aggregated to the LocalGovernment Area, based on the relevant concordances. All expenditure estimates exclude domestic airfares andpurchase of capital goods like motor vehicles.The Shoalhaven Visitor Profile and Satisfaction Report was conducted by TRA during June and July 2006. Thefollowing information is based on a sample of 121 people who visited the Shoalhaven during this period:• The top 2 reasons for visiting the Shoalhaven were ‘a place to spend time with a partner, family or friend (70%)and ‘a variety of things to see and do’ (30%);• Visitors of Shoalhaven expectations included ‘relaxation and rejuvenation’, ‘nature-based activities’ and ‘anopportunity to tour around and explore.’ Activities included sightseeing, shopping and eating out at restaurants;• The Shoalhaven’s National Parks also rated ‘highly’ on satisfaction;• 73% of the visitors were overnight visitors and 27% were day-trippers;• 88% were from Sydney, with the majority of these travelling by car down the Princes Highway;• On average, visitors travelling to the Shoalhaven visited or passed through between 3 and 4 destinationsduring their trip – Berry (70%), Nowra (55%), Ulladulla (34%) and Kangaroo Valley (33%);• 64% visited for holiday/leisure purposes, 30% visited friends and 6% for business/other purpose; and• Overall, the surveyed visitors were highly satisfied with the Shoalhaven, with the vast majority stating that theywould visit the again in the next 12 months and would recommend the Shoalhaven to others.6.2 Tourism Businesses in Shoalhaven LGAThe economic value of tourism in regional destinations is largely driven by the business community. Efforts indestination marketing and infrastructure development support or build on the success of businesses. Regions with highvisitation but low business engagement may struggle to profit from tourism. Strategies aimed at specific types of tourismsuch as cultural tourism needs to involve businesses in identifying commercial opportunities.The TRA defines a tourism business as: an active business entity which relies significantly on visitors through bothdirect and indirect consumption of the tourism characteristic or tourism connected industry products or services theC09143 Page 32 Hill PDA

Nowra CBD Master Plan – Market Assessmentbusiness produce. Tourism businesses are split into 2 groups – tourism characteristic and tourism connectedbusinesses. The two groups are defined as follows 2 :1. Tourism characteristic businesses: ‘those [businesses] that would either cease to exist in their present form, orwould be significantly affected if tourism were to cease. In the Australian Tourism Satellite Account, for anindustry to be “characteristic”, at least 25% of its output must be consumed by visitors.’2. Tourism connected businesses: ‘those [businesses], other than tourism characteristic [businesses], for which atourism related product is directly identifiable (primary) to, and where the products are consumed by visitors involumes which are significant for the visitor and/or the producer.’Examples of businesses which fall into both categories are provided in the table below.Table 10 - Tourism Business ClassificationsTourism Characteristic BusinessesTravel agency and tour operatorAir and water transportMotor vehicle hireAccommodationCafé’s and restaurantsTakeaway food retailingSource: Tourism Research Australia, ANZIC and ABS 2008.Tourism Connected BusinessesRoad and rail transportAutomotive fuel retailingFood and beverage manufacturingRetail tradeClubs, pubs, taverns and barsLibraries, museums and the artsEntertainment servicesAt June 2007 there were a total of 2,328 tourism businesses recorded in Shoalhaven LGA.Table 11 - Summary of Tourism Businesses in Shoalhaven LGA (June 2007)Type of BusinessNumberProportionof Total (%)Non-employing businesses 930 40%Micro businesses (1-4 employees) 714 31%Small businesses (5-19 employees) 534 23%Medium to large businesses (20 or more employees) 150 6%Total Businesses 2,328 100%Source: Tourism Research Australia 2007 and Counts of Australian Businesses, including Entries and Exits Jun 2003 to Jun 2006. Cat: 8165.06.3 Implications for Nowra CBDWhilst there appears to be sufficient tourism accommodation in coastal areas of the Shoalhaven, it is apparent thatthere is a lack of good quality tourist accommodation in Nowra CBD. There are a number of lower-grade hotels andmotels and a caravan park that satisfy the basic needs of last-minute and ‘stop-over’ overnight tourists, however, thereis a shortage of quality boutique hotels, self-catered apartments/units or holiday homes. Given Nowra’s central location,amenity, proximity to the Shoalhaven River and tourist attractions, there are definite opportunities to improve thetourism accommodation in Nowra.Other opportunities exist in event tourism, festivals and markets which increase the stay of travellers through the town.These would be part of a broader tourism and economic development strategy.2Source: Australian Bureau of Statistics 2007, Count of Australian Businesses, including Entries and Exits, Catalogue No. 8165.0, ABS, Canberra.C09143 Page 33 Hill PDA

Nowra CBD Master Plan – Market Assessment7. RETAIL & COMMERCIAL MARKET ANALYSIS7.1 Existing Retail Floorspace in Nowra CBDNowra is the major regional centre for Shoalhaven LGA. Located in the northern entry point to the LGA, it has anextended trade area from Berry in the north to the major township of Ulladulla in the south. The defined trade area is abroad region extending around 120km along the Princes Highway encompassing the majority of the LGA.Hill PDA has reviewed previous retail and commercial studies and background information for Nowra CBD. Thisinformation has been supplemented from Hill PDA’s own floorspace survey of Nowra CBD (completed in April 2010)and other sources where indicated, the purpose being to understand the size and significance of existing centres whencompared to their level in the retail hierarchy, and their quantum and mix of retail and commercial land uses. It providesan understanding of not only the relationship of Nowra to other retail centres, but also the relationship and impact ofspecific retailers and land owners within the CBD itself.From Hill PDA’s inspection of the study area, the retailing and/or commercial role and function of certain areas of NowraCBD became defined. In many instances, the role of particular locations was clearly different. For instance:• The retail and commercial core of Nowra CBD could be defined as that land bounded by North Street to thenorth, O’Keefe Avenue and Nowra Lane to the east, Worrigee Street to the south and Berry Street to the west.The traditional retail precinct being focused on Kinghorne and Junction Streets;• A fringe or peripheral retail and commercial role has been identified for the likes of Haigh Avenue, LawrenceAvenue, Osborne Street, Graham Street, Moss Street, McGrath Avenue, Hyam Street, that retail located to thewest of Princes Highway, and any other retail or commercial floorspace along Kinghorne, Junction and BerryStreets outside the retail core. These locations include a mix of retail, commercial, bulky goods, wholesale andlight industrial land uses. Furthermore, the likes of Osborne, Junction, and North Streets within the fringe areahas a distinct health theme. There are an abundance of health practitioners located within detached residentialdwellings within the 2(b)1 Residential zone. The fringe of Nowra CBD also accommodates standalonecommercial buildings particularly along Graham Street and south of Worrigee Street; and• Whilst located on Princes Highway, Stockland Nowra could be identified as being out-of-centre. Whilst there isa vehicle overpass, the arterial nature of the Highway is a physical and mental barrier to connecting theStockland shopping centre to the remainder of Nowra CBD, especially for pedestrians. As a result Nowra CBDas a retail centre is effectively severed by the Princess Highway, which also acts as a road by pass for thosetravelling south along Princes Highway.The total amount of existing shop front floorspace (GLA) attributed to Nowra CBD by retail core, fringe and out of centrelocation is provided in the following table. Further breakdown of the above supply data by street is provided in Appendix2. The number of shop fronts within Nowra CBD by retail store type is provided in Appendix 3 and 4.C09143 Page 34 Hill PDA

