The Waterloo Metro Quarter (WMQ) development is undergoing a significant transformation, reflecting broader shifts in Sydney’s urban planning and property market. WL Developer Pty Ltd has applied for Secretary’s Environmental Assessment Requirements (SEARs) for a Second Amending Concept DA, proposing a shift from commercial office space to residential housing.
If approved, the Northern Precinct will replace its office tower with residential apartments, while the Central Precinct will introduce a co-living housing model. The developer states these changes respond to declining office demand and increasing housing shortages, aligning with government policies supporting higher-density housing near transport hubs.
What’s Changing?
The Waterloo Metro Quarter Over Station Development (WMQ OSD) was initially approved as a mixed-use precinct with commercial, residential, and retail components. While the gross floor area (GFA) remains at 68,750 sqm, the latest amendments reallocate that space to prioritise housing.
Northern Precinct – From Commercial to Residential
- Originally approved as a 17-storey commercial office building.
- Now proposed as two residential towers (24 and 20 storeys).
- Includes 336 apartments, with:
- 40 affordable housing units.
- 296 market-rate dwellings.
- 5,450 sqm of retail and commercial space will remain in the podium.
- A new bridge link over Raglan Walk will connect shared amenities atop the Metro station.
Key Change: The precinct shifts from commercial office to residential, responding to low leasing interest and high housing demand, as outlined in the Scoping Report.
Central Precinct – Introducing a Co-Living Model
- Originally approved as a traditional apartment tower.
- Now proposed as a 24-storey co-living development.
- Designed for approximately 520 residents, featuring:
- Self-contained co-living rooms.
- Communal spaces on multiple levels.
- Includes retail, childcare, and community facilities in the podium.
Key Change: The precinct moves from traditional apartments to a high-density co-living model, which the Scoping Report states will increase housing diversity and affordability.
Why is the Development Changing?
The Scoping Report identifies declining commercial demand and strong housing demand as key drivers behind these changes.
Sydney’s Office Market Faces a Post-Pandemic Shift
According to the report, the demand for large-scale office space in city fringe locations like Waterloo has weakened, despite continued stability in Sydney’s CBD. The original 2019 Concept DA included a 17-storey office tower, but the developer reports minimal tenant interest since 2020, despite active marketing.
The report attributes this shift to changing workplace habits. Many companies now support hybrid work models, reducing their need for large office spaces. Additionally, businesses looking for office space continue to prefer prime CBD locations over fringe business districts.
Without strong commercial leasing prospects, the developer is now proposing residential towers instead of office space, aligning with current market realities.
Government Housing Policies Driving More Residential Supply
The Scoping Report states that housing shortages in Waterloo and the wider Zetland area have created an urgent need for new residential supply. It references several government strategies, including:
- The National Housing Accord (2024-2029), which aims to deliver 1.2 million new homes nationwide, with 377,000 allocated to NSW.
- The NSW Government’s focus on increasing density near major transport hubs, such as Waterloo Metro Station.
- The Premier’s 2023 housing reform announcement, prioritising more housing in well-located urban areas.
Co-Living as a New Housing Solution
The developer is introducing a co-living model in the Central Precinct, aligning with a growing trend in high-density housing. According to the Scoping Report, this model is designed for students, young professionals, and key workers.
Co-living housing provides:
- Private rooms with shared kitchens, lounges, and workspaces.
- Affordable rental options in high-demand locations.
- Short-term and flexible lease arrangements, making it more accessible than traditional apartments.
This model is increasingly common in major global cities like New York and London, where it helps combat housing shortages while maintaining affordability.
How This Compares to Other Developments
The shift from commercial office to residential use is not unique to Waterloo. Similar trends have emerged in Melbourne’s Docklands and Brisbane’s Fortitude Valley, where developers have pivoted toward high-density housing in areas initially planned for commercial office space.
As hybrid work trends continue, more developers may adjust their plans, prioritising residential and mixed-use developments over large-scale office towers.
What Happens Next?
Before construction can proceed, the Second Amending Concept DA must be approved, setting the new planning framework. Following this, the detailed SSDAs for the Northern and Central Precincts will be assessed under the revised planning controls.
If approved, these changes will reshape Waterloo’s skyline, replacing large-scale commercial office space with high-density housing, as outlined in the Scoping Report.
Project Team
- Developer: WL Developer Pty Ltd
- Urban Planner: Urbis Pty Ltd
- Architects:
- Northern Precinct: Woods Bagot
- Central Precinct: Bates Smart
