Payce recently bought the final piece of the parcel at Melrose Park from Aqualand​ for $160 million and will now redevelop the industrial land on the northern banks of the Parramatta River, not far form the expanding Parramatta city.

Under the scheme Payce and its joint-venture partner, Sekisui House Australia, are seeking to revitalise the suburb in collaboration with Parramatta City Council by creating new employment opportunities and sustainable new communities.

Payce general manager Dominic Sullivan said its structure plan outlined the broad pattern of future uses and services for further discussion with Parramatta City Council and the community. The plan also covers all the infrastructure necessary to support future uses, including new public roads, electricity, water and services, and major upgrades to the surrounding road network.

"The plan includes a retail village centre, as well as open space totalling 3.8 hectares, including a new central park, a community oval to be shared with Melrose Park Public School, a large garden park and numerous pocket parks throughout the precinct."

The development is yet another reason vacant industrial stock (5000 square metres)  now measures 493,130 square metres across 54 buildings – a reduction of 9208 square metres (or 1.8 per cent) during the three months to January 2016.

Lendlease chief executive Steve McCann has also identified it will seek out land across the Sydney basin that is suitable for urban redevelopment.

GPT's new chief executive, Bob Johnston, also said the group was looking at its land surrounding the Rouse Hill centre for development into more retail and about 1000 new apartments.

The Sydney Olympic Park precinct is another that has been earmarked for new development.

All the proposed sites are being supported by the NSW government's $20 billion infrastructure program, which is making industrial sites accessible and ripe for redevelopment.

According to Tim Armstrong, Knight Frank's head of Industrial NSW, despite the presence of several headwinds to the broader Australian economy, NSW and in particular Sydney continues to show steady growth and confidence, which is supporting industrial demand across Sydney.

"While the south region experienced the largest fall in vacancy during the final quarter, declining 20 per cent to 90,765 square metres, this is expected to be partially reversed over the next three to six months with several backfill options anticipated to be added to the vacancy count," Mr Armstrong said.

"However, a number of these vacancies will only be for lease on a short-term basis as owners begin medium-term plans for residential redevelopment. Subsequently, these options are being withdrawn from the market," he said.

Mr Armstrong said even with the progression of 37,240 square metres in speculative projects (both completed and under construction) during the January quarter, overall levels of vacant speculative space remain low, particularly in comparison with current absorption levels and the series average of 70,361 square metres per quarter (speculative projects).

The largest speculative project to progress in recent months was Stockland's 28,800 square-metre facility at Ingleburn (41-47 Stennett Road), which is due for completion in the fourth quarter of 2016.

Luke Crawford, Knight Frank's senior research analyst, NSW said leasing activity in Sydney continues to outperform the national average with the January quarter representing the sixth successive period of above-average take-up.

"The bulk of this activity has been broadly spread across the regions; however, the sustained gravitation of industrial businesses towards outer-ring locations has persisted with gross take-up in the outer west accounting for 34 per cent of gross absorption over the past three months and 49 per cent over the past 12 months."

Mr Armstrong said in the outer west, Reece recently signed up to Dexus' speculative 1 Litton Close, Greystanes facility. The 20,489 square-metre facility is due for completion in March 2016.