An area about 12 times the size of Barangaroo will be quarantined from Sydney's apartment boom, a move supporters say will ensure emerging businesses and industry are not pushed out of the inner city.

The 265-hectare "southern employment lands" – parts of Alexandria and Rosebery previously reserved for heavy industry – is to be opened up for the first time to retail uses, offices and new types of commercial enterprise.

But the new planning controls, which have been adopted by the City of Sydney, only allow private residential development in two "investigation" areas on the precinct's fringes – and only where this supports the provision of "substantial" affordable rental housing.

Lord Mayor Clover Moore said 17,000 new dwellings were either built, under construction or approved in the Sydney council area during the past financial year, "but we also need to accommodate the massive jobs growth Sydney is experiencing".