A controversial $1.2 billion data centre planned in Sydney's north just 20 metres from the nearest home has been formally withdrawn by developer Goodman Group, following pressure from the local community and a parliamentary inquiry.

The company had proposed a 90-megawatt data centre in the suburb of Lane Cove, which it called Project Mars.

The proposal had drawn vocal criticism from nearby residents and members of a school community, despite being smaller than many other proposed data centre developments in New South Wales.

Goodman officially backed down from its proposal less than a week after it faced tough questions at a parliamentary inquiry into artificial intelligence and data centres.

Representatives from Goodman had told the inquiry that the firm would decide by the end of 2026 whether to proceed with its Project Mars, but had suggested "some form of design change" may occur given "a difference of opinion" with the community.

Goodman blames 'policy and regulatory environment'

Goodman's head of planning, Guy Smith, advised the New South Wales government on Monday that it had formally withdrawn its development application for Project Mars.

The "policy and regulatory environment for large-scale data centre development has evolved significantly" since Goodman began planning Project Mars in March 2025, Smith wrote in a letter to the NSW Department of Planning, Housing, and Infrastructure.

"Goodman has carefully considered these changes together with feedback received through the planning process, including the views of the local community," he wrote.

"Having considered emerging federal and state policy, Goodman has concluded that it will not progress with the development application."


The proposed location of Goodman Group's scrapped data centre in the Sydney suburb of Lane Cove. Image: Nearmap / Goodman document

The company's withdrawal of Project Mars comes after the possibility of setting a "mandatory minimum distance" away from homes and schools was raised in a consultation paper released by the federal government last week.

Labor has said it plans to introduce legislation for national data centre standards by the end of 2026, after releasing voluntary expectations earlier this year and initially suggesting it would introduce laws for mandatory rules in early 2027.

Around a third of new data centre projects proposed in Australia's National Electricity Market have been cancelled over the past year, according to market operator AEMO.

Goodman, which is one of the largest industrial property developers in the world, is currently constructing a 90MW data centre in an industrial section of the Sydney suburb of Artarmon, which is adjacent to Lane Cove.

'A huge win for the Lane Cove community'

Lane Cove Council's deputy mayor Rochelle Flood, who voiced the council's opposition to the Goodman proposal at last week's hearing of the Senate committee examining AI and data centres, said the company's withdrawal was a "massive community win".

"This is a huge win for the Lane Cove community and shows what we can achieve when we work together," she wrote on social media.

"This wouldn’t have happened without sustained community pressure.

“... We know there are more hyperscale data centres in the pipeline but today is a win worth celebrating – for our community and for the environment."

Lane Cove Council, which had formally objected to the Goodman proposal, was contacted for comment.

Liberal Senator Sarah Henderson, who had asked Goodman to withdraw its Project Mars plan – describing it as "wholly unreasonable and frankly grossly irresponsible" given its proximity to residents – was also contacted for comment.

Henderson is a member of the parliamentary inquiry examining AI and data centres, which is expected to hold its next public hearings in Canberra on Thursday and in Darwin on 3 November.

The committee's final report is expected to be tabled on 16 November.