Previously owned by the NSW Department of Education, the 2156 square metre Auburn Street site opposite Wollongong railway station has been sold to Sydney investors.

Viktor Desovski of Colliers International, who negotiated the sale, said the intention of the new owners was to redevelop the site with a mix of commercial and residential space.

‘‘We had a number of inquiries from both local and Sydney buyers,’’ Mr Desovski said.

He said such sites were in demand given the flexible B3 commercial core zoning. A height restriction of 60 metres applies in the precinct.

‘‘I also think Wollongong is proving more attractive to buyers in light of government investment in the region and the GPT development,’’ he said.

The sale came a week after a nearby office building purpose-built in 1994 for the Wollongong branch of the Australian Tax Office was listed with Martin, Morris and Jones.

With the amount of high-grade office space in Wollongong classified as ‘‘critically low’’, the sale is expected to attract interest.

Now owned by David Arapali’s company DAA Holdings, the building has frontage to Atchison, Burelli and Auburn streets and comprises 5676 square metres of A-grade office space. It last traded for $22 million in April 2007.

MMJ director Geoff Jones said the building would make an ideal corporate headquarters for an owner-occupier or a very good investment property given the high demand for quality office space in Wollongong.

The tax office plans to move its 300 Wollongong employees into a new office in Kembla St at the end of next year.

Although agents are not popping open the champagne just yet, Simon Kersten of Colliers International, said there was confidence that Wollongong’s commercial real estate market was in a recovery stage.

‘‘It is not at boom-time type levels but it is happening. There is generally some enthusiasm in the market. Buyers are more positive and transactions are occurring,’’ Mr Kersten said.

Mr Jones said low interests rates were good for Wollongong’s commercial property market.

‘‘There is funding available for good commercial property at or below 7 per cent and a number of clients have been able to take advantage of that. At the same time, lease returns are as high as 9 to 10 per cent. A positive margin of that size doesn’t occur too often in the market place, so it is a good time to buy commercial investment property,’’ he said.