Nowra CBD Master Plan – Market AssessmentTable 12 - Existing Retail Floorspace Supply in Nowra CBD 2010 (GLA sqm)Retail Store Type Core Fringe Stockland Nowra CBD TotalDepartment Store - - - -Discount Department Store 1,150 - 7,190 8,340Supermarkets & Grocery Stores 8,412 1,500 4,230 14,142Mini Major 2,528 1,200 - 3,728Convenience Store 256 - - 256Specialty Food 1,539 270 735 2,544Restaurants & Take-aways 2,735 120 276 3,131Clothing 2,833 800 1,470 5,103Specialty Non Food 5,497 344 1,653 7,494Bulky Goods 1,120 576 - 1,696Personal Services 2,144 104 - 2,248Total Retail Shopfront Floorspace 28,214 4,914 15,554 48,682Commercial Shopfront 5,666 957 276 6,899Medical Shopfront 1,873 352 - 2,225Vacant Floorspace 1,248 367 - 1,615Commercial - in house 584 1,728 - 2,312Medical - in house 188 1,920 - 2,108Total Shopfront Premises 37,773 10,238 15,830 63,841* Stockland Nowra only. Does not include any bulky goods retailing outside of fringe or core areas, or retailing from industrial zones.**Shop front space is defined as that lettable area which is occupied by retailers plus non-retail users that occupy shop front spaces (such as banks, travel agents,medical services, real estate agents, etc) and vacant shop front space.Sources: Hill PDA Floorspace Surveys (2010) and PCA Shopping Centres Directory (2009)The floorspace results are based on the following assumptions:• Hill PDA surveyed all retail and commercial shop front floorspace located within the retail core and fringelocations;• Commercial and medical tenants located within residential dwelling type accommodation have been separatedfrom total shop front floorspace given its unlikely this type of accommodation would be tenanted by a typicalretailer should the commercial occupier vacate; and• Stand alone commercial buildings, bulky goods and any retailing in industrial zones, outside of Nowra CBDhave not been surveyed at this stage. It is acknowledged there is extensive bulky goods and industrial activitysouth of the study area along Princes Highway. Whilst not surveyed, the peripheral bulky goods role of thisarea is acknowledged.The floorspace data results indicate:• There is around 48,682sqm of retail shop front floorspace in Nowra CBD and a further 9,124sqm ofcommercial and medical shop front floorspace;• Nowra CBD has a low number of vacancies with only around 1,600sqm of vacant shop front floorspace at thetime of survey, representing 2.7% of all shop front floorspace;• Total retail and commercial shop front floorspace accounts for around 59,421sqm. As expected the majority ofthis is located in the retail core (62%), compared to the fringe and Stockland Nowra; and• A further 4,400sqm of associated floorspace is located within the fringe but within the 2b(1) Residential Zone.The majority of this being used by the likes of medical practitioners, accountants, financial planners, solicitorsand some community services (e.g. legal aid, community counselling services etc).C09143 Page 35 Hill PDA

Nowra CBD Master Plan – Market AssessmentWithin the retail core of Nowra CBD, the traditional shopping zone of Berry, Junction and Kinghorne Street’s, house themajor banks, building societies, speciality shops, supermarkets and mini majors. Junction Street and Kinghorne Streetaccount for around 13,000sqm and 8,500sqm of shop front floorspace respectively, with Berry Street accounting foraround 6,250sqm of shop front floorspace.The east of Nowra CBD’s retail core is anchored by the enclosed Nowra Mall shopping centre, located on the corner ofKinghorne and Junction Streets. The shopping centre includes a 3,716sqm Coles supermarket and is supported by 18specialty shops accounting for around 2,220sqm of floorspace. 345 open bay car spaces are also associated with thecentre. According to the PCA, the total turnover for the centre in 2009 was $9,774/sqm , which ranks in the top decile oftrading performances (turnover per square metre) in Australia.Other retail strip anchors in the retail core include a 3,100sqm Woolworths supermarket, 1,500sqm Aldi supermarket,and 800sqm Target Country Store. Various mini majors such as Harris Scarf (340sqm), Homeart (350sqm), Best & Less(800sqm), Chemists Warehouse (420sqm) and Spotlight (450sqm) are also located within the core.On the fringe of Nowra CBD, major retailers include Office Works (1,200sqm), Mitre 10 (770sqm), the St Vincent dePaul Opportunity Shop (570sqm), and the Rivers Superstore (800sqm). A 1,500sqm Supa IGA supermarket is alsolocated on the southern fringe of the CBD on the corner of Worrigee Street and Princes Highway.Stockland Nowra is 16,000sqm centre with more than 50 specialty retail shops and is anchored by a 7,190sqm Kmartand 4,230sqm Woolworths. The centre is well positioned on the Princes Highway to capture passing trade with accessfrom the Highway and Jane Street (via the overpass). Notwithstanding its location on the fringe, the ease of entry intothe centre when travelling south means its unlikely many tourists passing through Nowra visit the remainder of the CBD.According to the Shopping Centre News, the total turnover per square metre for the centre in 2009 was 8,376/sqm -23% higher than median of $6,795/sqm 3 .7.2 Existing Retail Floorspace in Surrounding CentresEast NowraThe East Side Shopping Centre is located on Kalander Street in East Nowra, around 2km from the core of Nowra CBD.It has 19 retail outlets, most of which are personal services and convenience-based stores. It serves the surroundingresidential area.North NowraThe North Nowra Shopping Centre is located on McMahons Road in North Nowra, around 3.5km from the core ofNowra CBD. It incorporates a health centre and a retail mall. Similar to East Nowra, most of the retail on offer ispersonal services and convenience-based stores. It also serves the surrounding residential area.BomaderryBomaderry has three retail centres: the Meroo Street strip shopping centre (includes Bomaderry Plaza), Boolong Roadand the Lyndhurst Centre. Bomaderry Plaza is anchored by an IGA supermarket (760sqm) and is supported by 243Shopping Centre News – Mini Guns 2009C09143 Page 36 Hill PDA

Nowra CBD Master Plan – Market Assessmentspeciality stores accounting for around 2,161sqm of floorspace. In total there are around 42 retail premises inBomaderry.UlladullaUlladulla, around 66km south of Nowra, has around 25,000sqm of retail space including Coles, Aldi and IGAsupermarkets, a variety of specialty stores, homeware stores and a Target Country store of 2,400sqm.KiamaKiama, located around 42km north of Nowra CBD, is the largest retail centre within Kiama LGA. Kiama has 24,777sqmof retail floorspace with the majority located along Terralong Street.The main retail strip runs from Centro Kiama at the western end of Terralong Street towards the coast. The largestsupermarket within the LGA (a 3,100sqm Woolworths) is located within the Centro Kiama. There are also many cafes,take-away and gift shops to cater to the tourist trade along the main street as well as on Manning and Collins Streets.Shellharbour City CentreThe City Centre, located 55km north of Nowra, is defined as a Major Regional Centre under the NSWDepartment ofPlannings, Illawarra Regional Strategy (2006-31) and is the largest retail centre in the LGA. The Centre is the closestmajor centre to Nowra CBD.Shellharbour City Centre accommodates around 62,665sqm of retail floorspace. The City Centre includes an olderenclosed shopping centre (Stockland Shellharbour), as well as the recently developed City Plaza which sees the returnof traditional main street urban design principles.The 40,257sqm Stockland Shellharbour indoor shopping centre on Lake Entrance Road is within close proximity of the15,630sqm City Plaza development on Main St and College Avenue. Between City Plaza and Stockland are a few stripretail tenancies (along Holm Place and Lamerton Crescent), including an Aldi Supermarket.Stockland Shellharbour is anchored by five major retailers including: Kmart (8,088sqm), Target (7,171sqm), Coles(3,846sqm), BiLo (2,752sqm), and Best & Less (1,028sqm). The centre also includes 117 specialty shops (13,323sqm),and various commercial tenancies. The centre provides 2,048 open car bays and 300 enclosed car spaces. Accordingto the PCA, Stockland Shellharbour has an annual turnover of $206.3million, equating to $6,120/sqm. By comparisonStockland Nowra trades $7,834/sqm and Warilla Grove is approximately trading at $7,179/sqm.Shellharbour City Centre also accommodates various commercial and government departments, including theDepartment of Community Services, Centrelink, Department of Housing, and various employment services.Given the strong residential dwelling growth in the region clearly Stockland Shellharbour can expand and operateviably. The desire to expand may come from threats of expansion of other retail centres – particularly by otherdevelopments in the City Centre and retail development in Wollongong and Kiama.Outside of Shellharbour City Centre, is Shellharbour Super Centre. Like Stockland Nowra, this peripheral role is onlydue to the Super Centre being physically separated from other retail and commercial accommodation in ShellharbourCity Centre, as well as it providing mainly bulky goods product.C09143 Page 37 Hill PDA

