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Goodman Group, Australia's largest property developer, has withdrawn its application to build a massive data centre in the Lane Cove area of Sydney, ending a bitter planning dispute that had come to symbolise growing public resistance to the rapid expansion of AI infrastructure in Australia.
The proposed facility, known as Project Mars, would have carried a price tag of A$1.2bn (£630m; $841m) and boasted a capacity of 90 megawatts. It was to be constructed roughly 20 metres from the nearest residential property in the suburb of Lane Cove, a proximity that galvanised local opposition from the outset.
The company confirmed its decision to abandon the project in a formal letter sent to the New South Wales Department of Planning. In that correspondence, Goodman Group explained that since it began the planning process in March 2025, it had carried out "extensive technical investigations, stakeholder engagement and community consultation." The developer acknowledged that the policy and regulatory landscape for large-scale data centres had shifted considerably during that period, and said it had weighed those changes alongside the views expressed by local residents before concluding it would not move forward.
The withdrawal represents a significant victory for community campaigners. During the public consultation period, the proposal attracted 374 submissions, of which only nine voiced support. According to the local news outlet In the Cove, that tally marked the highest number of submissions ever recorded for a data centre application in the region.
Anthony Roberts, the member of the New South Wales Legislative Assembly who represents Lane Cove, welcomed the outcome in a message posted to the Facebook page of the Lane Cove Responsible Planning Group. He described the decision as "a huge win for the Lane Cove West community" and framed it as a triumph of common sense. Roberts also said the result carried a broader message for the industry, urging other data centre developers to identify suitable locations before bringing proposals forward. While acknowledging that data centres have an important role to play, he stressed that projects of this size and scale must be appropriately situated and planned with the surrounding community in mind.
The decision by Goodman Group came shortly after the New South Wales government unveiled plans for a fast-track assessment programme for data centres. Under that scheme, such projects could be evaluated within 75 days, provided they satisfy certain standards and agree to fund additional water and energy supply. The timing of the withdrawal suggests that even with streamlined approvals on the horizon, developers remain vulnerable to fierce local opposition when projects are seen as poorly located.
The Lane Cove dispute reflects a much wider disagreement unfolding across Australia about the role and footprint of data centres. The mainstreaming of generative AI in recent years has triggered an enormous surge in demand for the computational infrastructure that powers it. Australia, with its abundance of clean energy, natural gas reserves and available land, has positioned itself as a leading global destination for data centre construction.
The federal government has actively courted investment from international AI companies, eager to capture a share of a rapidly growing industry. Yet that enthusiasm has been met with increasingly stiff resistance at the local level. Critics point to the enormous demands these facilities place on water and energy supplies, as well as the disruption they inflict on nearby communities through noise, traffic and construction activity.
For residents of Lane Cove, the prospect of living metres from a 90-megawatt facility proved a step too far. Their campaign tapped into a broader anxiety that Australia's eagerness to attract AI investment may be outpacing the planning system's ability to protect affected neighbourhoods.
The case also highlights a tension at the heart of the country's AI ambitions. On one hand, governments want to capitalise on the global data centre boom and the economic benefits it promises. On the other, they face a public increasingly aware of the environmental and social costs of hosting such infrastructure. The New South Wales fast-track programme was designed to accelerate approvals, but it may do little to quell opposition if communities feel their concerns are being sidelined.
Goodman Group's withdrawal does not necessarily signal a retreat from the data centre sector, which remains highly lucrative. But it does demonstrate that location and community engagement have become critical factors in whether projects proceed. The company's letter made clear that evolving regulations and local sentiment both weighed heavily on its decision.
The outcome in Lane Cove is likely to encourage other community groups across Australia who are fighting similar proposals. It may also prompt developers to reconsider how they select sites, favouring locations farther from residential areas and engaging with residents earlier in the process. For now, Project Mars will not rise in suburban Sydney, and the campaigners who opposed it have secured a notable precedent in the struggle over where Australia's AI infrastructure should be built.
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