Commercial investment properties in the Sydney market rose to new heights off the back of the pandemic. In recent months, property prices have started to soften due to 10 consecutive interest rate rises. As a result we have seen an improvement in the yield for investors looking to purchase now. 12 months ago the average yield in Sydney across all asset classes was around 4-5%. It’s now 4.5-5.75% for the same set of properties. This now represents value to some investors. Especially considering that many believe that we are close to the peak of this interest rate cycle and there is a high amount of rental growth on offer. This rental growth has been driven by low supply and high inflation.
In this article, our specialists at Rethink Investing will explore some of the best suburbs to invest in Sydney.
Why Choose Commercial Property Investments in Sydney?
Commercial property is one of Australia’s leading investment options for capital growth and high-cash-flow assets. Investors can negotiate longer lease agreements with annual rental increases worked into contracts, as well as enjoy a sense of tenant security from larger organisations.
You can learn more from our commercial property buying guide for investors, but the key is to find a location that supports your investment property goals and strategy. Sydney is a thriving metropolitan city and is considered by many to be the commercial capital city of Australia. Strong economic growth and a diverse population lead to a high demand for commercial sites in the Sydney property market, creating an enviable average yield and higher capital gains.
Best Suburbs to Invest in the Sydney Market for Rental Yields & Capital Growth
From growing business hubs just outside of the CBD, to the state’s very own budding ‘Silicon Valley’ hosting a variety of multinationals, there is a range of opportunities for commercial real estate across Sydney found in many leading inner and outer suburbs, including:
Parramatta
Located 25 km west of the central business district, Parramatta has come to be known as the second CBD of Sydney. Thanks to a string of upcoming infrastructure investments and future developments across the health, finance and government sectors, the City of Parramatta estimates the area’s economic growth to rise from 2.4% per annum up to 4.6% by 2026, worth $30 billion. Moreover, the 2025 commissioning of the Western Sydney Airport is set to increase visitors by up to one million people each year.
Boasting excellent transport links, including bus, train, and ferry services, the area’s population is also growing at twice the rate of NSW (2.44% vs 1.37%), demonstrating clear demand to live and work in the local area.
Surry Hills
Surry Hills is just one kilometre directly south of the Sydney CBD, offering an eclectic mix of commercial real estate, creative industries and multicultural residents.
As a central location, residents and visitors demand a constant stream of new hospitality venues, including restaurants, cafes, bars and more. Surry Hills is also renowned for its creative and technology-oriented industries, including design, media, advertising, and start-ups, fostering a dynamic and collaborative environment and generating various commercial investment opportunities, such as office spaces, co-working facilities, and specialised services tailored to the needs of these industries.
There is a slew of mixed-use, freehold spaces along busy retail strips, modern office spaces, showrooms and more, making Surry Hills an excellent option for property investors.
Marrickville
Marrickville is an inner-west suburb located just seven kilometres from Sydney’s CBD, situated on the northern bank of the Cooks River. This gentrified area offers a terrific mix of commercial and light-industrial areas, as well as being home to a vibrant multicultural community with a flourishing arts scene.
Marrickville is well-connected to the rest of Sydney, with excellent public transport links. Thanks to a growing population and strong local economy, it is no wonder Marrickville is experiencing a surge in buyer demand for commercial real estate.
Alexandria
Located in the inner south of Sydney, Alexandria is an up-and-coming suburb with significant commercial developments. It was once an area known for factory and industrial shift workers, but has since evolved to offer a range of sought-after Sydney commercial real estate, including office spaces, warehouses, and showrooms.
Alexandria also boasts a thriving creative community, welcoming a new slate of galleries, studios, and design agencies in the area. With its proximity to the CBD, growing commercial developments, and lucrative yields on offer, Alexandria can prove an ideal spot for investment properties in Sydney.
Macquarie Park
Macquarie Park is found 12 km northwest of the CBD and has become a bustling commercial hub with significant developments in the area, growing to be Sydney’s second-largest business district. It is home to the offices of some of the largest multinational corporations in the world, such as Microsoft, Optus, Sony, Johnson & Johnson and more.
Over 40% of the occupants in Macquarie Park work across the health, technology, science and education sectors, adding to the reputation as NSW’s ‘Silicon Valley’. This strategic location offers a higher rate of exposure than many other areas, creating strong demand among tenants and allowing for a lucrative investment position within the Sydney market.
Coogee
Coogee is a popular beachside suburb sitting just 8 kilometres southeast of the Sydney CBD. It offers a bustling commercial scene, with a selection of multi-storey retail shops, modern offices, and hospitality spots available within high-populous areas, as well as a variety of new infrastructure projects coming to fruition in the near future.
For example, the South-East Light Rail project, worth over $2.2 billion, is expected to positively impact the median price of properties, thanks to the 12 km light rail network connecting Kingsford and Circular Quay.
Kingsford
Located in the eastern suburbs, Kingsford is a growing residential hub situated 7 km southeast of the CBD with a range of opportunities that have made it an attractive destination for commercial investment. Offering a unique blend of urban amenities and natural beauty, this thriving suburb provides an ideal environment for businesses to flourish.
The suburb is well-connected by public transport, including bus services that connect to the CBD, Bondi Junction, and other key locations. Moreover, with a steadily growing population, Coogee attracts both local and international tourists due to its stunning beaches, coastal walks, and lively atmosphere, fuelling demand for retail, hospitality, and entertainment services.
Kensington
Nestled within the local government area of the City of Randwick, Kensington is a growing suburb 6 km southeast of the Sydney CBD. Its proximity to the city’s centre, major business hubs, and transportation links make it a highly desirable location for businesses and investors. The upcoming Sydney Light Rail project will also further improve Kensington’s accessibility,
The presence of UNSW and the Randwick Health and Education Precinct contribute to Kensington’s robust local economy. The influx of students, healthcare professionals, and visitors supports various industries, such as retail, hospitality, and professional services. As such, investors can select from a broad array of commercial property options to meet their investment goals, such as office buildings, mixed-use developments, and specialised facilities.
Sydney Real Estate & Investment Management Experts
When investing in commercial property in Sydney, it pays to have the right experts on your side. Rethink Investing are a leading commercial buyer’s agent in Australia with expertise in commercial real estate across metropolitan and regional areas. With a team offering over 110 years of combined experience and a proven track record of success, we can help you identify the best suburbs to invest in Sydney to maximise your returns.
For more information, speak with our team today.