Nowra CBD Master Plan – Market AssessmentNotwithstanding this fringe location, the 21,432sqm Super Centre does include a 4,370sqm Woolworths supermarket,1,000sqm Dan Murphy’s Liquor Store, and 7,762sqm Bunnings Warehouse.7.3 Proposed Retail and Commercial DevelopmentsStockland NowraThe $38.5m proposal involves the redevelopment of the shopping centre to include 2 large discount department storesof around 7,500sqm each (with one of them to be a Big W), a 3,800sqm supermarket, a 500sqm food court, 3 minimajorstores (2,200sqm) and 7,000sqm of specialty stores. There will also be parking for 1,400 cars, with 212 of theselocated above ground. This proposal would result in around 29,000sqm of additions, bringing the total shopping centrearea to around 45,000sqm. The development would use the vacant land located directly behind the existing shoppingcentre (to the east). This project has development approval however it has been deferred indefinitely.However it is understood that an alternative proposal has been submitted by Stockland involving a new 4,100sqmsupermarket, a new 6,000sqm DDS and new retail specialties (5,800sqm). There will also be basement car parking for796 cars. The development is over the existing car park that fronts the Princes Highway. This proposal would result inaround 16,000sqm of additions, bringing the total shopping centre area to around 32,000sqm.Shell CoveThere will be one retail hub within Shell Cove which will be developed around the marina. Some 6,000-7,000sqm ofretail floorspace is proposed, of which 2,500sqm will be attributed to a new full line supermarket. There appears toalready be strong interest in the operation of the supermarket by prospective operators. It is hoped the retail componentof the project will be operating by 2012. A review of retail floorspace needs for Shell Cove is currently being undertaken,with a draft of the study being reviewed by Shellharbour Council.Vincentia District Town CentreStockland has been granted Development Approval for Stage 1 of the Vincentia District Town Centre. Stage 1comprises approximately 14,000sqm of floor area including approximately 10,000sqm of retail and 3,800sqm ofcommercial, community and library floor space.It has use-approval for a Woolworths supermarket and an Aldi store. The Woolworths will be approximately 4,200sqmand the Aldi approximately 1,500sqm. There will be a fruit and vegetable outlet of 300sqm and a mini major retail outletof 600sqm.Ulladulla MarketplaceTenders are being called for the construction of a 2 storey neighbourhood shopping centre consisting of a 3,615sqmsupermarket, 485sqm of specialties and a 238sqm for Woolworths Liquor. There will also be basement car parking androoftop car parking. The estimated cost of the project will be $13m.C09143 Page 38 Hill PDA

Nowra CBD Master Plan – Market Assessment7.4 Retail and Commercial Market ConsiderationsAccording to the 2006 ABS Census, there were 4,431 businesses in operating in Shoalhaven LGA. There has beenhealthy growth in new businesses largely due to the strong emphasis on placed on economic development by Council,which has successfully encouraged a number of firms to set up or relocate to the area.Whilst recent rental and sales evidence of retail and commercial properties are limited, an analysis of the current markettogether with discussions with local agents has indicated that:• Recent rental and sales evidence is limited, however, there are a number of retail and commercial propertiescurrently for sale or for lease in Nowra. By comparison, there are very few retail and commercial properties onthe market in the commercial centres of Kiama and Shellharbour. This suggests that the majority of existingstock in these areas is occupied and tightly held;• Traditional strip retailing along Kinghorne, Junction and Berry Streets generally have net rentals between$300/sqm and $400/sqm;• By comparison, Stockland Nowra’s anchor tenants (K-Mart and Woolworths) are paying net rents ofapproximately $230/sqm and the specialties are paying around $1,100/sqm;• Overall, the region’s retail sector is performing well, with a number of major retail and supermarket chainsoperating in the area, as well as a number of retail proposals in the pipeline;• Commercial rents in the CBD are achieving around $150-$250/sqm (net), with new commercial propertiescommanding around $300/sqm;• The Nowra CBD fringe area accommodates a number of businesses within single detached residentialdwellings within the 2(b)1 Residential zone, especially health practitioners. There are also a number of homebasedbusinesses. It’s understood that many of these dwellings contribute to the character of Nowra;• Agents indicate there is office demand in Nowra for local services like accountants, lawyers, real estate agents,etc;• There are various at grade car parking sites within the CBD that are potential infill redevelopment sites;• Mixed use developments (retail/commercial/residential) should be investigated; and• Wollongong will remain the main provider of high density stand alone commercial buildings for the region,catering for large scale government and corporate tenants.21 Kinghorne Street in Nowra recently sold in February 2010 for $850,000. The second-hand retail and office buildingcontains 3 retail shops and 3 office suites and has a total building area of 477sqm. The sale achieved a capital value of$1,782/sqm. Generally speaking, older commercial office stock in Nowra and surrounds achieve capital values in the$1,500/sqm to $2,000/sqm range.57 Graham Street, Nowra is a new commercial development for sale for $2.9m ($3,384/sqm). The ground floor café hasan internal area of around 85sqm with a 50sqm external deck and an asking rental of $30,000 per annum. The first flooris 366sqm and is currently vacant and has an asking rent of $100,000 per annum ($273/sqm). The second floor is also366sqm and is under a lease which commenced in June 2009 for $94,600 per annum ($258/sqm). There are also 11 onsite car parks.C09143 Page 39 Hill PDA

