Microsoft secures government approval for a $902 million data center in Sydney after Goodman Group withdrew from the project.

Microsoft has won New South Wales government approval for an A$1.3 billion ($901.9 million) data centre in western Sydney, three days after Goodman Group withdrew plans for a hyperscale facility on the city's north shore amid neighborhood opposition. The NSW Department of Planning, Housing and Infrastructure granted consent on 1 October for the Honeman Close Data Centre in Huntingwood, an industrial precinct 3.5 kilometres southwest of the Blacktown town centre and 10 kilometres west of Parramatta. The facility will house 40 data halls across five floors with 96 megawatts of IT load.

The approval illuminates the challenges site selection poses for data centre developers in Sydney. Microsoft's application drew a single public submission—an objection over emissions—despite nearest homes being about 90 metres away. By contrast, Goodman's Project Mars, planned 20 metres from the nearest house, attracted 374 public submissions, only nine supportive.

The department cited A$1.26 billion in capital investment, 250 construction jobs, and 74 operational roles in approving the project. Construction is expected to take about 24 months, adding to Microsoft's broader Australian buildout, for which the company committed A$5 billion over two years in October 2023. The project carries a capital cost of about A$13.2 million per megawatt, compared with A$9.9 million for the 81MW Project Mars.

State consent is not Microsoft's final hurdle. The company still requires separate federal environmental approval because the building will clear 0.33 hectares of a conservation area containing critically endangered woodland and potential habitat for endangered wildlife, under assessment via the Environment Protection and Biodiversity Conservation Act. Before operations begin, Microsoft must also demonstrate that all electricity demand is matched by additional, firmed renewable supply secured through power purchase agreements for NSW-based generation.

The facility will consume up to 140 megawatts of power. Back-up power comes from 46 diesel generators with up to 1.5 million litres of diesel stored on site and 158,763 kilograms of lithium-ion batteries to bridge outages. Cooling relies on 36 rooftop evaporative cooling towers. The facility is expected to use about 3.9 megalitres of water daily and generate 1,326 kilotonnes of carbon dioxide equivalent annually, primarily from electricity use.

The application, lodged in 2023 by engineering consultancy Lehr Consultants International without public identification of the end user, faced a three-year wait to approval. Public exhibition closed on 1 February 2024, more than two and a half years before Goodman withdrew Project Mars. Much of the interval involved negotiations with Blacktown City Council, which had raised concerns about the building's bulk, landscaping, and drainage before withdrawing its objection. Microsoft's data centre entity signed a planning agreement with the council in September 2025.

Huntingwood sits beside the Eastern Creek data centre cluster, where Starwood, Doma, and Telstra InfraCo are developing a 62-megawatt facility in neighbouring Minchinbury on an approved site. Goodman has filed for environmental assessment of Project Atlas, a A$5 billion, 500-megawatt data centre planned for Eastern Creek.

Policy pressure on large data centres continues to mount. Goodman's Project Mars in Lane Cove West, located 160 metres from a primary school, faced both neighborhood objections and Sydney Water's request to defer assessment pending further study of local water supply. On 28 September, Goodman's head of planning, Guy Smith, told the department that the policy environment for large data centres had "evolved significantly" since planning began in March 2025. Victoria has proposed a 150-metre buffer between data centres and homes—a distance that would encompass the nearest homes to the Huntingwood site. National Cabinet agreed in August to develop mandatory national standards for large data centres, with the Commonwealth committing to legislate in early 2027, though Prime Minister Anthony Albanese stated the rules would not apply to already-approved projects.

On the same day as Microsoft's approval, New South Wales also granted consent to Stockland's Road 1 Data Centre, a A$630.4 million facility at 1–5 Khartoum Road in Macquarie Park. Designed for 34.3 megawatts of IT load and 49 megawatts of total power capacity on a former Johnson & Johnson campus, the project will adjoin a 76.4-megawatt Stockland data centre approved in March and sits in the same precinct as Goodman's Project Apollo. The application drew five public submissions, three objections, with no council opposition from the City of Ryde.

Because Stockland plans build-to-rent apartments up to 39 floors above the data centre on the former campus site, the department required air quality modelling for future residents. Stockland specified higher-performance generators fitted with catalytic reduction systems that cut nitrogen oxide emissions by 85 percent. Like Microsoft's consent, Stockland's carries the requirement to match all operating electricity demand with firmed, NSW-based renewable supply.