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Goodman Group, Australia's largest property developer, has withdrawn its planning application for a major data centre in the Lane Cove area of Sydney, abandoning a project that had become a lightning rod for community anger over the rapid spread of AI infrastructure into residential neighbourhoods.
The company had proposed a A$1.2bn (£630m; $841m) facility known as Project Mars, a 90-megawatt data centre that would have been built roughly 20 metres from the nearest home in the suburb. The withdrawal was confirmed in a letter to the New South Wales Department of Planning.
The decision represents a significant victory for local campaigners, who mounted a sustained opposition effort against the development. Their resistance tapped into a broader unease across Australia about the environmental and social costs of the data centre boom that has accompanied the mainstreaming of generative AI.
The scale of public opposition was striking. During the consultation process, the proposal attracted 374 submissions, of which only nine expressed support. According to the local news website In the Cove, that is the highest number of submissions ever recorded for a data centre application in the state.
In its letter to planning authorities, Goodman Group said it had carried out extensive technical investigations, stakeholder engagement and community consultation since beginning the planning process in March 2025. The company noted that the policy and regulatory environment for large-scale data centre development had evolved considerably over that period.
Goodman Group said it had weighed those regulatory changes alongside the views of local residents before concluding that it would not proceed with the development. The company did not indicate whether it would pursue an alternative site for the project.
The withdrawal came shortly after the New South Wales government announced a fast-track programme for data centres. Under the new framework, such facilities can be assessed within 75 days, provided they meet certain standards and help fund additional water and energy supply.
That policy shift, intended to attract investment and accelerate approvals, appears to have cut both ways. It signalled strong government backing for the sector, but it also intensified scrutiny from communities worried that faster approvals would mean less say for residents living near proposed sites.
Anthony Roberts, the member of the New South Wales Legislative Assembly representing Lane Cove, welcomed the company's decision. In a message posted to the Facebook page of the Lane Cove Responsible Planning Group, he described the outcome as a huge win for the Lane Cove West community and a common-sense victory.
Roberts said the result sent a clear message to other data centre developers to identify suitable locations before bringing proposals forward. He acknowledged that data centres have an important role to play but argued that developments of this size and scale must be appropriately located and planned with the surrounding community in mind.
The dispute reflects a wider tension in Australia over the role of data centres in the national economy. The country has become a global destination for their construction, drawing on an abundance of clean energy, natural gas reserves and available land.
The federal government has actively courted investment from global AI companies, eager to position Australia as a competitive player in the artificial intelligence supply chain. Data centres underpin that ambition, providing the computing power needed to train and run AI models.
Yet the same infrastructure places enormous demands on water and electricity supplies. Communities near proposed sites have increasingly organised against projects they fear will strain local resources, generate noise and traffic, and disrupt the character of their neighbourhoods.
The Lane Cove case illustrates how quickly such concerns can harden into formal opposition. A proposal that might once have proceeded with limited public attention instead drew hundreds of objections and ultimately proved untenable for its developer.
For Goodman Group, the withdrawal avoids a protracted planning battle and the reputational costs that could accompany it. For campaigners, it demonstrates that well-organised local resistance can shape outcomes even against a developer of considerable scale and resources.
The case also raises questions about where Australia's data centre expansion will go next. If densely populated suburbs become politically unviable, developers may look to industrial zones or remote areas where land is cheaper and fewer residents are affected.
Such a shift could ease community friction but may create new challenges, including the need to transmit power over longer distances and to secure water supplies in drier regions. The economics of data centres depend heavily on proximity to existing grid infrastructure and fibre connections.
Industry observers are likely to watch whether the New South Wales fast-track programme encourages developers to negotiate more carefully with communities upfront, or whether it simply shifts contests over siting to an earlier stage of the planning process.
What is clear is that the debate over data centres in Australia is no longer confined to boardrooms and energy planners. It has moved into suburban streets, local Facebook groups and state parliament, where the promise of AI investment now competes directly with residents' concerns about the places they live.
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