Nowra CBD Master Plan – Market AssessmentThere is a new commercial development located on the Corner of Worrigee and Kinghorne Streets in Nowra. Thedevelopment provides premium grade commercial or retail space ranging from approximately 400sqm to 975sqm overlarge floor plates. There are also 30 basement car parks accessible by lift. The asking rent is $300/sqm. Opposite this,there is a commercial investment and/or redevelopment site located 106 Kinghorne Street currently on the market for$890,000. The prominent building is currently tenanted until May 2012. A DA was approved in 2007 for 3 shops, officesand storage. The land comprises approximately 960sqm and the building approximately 850sqm. Zoning is 3(a)Business. The auction is planned for May 2010.Due to the limited number of recent commercially zoned land sales in Nowra, consideration has been given to landvalues achieved in the remainder of the LGA and the broader Southern Region (e.g. surrounding local governmentareas like Shellharbour).Recent sales evidence suggests that commercially zoned land in out-of-centre locations such as South Nowra generallyachieve around $150/sqm to $250/sqm. This is as compared to land within town centres or on the fringe of centreswhich generally achieves around $350/sqm to $550/sqm.Commercially zoned land in new premium locations achieves values up to 50% higher than land within the fringe ofcentres. An example of this is Shellharbour City Centre, which has recorded recent commercial land sales as high as$900/sqm. This is compared to older locations such as Warilla or Albion Park where land values are around $250/sqmto $400/sqm.The table below summarises recent development land sales in Nowra and its surrounds.Table 13 - Land Values – Business Zoned LandAddress Date Price Site Area $/sqm59 Berry St, Nowra 2/9/2009 $445,000 1,040 $42857 Graham St, Nowra* 15/01/2008 $415,000 753 $55155 Worrigee St, Nowra 30/06/2008 $215,000 516 $416148 Island Point Rd, St Georges Basin 11/3/2008 $240,000 696 $345Cygnet Ave, Shellharbour City Centre 31/03/2008 $2,450,000 3,213 $7631 Memorial Dr, Shellharbour City Centre 10/3/2008 $775,000 881 $8802 Albert St, Mittagong 9/5/2008 $300,000 708 $4244 Arthur S, Moss Vale 1/5/2008 $165,000 417 $3956 Jane Street, Nowra For Sale $650,000 1,170 $556*See Section 7.4Source: RP Data, www.realcommercial.com.au, Hill PDA Research 2010C09143 Page 40 Hill PDA

Nowra CBD Master Plan – Market Assessment8. RETAIL AND COMMERCIAL DEMANDThis chapter documents the methodology and findings from the retail demand forecasting completed for Nowra CBD byHill PDA, based on incremental estimated population forecasts as provided by Shoalhaven City Council.8.1 Trade Area AnalysisA centre’s trade area is generally referred to as the geographical boundary of influence that that the centre draws itstrade from. The definition of the trade area served by any shopping centre is determined by a number of factorsincluding:• The strength and attraction of the centre in question, determined by factors such as the composition, layout,ambience/atmosphere and car parking in the centre;• Competitive retail centres, particularly their proximity to the subject centre and respective sizes, retail offer andattraction;• The location and accessibility of the centre, including the available road and public transport network and traveltimes; and• The presence or absence of physical barriers, such as rivers, railways, national parks and freeways.Having regard to the above, Shoalhaven LGA provides both a practical and simple boundary for any supply demandanalysis. North of the Shoalhaven localities are more drawn towards the larger centres in Shellharbour, Warrawong,Wollongong and Campbelltown. South of Shoalhaven is better served by Batemans Bay.Within the LGA however the level of influence that Nowra has varies considerably between localities due to varyingdistances to the administration centre. This is considered further below.8.2 Population ProjectionsPopulation projections were sourced from Council and are provided in the table below.Table 14 - Population Forecast by Planning District by Census Year (2006-2036)Planning District 2006 2011 2016 2021 2026 2031 2036Planning Area 1 (Nowra, Bomaderry, Berry,Kangaroo Valley and Shoalhaven Heads)43,251 46,725 51,124 55,460 59,343 62,742 65,879Planning Area 2 (Culburra, Currarong, Callala Bay,Callala Beach)6,688 6,644 6,620 6,610 6,579 6,505 6,358Planning Area 3 (St. Georges Basin, Vincentia,Sanctuary Point, Erowal Bay)18,479 19,935 21,336 22,669 23,894 24,985 25,996Planning Area 4 (Sussex Inlet, Cudmirra, Berrara) 4,365 4,741 5,191 5,611 5,988 6,306 6,579Planning Area 5 - (Ulladulla, Milton , plus others) 19,412 20,713 22,025 23,424 24,855 26,102 27,188Total 92,195 98,758 106,296 113,774 120,659 126,640 132,000Source: Shoalhaven City Council 2008C09143 Page 41 Hill PDA

Nowra CBD Master Plan – Market AssessmentPopulation in the LGA is expected to increase by almost 40,000 or 43% from 2006 to 2036. This is an average rate of1.2% per annum. Most growth is expected to occur in Planning District 1 – 22,500 more people or 52% growth. This isthe precinct that will have the strongest impact on demand for retail space in the CBD.8.3 Retail Spend by ResidentsThe first step in determining demand for retail floorspace is to derive a likely expenditure level generated from eachresident in the trade area. Household expenditure was sourced from:• ABS Household Expenditure Survey 2003-04 which provides household expenditure by broad commodity type byhousehold income quintile; and• Marketinfo 2009 database which is generated by combining and updating data from the Population Census andthe ABS Household Expenditure Survey using “microsimulation modelling techniques”.Marketinfo combines the data from the Census, HES and other sources to derive total expenditure by commodity type.This data, which was validated using taxation and national accounts figures, quantifies around 15% more expenditurethan the ABS HES Survey.Average per capita spend generated by the Shoalhaven LGA was $11,330 including selected personal services definedby ANZIC 4 and meals in restaurants, hotels and clubs. Excluded are cinema admissions and liquor consumed onlicense premises.The ABS Retail Survey 1998-99 was sourced to distribute household expenditure into the retail store types.Expenditure by store type per capita is provided in the following table.Table 15 - Per Capita Expenditure in 2008-09Store Type $2009Supermarkets & Grocery Stores 3,674Specialty Food Stores 1,227Fast-Food Stores 521Restaurants, Hotels and Clubs* 599Department Stores 994Clothing Stores 577Bulky Goods Stores 1,727Other Personal & Household Goods Retailing 1,739Selected Personal Services 272Total Retailing 11,330* Includes only revenue derived from mealsSource: Hill PDA Estimate from Marketinfo 2009 and ABS Retail Survey 1998-99The above table indicates Nowra residents generated around $11,300 per capita in retail expenditure in 2009.The next step is to apply capture rates to the Nowra CBD from the trade areas. This refers to the proportion ofexpenditure generated by the respective trade areas that will be captured by Nowra CBD. For the purpose of the4Australia and New Zealand Industry Code defines selected personal services as including optometry, photo processing, hair and beauty , tailoring and alterations,shoe repair and video hire.C09143 Page 42 Hill PDA

