The Latest Proposed Addition to the Commercial Zones: The Commercial 3 Zone

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By Andrew Vicendese, Law Graduate and Elle McIntosh, Law Graduate.

On 11 September 2018, the Minister for Planning, Richard Wynne, announced a new category of planning zone which will be introduced into the Victoria Planning Provisions as part of proposed Amendment VC149.

The new “Commercial 3 Zone” (C3Z) is a mixed-use employment zone and a key part of the Victorian Government’s new policy guidelines, Unlocking Enterprise in a Changing Economy. The C3Z is purposed to streamline planning permit applications for certain creative and start-up industries emerging in metropolitan Melbourne. More particularly, the suburbs of Brunswick, Collingwood, Cremorne and South Melbourne have been identified as established “enterprise precincts” where emerging economies in tech, boutique manufacturing, media, and design are establishing successful footholds. Regional towns including Geelong, Ballarat, Bendigo, Kyneton and Castlemaine have also been recognised as showing similar signs of economic activity.

What is permitted in the Commercial 3 Zone?

While the proposed C3Z allows and permits a suite of land uses as set out in the Table of Uses in clause 34.03-2, this article focuses on some of the key uses as set out below.


Pursuant to the proposed C3Z, some form of Accommodation (i.e. Dwelling and Residential Building) will be allowed where it is demonstrated that the proposal compliments the primary employment and economic development focus of the area.

Before a planning permit will be granted for use of the land for a Dwelling or Residential Building, the proposal will need to comply with the following default conditions which attach to these uses:

  • the gross floor area of all Dwellings and Residential Buildings on the lot must not exceed 35% of the gross floor area of all buildings on the lot; and
  • any frontage at ground level must not exceed 4 metres.

If these conditions are not met, then these uses are prohibited.

Some guidance on how residential floor area versus non-residential floor area is to be calculated is provided in DELWP’s Planning Practice Note 85 ‘Applying the Commercial 3 Zone’.

It will also be important for mixed residential-commercial developments to demonstrate design which mitigates the amenity impacts from adjoining uses, as the C3Z imposes a “reverse amenity” decision guideline on residential developments.


As is the case with the C1Z and C2Z, Office land uses will be “as of right” under the new C3Z with no limitations on the maximum leasable floor area. Industrial uses will also be “as of right” unless the specific use has been recognised as having adverse amenity potential.


To foster high amenity in C3Z areas, Food and Drink premises will be an “as of right” use, while Shops will require a permit and be limited to 200 square metres. It is thought that the limits on floor space will foster a greater diversity of small scale retail activities which will compliment and support the mixed use employment functions of the area. Retail is otherwise prohibited under the C3Z.

Our view on the new zone

On a review of the proposed C3Z, we consider the newly proposed  zone to be a positive step which can be used to facilitate and encourage mixed-use developments in inner city areas. The real effect of this zone will ultimately depend on where it will be rolled out and which zones it will replace.

For further information, please do not hesitate to contact us.

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