Sydney data centre plan scrapped by developer after community backlash

Goodman Group withdrew plans for a A$443.8-million data centre in Sydney's Lane Cove after residents raised concerns over its impact on homes, schools and local infrastructure

By Keira Wright and Joe Flynn

 

Australia’s data-centre boom is running into growing community resistance, with Goodman Group scrapping plans for a 24-hour facility in suburban Sydney after a backlash from local residents.

 

Goodman said it won’t proceed with the development application for Project Mars after considering community feedback and changes to federal and state policy. Regulation of large AI data centres had “evolved significantly” since planning began in March 2025, the company said in a statement. 

 

The facility was planned for the family-friendly residential suburb of Lane Cove, within minutes’ walk of homes and a public school, according to Google Maps. The proposal drew swift criticism from residents and activists, reflecting broader concerns over the rapid expansion of data centres into populated areas. 

 

 

“There is significant concern in the school community that the proposed development poses substantial and unmitigated risk to our children,” the Lane Cove West Public School Parents and Citizens Association said in an objection to the project. The group also raised concerns about potentially lower property values and the cost of upgrading homes to mitigate the data centre’s impact. 

 

Goodman had put the project’s estimated development cost at A$443.8 million ($311 million) in its development application. The firm’s shares fell as much as 2.1% in Sydney on Tuesday morning.

 

Australia is undergoing a rapid data centre buildout, attracting investment because of its abundant land and renewable-energy potential. The country’s data centre pipeline is worth about A$175 billion, with roughly A$110 billion of that investment likely to occur over the next three years, Westpac Banking Corp. senior analyst Pat Bustamante said in a research note this month.

 

But the investment push is increasingly running into community opposition, with residents questioning the impact on local resources and quality of life, who should pay for infrastructure upgrades and what benefits communities receive in return, said Naomi Wagura, a researcher at Accela Research, which helps investors assess climate-transition risks. 

 

“We expect community opposition to delay some projects, force redesigns and influence where investment flows,” Wagura said, adding that financial consequences can be substantial as delays “increase financing and development costs and push back expected revenue.”  

 

Tensions are emerging elsewhere in Australia, including around projects operated by some of the country’s biggest data centre firms. Residents near NEXTDC Ltd.’s M3 facility in Melbourne have raised concerns about noise and diesel fumes, with some calling for compensation and voluntary home buybacks. Firmus Technology Pty Ltd.’s Bell Bay project in Tasmania has faced opposition over plans governing when its diesel generators can operate. 

 

The backlash recently prompted Victoria state to ban the construction of data centres in residential areas and require new facilities to “bring their own renewable energy supply.”