Nowra CBD Master Plan – Market Assessmentdemand modelling we have used the planning districts (5) that comprise the Shoalhaven LGA. The capture rates arepresented in the table below.Table 16 - Assumed Nowra CBD Capture RatesStore Type District 1 District 2 District 3 District 4 District 5Supermarkets & Grocery Stores 65% 45% 20% 12% 7%Specialty Food Stores 65% 45% 20% 12% 7%Fast-Food Stores 52% 36% 16% 10% 6%Restaurants* 36% 25% 11% 7% 4%Department Stores 70% 70% 60% 50% 30%Clothing Stores 70% 70% 60% 50% 30%Bulky Goods Stores** 14% 14% 12% 10% 6%Other Personal & Household Goods Retailing 68% 62% 47% 37% 22%Selected Personal Services*** 65% 45% 20% 12% 7%Weighted Total 56% 45% 28% 20% 12%* The lower percentage reflects expenditure “lost” to non-retailers such as hotels and clubs.** The low percentage for bulky goods reflects the high percentage of expenditure that is captured in out of centre locations – mostly to South Nowra*** Selected Personal Services includes hair and beauty, laundry, clothing hire and alterations, shoe repair, optical dispensing, photo processing andhire of videosThe above table shows, for example, that Nowra CBD should capture around 65% of total supermarket expendituregenerated by households in Planning District 1, 45% of supermarket expenditure from Planning District 2 and so forth.The further the distance, the lower the capture rate. The balance of expenditure is captured by supermarkets outsidethe CBD including localities such as Berry, Vincentia, Ulladulla, etc. For the purpose of the demand modelling we haveassumed that projects in the pipeline, including the district centre in Vincentia are trading.Multiplying assumed capture rates by average per capita spend by population forecast for each of the trade areas,derives expenditure captured in the CBD, as indicated in the table below.Table 17 - Forecast Expenditure Captured in Nowra CBD by Store Type ($2009)Store Type 2011 2016 2021 2026 2031 2036Supermarkets & Grocery Stores 144.6 167.1 191.8 217.5 244.0 271.9Specialty Food Stores 48.3 55.8 64.0 72.6 81.5 90.8Fast-Food Stores 16.4 18.9 21.7 24.7 27.7 30.8Restaurants 13.0 15.0 17.2 19.5 21.9 24.4Department Stores 57.6 66.2 75.7 85.6 95.8 106.6Clothing Stores 33.4 38.4 43.9 49.7 55.7 61.9Bulky Goods Stores 20.0 23.0 26.3 29.7 33.3 37.0Other Personal & Household Goods Retailing 89.9 103.6 118.5 134.1 150.2 167.1Selected Personal Services 10.7 12.4 14.2 16.1 18.0 20.1Total Retailing 434.0 500.4 573.3 649.5 728.1 810.6The above table indicates the Nowra CBD trade area will generate $434m of retail expenditure in 2011, increasing to$500m in 2016, and so on. Of the $434m generated, $144.6m relates to supermarket and grocery stores, $48.3m tospecialty food stores, and so on. Required retail floorspace was calculated by dividing the above expenditure by targetturnover levels per square metre. The target turnover levels are forecast as follows:C09143 Page 43 Hill PDA

Nowra CBD Master Plan – Market AssessmentTable 18 - Target Turnover Levels ($/sqm)* to 2036Store Type 2009** 2011 2016 2021 2026 2031 2036Supermarkets & Grocery Stores 9,941 10,070 10,402 10,745 11,098 11,464 11,841Specialty Food Stores 7,535 7,634 7,885 8,145 8,413 8,690 8,976Fast-Food Stores 7,535 7,634 7,885 8,145 8,413 8,690 8,976Restaurants 5,000 5,065 5,232 5,404 5,582 5,766 5,956Department Stores 3,500 3,546 3,662 3,783 3,908 4,036 4,169Clothing Stores 5,000 5,065 5,232 5,404 5,582 5,766 5,956Bulky Goods Stores 3,500 3,546 3,662 3,783 3,908 4,036 4,169Other Personal & Household Goods Retailing 5,000 5,065 5,232 5,404 5,582 5,766 5,956Selected Personal Services 3,000 3,039 3,139 3,243 3,349 3,460 3,573Total Retailing 5,700 5,774 5,968 6,168 6,374 6,586 6,804* Target turnover levels are around 5% below national average to reflect non-metropolitan average** Sources: ABS Retail Survey 1998-99 (escalated to 2009 dollars), Urbis Retail Averages, Shopping Centre News and various consultancy reportsDividing total expenditure by the above target turnover rates results in the following demand for floorspace in Nowra.Table 19 - Forecast Demand for Retail Floor Space in Nowra CBD to 2036Store Type 2011 2016 2021 2026 2031 2036Supermarkets & Grocery Stores 14,363 16,066 17,848 19,597 21,284 22,959Specialty Food Stores 6,327 7,077 7,862 8,633 9,376 10,114Restaurants and Fast Foods 4,711 5,269 5,854 6,427 6,981 7,530Department Stores 16,238 18,078 20,003 21,907 23,745 25,563Clothing Stores 6,601 7,349 8,131 8,906 9,653 10,392Bulky Goods Stores 5,640 6,279 6,947 7,609 8,247 8,879Other Personal & Household Goods Retailing 17,757 19,794 21,923 24,027 26,055 28,065Selected Personal Services 3,519 3,936 4,372 4,801 5,214 5,624Total Retailing 75,154 83,848 92,941 101,907 110,555 119,126The above table shows that Nowra CBD requires around 75,000sqm of retail floor space to meet demand in 2011.8.4 Tourism ExpenditureIn addition to household expenditure, demand for retail services is also generated by visitors or tourists. The mainsource of data used to estimate tourism expenditure is the National Visitor Survey (NVS) conducted by TourismResearch Australia (TRA). TRA provides information on visitor characteristics to Local Government Areas locatedoutside capital city regions.In 2006-07 Shoalhaven had 1.08m overnight tourists and 1.16m day trippers (tourists beyond Shoalhaven LGA)spending around $470m. Around half of tourism spend relates to retail goods and services. Apportioning this spendbetween the centres is difficult. Much of it can be ascertained by the types of stores in those centres. Many centressuch as Berry and Huskisson rely considerably on tourism for their viability. Nowra’s role in relation to tourism on theother hand is more related to serving the regional or sub-regional shopping needs of surrounding residents. For Nowraa reasonable estimate is that 7% of its turnover is derived from tourists – from people who live outside the LGA. Thistranslates to around $32m or 14% of the LGA’s total capture. This expenditure supports a further 6,000sqm in the CBDin 2011 on top of the 75,000sqm demanded, increasing the undersupply to around 30,000sqm.C09143 Page 44 Hill PDA

Nowra CBD Master Plan – Market Assessment8.5 Supply versus DemandNowra CBD provides some 48,682sqm of retail shopfront floorspace. Given modelling within this report indicatesdemand for around 75,000sqm of retail floorspace in 2011 there is currently considerable undersupply of over26,000sqm. The condition of undersupply is reflected in the lower than average vacancies recorded in the CBD and thehigh performance of Stockland Nowra (turnover per square metre).Table 20 - Comparison of Demand versus Supply (sqm)Store Type Supply in 2010 Demand in 2011 UndersupplyDepartment Stores 8,340 16,238 -7,898Supermarkets & Grocery Stores 14,142 14,363 -221Specialty Food Stores 2,544 6,327 -3,783Restaurants and Fast Foods 3,131 4,711 -1,580Clothing Stores 5,103 6,601 -1,498Bulky Goods Stores 2,896 5,640 -2,744Other Personal & Household Goods Retailing 10,022 17,757 -7,735Selected Personal Services 2,248 3,519 -1,271Total Reta iling 48,426 75,154 -26,728*Note the 1,200sqm office works otherwise categorised as a mini-major in Section 7.1 of this report, has been included as bulky goods in the aboveanalysis.Examining supply versus demand in more detail:• There is a considerable undersupply of department store, specialty food, and specialty non-food (other personaland household goods retailing) retailing.• Supermarket and grocery store supply and demand is roughly in equilibrium . The CBD provides around14,000sqm of supermarket and grocery store floorspace (3,700sqm Coles, 3,100sqm Woolworths, 4,200sqmWoolworths and 1,500sqm ALDI). By 2021 there will be demand for another 3,500sqm supermarket.• There is an existing undersupply of department (including discount department floorspace) in Nowra. This is notunexpected given there is only provision of a small Target County and a larger Kmart (as part of Stockland).There is sufficient demand in 2011 to warrant an additional discount department store of a similar size to theexisting Kmart of say around 5,000-7,000sqm. By 2031 there will demand for another similar store around thesame size.Notwithstanding the above, as outlined previously within this report, expansions are planned for Stockland Nowra. Theproposal submitted by Stockland includes a new 4,100sqm supermarket, a new 6,000sqm discount department storeand new associated specialty stores equivalent to a further 5,800sqm. The expansions would provide an additional16,000sqm of retail floorspace. Should this be developed, demand for supermarket and additional department storefloorspace would be satisfied to 2021.C09143 Page 45 Hill PDA

