At a glance
Centuria Industrial REIT's A$137 million plan for a 38MW, four-storey data centre on Telstra's Clayton campus was refused by Monash City Council on 29 September 2026.
Council planning officers had recommended a permit with conditions on a site that has a lawful data centre use.
The written grounds of refusal cite scale and intensity, energy demand, 66kV powerlines and environmental effects under the existing planning scheme.
Victoria's government has said its new data centre rules, including a 150-metre buffer from homes, will not apply to applications under assessment.
Centuria can seek a review at the Victorian Civil and Administrative Tribunal, and it has a separate application for up to 40MW on the same site.
Monash City Council refused a planning permit on 29 September 2026 for a A$137 million, 38MW data centre at 1816-1832 Dandenong Road, Clayton, on a Telstra-occupied campus in Melbourne's south-east, one of the operating data centres in Australia. The applicant is Centuria Industrial REIT, which owns the site. The motion to approve, in line with the planning officers' recommendation, was lost, and councillors carried an alternative motion to refuse, trade publication W.Media reported on 5 October.
The vote came a week after Victoria released its Sustainable Data Centre Action Plan, and two councillors referred to it in debate. The Clayton application was under assessment when the plan was announced.
The council's written grounds for refusal rest on the existing Monash Planning Scheme: the scale of the expansion, its power demand and new high-voltage powerlines, and the scheme's general tests for environmental effects.
Telstra's two Clayton data centres draw 12.7MW
Telstra sells colocation space from the Clayton campus, Data Center Dynamics reported. Centuria Industrial REIT bought the 3.2-hectare complex from Telstra for A$416.7 million in 2020 with a 30-year leaseback, RealEstateSource reported at the time. Telstra's two existing data centres on the site draw 12.7MW combined, according to RealEstateSource and The Eastern Melburnian.
The refused planning application, TPA/57779, would replace two existing buildings with a four-storey data centre. Centuria lodged the original design in December 2025 and submitted revised drawings in February 2026 in response to a council request for information, W.Media reported.
Facility on the Clayton site | Capacity and cost | Planning status |
|---|---|---|
Telstra's two existing data centres | 12.7MW combined | Operating, on a 30-year leaseback from 2020 |
Four-storey data centre, TPA/57779 | 38MW, A$137 million | Refused 29 September 2026 |
Second data centre | Up to 40MW | Application lodged, reported February 2026 |
Source: Monash City Council; RealEstateSource; W.Media; The Eastern Melburnian, October 2026.
Council officers recommended a permit with conditions
The officers' report recommended that a permit be issued, subject to conditions, on land with a lawful data centre use, W.Media reported. It put the new building about 80 metres from the nearest homes, which sit to the west across the Dandenong Road and Princes Highway corridor, and considered that separation adequate.
The submitted noise impact assessment found the data centre would comply with the EPA's Noise Protocol limits and sleep disturbance criteria, according to the report. How loud Australian sites run is set out in data centre noise in Australia. Council received one formal objection, which raised residential compatibility, noise, heat, traffic, visual impact and safety.
Monash refused on scale, energy and environmental grounds
Councillor Rebecca Paterson moved the alternative motion and Councillor Elisha Lee seconded it, the unconfirmed minutes record. The first ground states that the development "would result in an unacceptable intensification of the data centre use on the land that is not in the net community benefit". The second cites energy demand, the infrastructure footprint including 66kV high-voltage powerlines, and effects on the natural environment. The third cites Clause 65, the scheme's general decision guidelines.
Paterson told the meeting that "the community needs to have confidence that this kind of work happens before the foundations are being laid", The Eastern Melburnian reported. Lee and Councillor Brian Little referred to the state's new action plan in debate. Lee said she could not support an expansion that "would otherwise be deemed non-compliant with the new guidelines", and Little said the new rules would start operating at the beginning of 2027, according to W.Media.
Mayor Stuart James seconded the motion to approve, the minutes record. He said he was comfortable with both the officers' report and a refusal, and noted that the council could only assess the application under the planning rules in place, W.Media reported.
What Victoria's action plan covers
Premier Ben Carroll's release of 22 September sets out rules for new data centres: a buffer of "150 metres between a data centre building and homes", their own renewable supply and storage, and a Local Investment Guarantee for host communities. The release states that the rules "won't be retrospective for applications under assessment, but we expect data centres to continue to work with locals and respond to their concerns."
The plan's detail, including the planning scheme definition for data centres and the referral role for VicGrid, is set out in what's in Victoria's Sustainable Data Centre Action Plan. Victoria's settings sit alongside the other states' in Australian data centre policy by state.
Clayton is one of several Victorian applications lodged before the plan. HyperDC's application for a 400MW campus at Moorabool was received on 22 September through the state's significant economic development pathway, and four Melbourne campuses were in the system by July 2026, covered in Melbourne's data centre pipeline breaks out of the west.
What to watch
A VCAT application. Centuria can apply to the Victorian Civil and Administrative Tribunal for a review of the refusal. W.Media reported it had asked Centuria about its options following the refusal. A review is the likelier path than a smaller redesign. The tribunal hears the application afresh in place of the council, and Centuria would go in with a supportive officers' report, an established data centre use on the land, a compliant noise assessment and a single formal objection. The council's own grounds turn on the scale and power of the building, so a cut deep enough to answer them would change the project's economics. A new, smaller application lodged now could also be assessed against the 150-metre buffer once it takes effect, and the building sits about 80 metres from homes. Any reduction is more likely to come as amended plans put to the tribunal. RealEstateSource reported that Centuria could also bundle its Clayton applications and apply to the planning minister.
The second Clayton application. Centuria lodged an application for a second data centre of about 40MW on the same site, reported with its half-year results in February 2026. Telstra has agreed to hand back part of the site, with its decommissioning of that section expected around mid-2027.
The planning scheme changes. The action plan says the 150-metre buffer and a data centre land use definition will be enforced through the planning system. The Commonwealth's data centre standards are also intended for legislation in early 2027.