While Wollongong's commercial office investment market has performed strongly of late, one analyst believes it has reached the peak of its current cycle.
In property valuation and advisory company Herron Todd White's latest report, their commercial director, South East NSW Scott Russell said the commercial property market across Wollongong has had sustained growth over the past three years.
He said there had been continued strong demand across a broad profile of buyers including investors (high net worth individuals and families) and private and second tier funds from Sydney, interstate and overseas.
"Investors over this timeframe remain enticed to the market by yield arbitrage not typically found in Sydney and other major capital cities, and this has pushed yields to low levels by historical standards," he wrote.
"This is similar to most regional locations across NSW.
"Price point has become less of a factor with strong demand evident for higher valued assets ($5 million and above), while there is good demand for secondary and tertiary quality assets that require immediate capital expenditure and intensive management focus to reposition assets."
Mr Russell noted the record price achieved in 2018 in the Wollongong CBD office market - 90 Crown Street for a $50 million-plus purchase price.
"While sales volumes are down overall, local agents are still reporting continued strong buyer interest," he said.
"This asset class is still attracting capital. Low interest rates and the increased buyer depth have resulted in strong yield compression with rents largely remaining flat over this period.
"For the year ahead, we expect to see some upward pressure being placed on rents, particularly for A-grade space.
"While recent history has been one of high performance, the market is considered to have reached the peak of its current cycle and at this juncture long-term investment strategies and value add opportunities are considered prudent."