Nowra CBD Master Plan – Market Assessment9. RESIDENTIAL MARKET CONSIDERATIONS9.1 The Market ContextShoalhaven LGA is a growing residential area mainly due to its high amenity and affordability. There are substantialareas of national park, state forest, bushland, and beaches. Most of the population is concentrated along the coastalfringe, in major centres and in a number of small settlements. Major centres include Nowra-Bomaderry, Milton-Ulladulla,Huskisson-Vincentia, St Georges Basin District, Culburra Beach and Sussexs Inlet.The table below illustrates the breakdown of the residential markets of Nowra (suburb), Nowra-Bomaderry SD andShoalhaven LGA, benchmarked against the neighbouring LGA’s of Kiama, Shellharbour and Wollongong.Table 21 - Residential Dwelling Mix (2006)Location Houses Units Buying RentingNowra (suburb) 2,829 80% 532 15% 52% 44%Nowra-Bomaderry SD 9,846 86% 900 8% 66% 31%Shoalhaven LGA 30,653 90% 1,391 4% 73% 24%Kiama LGA 5,722 84% 640 9% 76% 19%Shellharbour LGA 17,263 83% 1,130 5% 71% 26%Wollongong LGA 49,202 72% 11,263 16% 66% 29%Source: 2006 ABS Census DataFrom the table it can be seen that, as a whole, the region predominantly consists of separate houses compared to units.Similar to Wollongong LGA, Nowra (suburb) has a higher proportion of unit dwellings compared to the SD and the otherLGA’s. Furthermore, it can been there are a greater proportion of rental properties in Nowra (suburb) and the SDcompared to the remainder of Shoalhaven LGA and surrounding LGA’s.9.2 The Housing MarketDespite unfavourable economic conditions, the Shoalhaven residential property market performed relatively well in2009. The last 6 months of 2009 saw some gains in median residential property values, in particular in the sub-$300,000 price range. This was largely driven by government grants and low interest rates. This trend was seen inmany suburbs in NSW as first home buyers and new investors entered the market.The table below summarises the median values for houses, units and vacant land achieved in the year to December2009 for Shoalhaven LGA, benchmarked against Kiama, Shellharbour and Wollongong LGA’s.C09143 Page 46 Hill PDA

Nowra CBD Master Plan – Market AssessmentTable 22 - Median Residential Values (2009)Location Year to Dec 08 Year to Dec 09 Yearly Change (%)HousesShoalhaven LGA $305,000 $317,500 4.1%Kiama LGA $470,000 $490,000 4.3%Shellharbour LGA $335,000 $350,000 4.5%Wollongong LGA $377,000 $385,000 2.1%UnitsShoalhaven LGA $240,000 $220,000 -8.3%Kiama LGA $340,000 $350,000 2.9%Shellharbour LGA $273,000 $279,500 2.4%Wollongong LGA $300,000 $315,000 5.0%Source: Illawarra Regional Information Service (IRIS), Illawarra Real Estate Report, March 2010.From the table it can be seen that, as a whole, the region experienced growth in the median values of houses and unitsin the year to December 2009. Shoalhaven LGA experienced a 4.1% growth in house value and an 8.3% decrease inunit values.Median sales prices achieved in the LGA vary greatly between individual suburbs. Suburbs with high amenity, such ascoastal living, achieved greater sales values. This is apparent in Mollymook, Ulladulla, etc. The following table furtherillustrates the median sales prices achieved in Shoalhaven LGA suburbs.Table 23 - Median Residential Values by Suburb (2009)*Suburb Houses Units Sales - Houses/UnitsNowra $235,000 $197,000 195/32Bomaderry $235,000 $195,000 146/23Shoalhaven Heads $350,000 - 77/6Berry $487,000 - 60/2Gerringong $450,000 $379,000 61/14Vincentia $450,000 - 94/8Sussex Inlet $281,000 - 72/2Mollymook $402,000 - 24/2Mollymook Beach $370,000 $260,000 77/15Ulladulla $325,000 $259,000 124/13Milton $362,000 - 28/1Kiama $470,000 n/a 180/65Shellharbour $410,000 $350,000 51/16* Based on sales reported to Australian Property Monitors in the 12 months to January 2010.Source: Australian Property Monitors 2010In the year to January 2010, Nowra and Bomaderry had a median house price of $235,000 and a median unit price of$197,000 and $195,000 respectively – this is below the median sales prices achieved for other suburbs within the LGAand the suburbs of Kiama and Shellharbour.The results also indicate the volume and the proportion house versus unit sales in the year to January 2010. In Nowraand Bomaderry there was considerable market activity. A total of 227 properties were sold in Nowra and in Bomaderry atotal of 169 properties sold. Houses made up the majority of these sales, which suggests a healthy demand forproperties of this nature and a limited supply of unit developments.C09143 Page 47 Hill PDA

Nowra CBD Master Plan – Market AssessmentFurthermore, according to Australian Property Monitors and based on sales in the 12 months to January 2010, housesin the suburbs of Nowra and Bomaderry spent around half the time on the market than the remainder of ShoalhavenLGA.9.3 Land ValuesThere are a diverse range of residential sites available in Shoalhaven LGA, ranging from small acreages and largerfarms to suburban blocks in the Nowra-Bomaderry area, near the shores of Jervis Bay or in the Milton-Ulladullaarea. Land prices are comparatively cheaper than metropolitan areas. New subdivisions are continuously beingreleased to accommodate the ever increasing population of the region.The table below summarises land values for suburbs within Shoalhaven LGA. It can be seen that suburbs with highamenity, such as coastal living or with water views, achieved greater land values. For example, Mollymook Beach($250/sqm to $400/sqm), Vincentia ($250/sqm to $350/sqm) and Shoalhaven Heads ($220-$450). By comparison,Nowra generally achieves land values between $150/sqm to $250/sqm.Table 24 - Shoalhaven Residential Vacant Land Values (2010)Suburb Lot Sizes (sqm) Vacant Land Values ($/sqm)Berry 500-1,500 $250-$400Bomaderry 500-1,000 $150-$300Callala Bay/Beach 600-1,000 $200-$400Milton 700-1,000 $180-$300Mollymook 600-1,000 $150-$300Mollymook Beach 700-1,000 $250-$400Nowra 500-900 $120-$220Nowra North 600-800 $160-$250Nowra South 650-1000 $140-$200Nowra West 650-850 $130-$180Sanctuary Point 600-900 $150-$200Shoalhaven Heads 600-1,000 $220-$450St Georges Basin 500-1,100 $120-$210Sussex Inlet 600-1,000 $160-$270Ulladulla 600-1,200 $180-$300Vincentia 400-600 $250-$350Worrigee 600-900 $120-$200Source: RP Data, Red Square, Hill PDA Research 2010.9.4 Proposed Residential DevelopmentsApprovals in Shoalhaven LGA for houses were strong in 2009. In the 12 months to December 2009, the volume ofhousing approvals in Shoalhaven LGA increased by 23.7% to 470. This can be compared to Kiama LGA which had 31approvals (139% increase), Shellharbour LGA which had 197 approvals (13% increase) and Wollongong LGA whichhad 270 approvals (17% decrease).However, there were mixed results when it came to the number of medium/high density approvals. Wollongong andKiama LGA’s recorded no change and Shellharbour LGA had 65 approvals (81% increase).By comparison, ShoalhavenLGA approvals were down 21% to 89 – still a greater number recorded than the surrounding LGA’s.C09143 Page 48 Hill PDA

Nowra CBD Master Plan – Market AssessmentBayswood, VincentiaBayswood is Vincentia’s newest coastal community and provides opportunities for both permanent home and holidayhouses. It located about 30 minutes from Nowra. A variety of blocks of land are available as well as house and landpackages. Stage 2 of ‘The Watergum Release’ is now selling, with land ranging from 320sqm to 600sqm available andstarting at $115,000.A new land release known as ‘The Collingwood Release’ is also now available. The release comprises 8 lots up to800sqm. House and land packages at Bayswood start at $314,000. Three and four bedroom packages are typicallyasking $350,000 to $400,000. Bayswood forms part of the Vincentia Coastal Village project, which when completed willconsist of around 600 residential lots, retirement living as well as the Vincentia District Town Centre (which hasdevelopment approval).Shell CoveShell Cove, 54km north of Nowra CBD, was adopted by Council as a project in the 1990’s, aiming to be the major focusfor meeting the LGA’s economic development objectives. It is expected that Shell Cove will house some 10,000residents on 3,000 residential lots, with 1,150 lots already developed. Approximately 2,000 are conventional lots(500sqm sites), and around 1,000 are high density lots to be constructed around the harbour. Detached residential lotsare selling at around $300,000/lot. However, the sale rate has fallen over the last few years with average sales of 60-70lots per annum compared to previously when take up was approximately 140 lots per annum.Financed and managed by Australand, Shell Cove is located just south of Shellharbour Village. It is envisaged that thefirst boats will be in the harbour by the end of 2011. Residential sales are expected to continue until approximately2020.9.5 Implications for Nowra CBDResidential living in town centres is recognised as an important element of fostering the living city concept. Localresidents in a centre extend the level of activity past office and shopping hours. They create a demand for a variety ofuses and lobby for improved amenity and safety.The factors that have led to a growth of housing in commercial centres include:• Changing demographics with increased single households made up of empty nesters, university students andyoung professionals.• Housing choice shifts where suburban homes with the white picket fence have been replaced by apartments -there has been a value shift from sense of space to sense of place.• Growing cultural and entertainment activities have made city centre living attractive for social interaction.• Easy access to work or public transport.• Affordability – property costs are cheaper than traditional home.In Nowra the growth of residential development is not a prevalent factor as in other centres. The cost saving of a Nowraapartment compared to a house in the suburbs is not as substantial as similar comparisons between apartments andC09143 Page 49 Hill PDA

Nowra CBD Master Plan – Market Assessmentdetached dwellings in Sydney and other coastal locations. However with rising land and housing costs this is likely tobe an issue over time.The success of revitalisation programs should be a catalyst for attracting residential back into town centres. A towncentre strategy needs to identify how best to foster this trend and how to eliminate some other negative impacts such asdisruption to retail frontages with car access and the “crowding out” of lower order retail and commercial uses. Thisprogramme should:• Concentrate on one area at a time (raspberry jams principle: more you spread the thinner it gets) and focus onareas that already have marketable assets such as views over parks and to the river. Build upon the successof that precinct to apply to other less desirable areas.• Capitalise on the special draw of the water – potentially by developing first near the water and then back fillingto the CBD.• Encourage design solutions that provide residential frontage to the street to improve safety and connectivitythrough the CBD.• Encourage a variety of housing types to cover a broad spectrum of housing groups including “key worker” 5 ,affordable housing, student housing, and seniors living.• Establish guidelines that encourage quality of new development which will in turn also encourage existingdevelopment to improve and capitalise on the improved identity of that precinct.In some cases retail development is conditional upon residential development. This however needs to be handled withcaution because a further residential property boom may see residential displace retail as more profitable. It is importantto safeguard against this by ensuring as a guideline that within the CBD the ground floor remains predominantly retailand that car access is to the rear and located either in the basement or above ground.Further considerations for residential land in Nowra include:• Multi unit, medium density and infill opportunities exist.• The need for student housing should be further investigated in dialogue with the University of Wollongong.• The adequacy of buffer zones between uses is an important issue.• The constraints of flooding (e.g. flood levels, evacuation of persons).• The visually sensitive nature of the area.• Home businesses should be permitted in residential zones however it should be ensured that:ooThe use is located within a defined area of the property;The use does not create disruptive levels of noise, smells or fumes to surrounding uses;o There are a defined number of employees that work on the premises (i.e. no more than 3);ooThe use does not result in a significant level of traffic or pedestrian movement that may disrupt thefunction of surrounding uses; andThere are adequate servicing and parking facilities.5Key workers include nurses, police, shop workers bus drivers etc that provide essential services to the local communityC09143 Page 50 Hill PDA

Nowra CBD Master Plan – Market AssessmentDISCLAIMERThis report is for the confidential use only of the party to whom it is addressed (the client) for the specific purposes towhich it refers. We disclaim any responsibility to any third party acting upon or using the whole or part of its contents orreference thereto that may be published in any document, statement or circular or in any communication with thirdparties without prior written approval of the form and content in which it will appear.This report and its attached appendices are based on estimates, assumptions and information sourced and referencedby Hill PDA. We present these estimates and assumptions as a basis for the reader’s interpretation and analysis. Withrespect to forecasts we do not present them as results that will actually be achieved. We rely upon the interpretation ofthe reader to judge for themselves the likelihood of whether these projections can be achieved or not.As is customary, in a report of this nature, while all possible care has been taken by the authors to prepare the attachedfinancial models from the best information available at the time of writing, no responsibility can be undertaken for errorsor inaccuracies that may have occurred both with the programming or the financial projections and their assumptions.C09143 Page 51 Hill PDA

Nowra CBD Master Plan – Market AssessmentAppendix 1 – Resident Demographic Characteristics (2006 ABS Census Data)Nowra(Suburb)Nowra-BomaderryStatisticalDistrict (SD)ShoalhavenLGANSWNon-MetroNSW(ExcludesSydney SD)Population and DwellingsTotal Population 8,905 30,955 88,405 6,549,177 2,429,987Total Dwellings 4,055 12,823 48,514 2,728,719 1,085,044Occupied Private Dwellings 3,788 11,890 35,509 2,470,451 948,986Occupied Private Dwellings (%) 93.4% 92.7% 73.2% 90.5% 87.5%Average Household Size 2.2 2.5 2.4 2.6 2.6Age Distribution0-14 20.7% 22.0% 19.3% 19.8% 19.7%15-29 17.8% 18.2% 14.4% 19.8% 20.3%30-44 17.2% 18.9% 17.1% 21.8% 22.3%45-59 19.1% 19.9% 21.3% 19.9% 19.7%60-74 14.9% 13.5% 18.4% 12.0% 11.4%75+ 10.4% 7.6% 9.6% 6.7% 6.5%Median Age 40 35 44 37 36Home OwnershipOwned or Being Purchased 51.6% 66.3% 72.7% 66.7% 66.1%Rented 43.8% 30.6% 23.8% 29.5% 30.2%Other/Not Stated 4.5% 3.1% 3.5% 3.8% 3.7%Household StructureFamily Households 61.2% 71.5% 71.7% 72.1% 72.3%Lone Person Households 34.9% 25.7% 25.9% 24.2% 23.7%Group Households 3.9% 2.8% 2.4% 3.7% 3.9%Family TypeCouple family w. children 30.4% 40.9% 36.0% 46.2% 47.4%Couple family w/o children 39.6% 39.3% 46.8% 36.0% 34.9%One parent family 28.3% 18.7% 16.2% 16.1% 15.9%Other family 1.7% 1.1% 1.0% 1.7% 1.8%Dwelling TypeSeparate house 79.9% 86.5% 90.3% 71.4% 68.4%Townhouse 2.4% 3.8% 3.5% 9.7% 10.5%Flat-Unit-Apartment 15.0% 7.9% 4.1% 17.7% 20.1%Other dwelling 2.6% 1.9% 2.1% 1.1% 0.9%Not stated 0.0% 0.0% 0.0% 0.1% 0.1%Weekly Household Income$0-$349 28.8% 19.0% 19.8% 14.9% 14.1%$400-$799 30.7% 26.6% 31.5% 21.2% 19.9%$800-$1,399 19.3% 23.4% 22.0% 21.5% 21.3%$1,400-$2,499 8.2% 15.4% 12.2% 19.1% 19.9%$2,500+ 2.2% 4.5% 3.7% 12.0% 13.6%Partial income stated 6.6% 8.2% 7.6% 8.3% 8.4%All incomes not stated 4.2% 2.9% 3.2% 2.9% 2.8%Median Weekly Household Income $ 576 $ 776 $ 659 $ 1,036 $ 1,082C09143 Page 52 Hill PDA

Nowra CBD Master Plan – Market AssessmentAppendix 2 – Existing Retail Floorspace Supply in Nowra CBD by Street (GLA sqm)Osborne StreetKeft AvenueBridge RoadBerry StreetWorrigee StreetDepartment Store 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Discount Department Store 0 0 0 0 0 800 0 0 0 0 0 800 0 350 0 0 7,190 9,140Supermarkets & Grocery Stores 0 0 0 0 1,500 96 0 0 0 0 0 0 0 5,216 3,100 0 4,230 14,142Mini Major 0 0 0 636 1,200 1,472 420 0 0 0 0 0 0 0 0 0 0 3,728Convenience Store 0 0 0 80 0 0 0 0 0 96 0 0 0 0 80 0 0 256Specialty Food 0 0 120 160 150 72 0 0 0 96 0 0 0 433 778 0 735 2,544Restaurants & Take-aways 0 0 0 848 0 811 0 0 120 96 0 0 0 144 716 120 276 3,131Clothing 0 0 0 280 0 1,905 0 0 0 0 0 0 0 144 440 64 1,470 4,303Specialty Non Food 0 0 0 1,152 104 2,506 216 0 240 160 0 0 0 144 1,091 148 1,653 7,414Bulky Goods 0 0 200 0 376 768 0 0 0 80 0 0 0 0 272 0 0 1,696Personal Services 0 0 0 440 104 548 96 0 0 108 0 0 0 0 768 184 0 2,248Other Shop Front 0 0 0 80 0 0 0 0 0 0 0 0 0 0 0 0 0 80Total Retail Space 0 0 320 3,676 3,434 8,978 732 0 360 636 0 800 0 6,431 7,245 516 15,554 48,682Commercial 0 0 444 1,531 513 2,315 456 0 0 384 0 0 0 144 836 0 276 6,899Medical 0 0 0 856 352 641 0 0 0 280 0 0 0 0 96 0 0 2,225Vacant Floorspace 0 0 0 192 71 444 0 0 200 160 96 0 0 0 332 120 0 1,615Total Retail and Commercial Space 0 0 764 6,255 4,370 12,378 1,188 0 560 1,460 96 800 0 6,575 8,509 636 15,830 59,421Commercial - in house 288 192 0 0 768 584 0 0 0 0 480 0 0 0 0 0 0 2,312Medical - in house 1056 0 288 0 192 188 0 288 0 0 96 0 0 0 0 0 0 2,108Total 1,344 192 1,052 6,255 5,330 13,150 1,188 288 560 1,460 672 800 0 6,575 8,509 636 15,830 63,841Sources: PCA Shopping Centres Directory (2009), Hill PDA Floorspace Survey 2010.Junction StreetNowra LaneMcGrath AvenueGraham StreetNorth StreetMoss StreetPrinces HighwayHaig StreetO'Keefe AvenueKinghorne StreetSchofield LaneStockland NowraTotalC09143 Page 53 Hill PDA

Nowra CBD Master Plan – Market AssessmentAppendix 3 – Existing Number of Shopfronts in Nowra CBDNowra CBD Retail Core Nowra CBD Fringe Retail Nowra CBD Out of Centre Nowra CBD Total *Department Store - - - -Discount Department Store 2 1 1 4Mini Major 6 1 - 7Supermarkets & Grocery Stores 4 1 1 6Convenience Store 3 - - 3Specialty Food 10 2 8 20Specialty Non Food 50 3 18 71Restaurants & Take-aways 26 1 3 30Clothing 24 - 16 40Bulky Goods 4 2 - 6Personal Services - - - -Other Shop Front 1 1 - 2Total Retail 130 12 47 189Commercial Shop front (incl. medical) 50 13 3 66Vacant Floorspace 6 19 - 25Total Shop front 186 44 50 315Commercial - in house 2 20 - 22Medical - in house 10 3 - 13*Shop front retail plus shop front commercial.Sources: PCA Shopping Centres Directory (2009), Hill PDA Floorspace Surveys 2010.C09143 Page 54 Hill PDA

Nowra CBD Master Plan – Market AssessmentAppendix 4 – Existing Number of Shopfronts in Nowra CBD (by Street)Osbourne StreetKeft AvenueBridge RoadBerry StreetWorrigee StreetDepartment Store 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Discount Department Store 0 0 0 0 0 1 0 0 0 0 0 1 0 1 0 0 1 4Supermarkets & Grocery Stores 0 0 0 0 1 1 0 0 0 0 0 0 0 2 1 0 1 6Mini Major 0 0 0 2 1 3 1 0 0 0 0 0 0 0 0 0 0 7Convenience Store 0 0 0 1 0 0 0 0 0 1 0 0 0 0 1 0 0 3Specialty Food 0 0 1 1 1 1 0 0 0 1 0 0 0 3 4 0 8 20Restaurants & Take-aways 0 0 0 4 0 10 0 0 1 1 0 0 0 1 8 2 3 30Clothing 0 0 0 3 0 14 0 0 0 0 0 0 0 1 5 1 16 40Specialty Non Food 0 0 0 4 2 25 2 0 1 2 0 0 0 1 13 3 18 71Bulky Goods 0 0 1 0 1 1 0 0 0 1 0 0 0 0 2 0 0 6Personal Services 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Other Shop Front 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 2Total Retail Space 1 0 2 16 6 56 3 0 2 6 0 1 0 9 34 6 47 189Commercial 0 0 5 11 4 9 3 0 0 5 0 0 0 1 11 0 3 52Medical 0 0 0 3 4 4 0 0 0 2 0 0 0 0 1 0 0 14Vacant Floorspace 0 0 0 2 1 3 0 0 1 1 1 0 0 0 3 1 0 13Total Shopfront 1 0 7 32 15 72 6 0 3 14 1 1 0 10 49 7 50 268Commercial - in house 4 2 0 0 8 6 0 0 0 0 5 0 0 0 0 0 0 25Medical - in house 11 0 3 0 2 2 0 3 0 0 1 0 0 0 0 0 0 22Total 16 2 10 32 25 80 6 3 3 14 7 1 0 10 49 7 50 315Sources: PCA Shopping Centres Directory (2009), Hill PDA Floorspace Survey 2010Junction StreetNowra LaneMcGrath AvenueGraham StreetNorth StreetMoss StreetPrinces HighwayHaig StreetO'Keefe AvenueKinghorne StreetSchofield LaneStockland NowraTotalC09143 Page 55 Hill PDA