How this Wollongong property is setting the scene for Illawarra investors
Income-focused assets are underpinning Illawarra property confidence
It is a rare chance to buy an investment property near the beach and within a transport-oriented development zone, with 1 Park Street in North Wollongong emerging as an early indicator for the Illawarra property market heading into 2026.
The block of 19 units across two buildings is a “unique” find, combining established rental income with longer-term development potential, said Colliers Wollongong Associate Director of Investment Services, Taleah Thomas.
“It’s a strong investment as it stands,” she said, noting that most of the units have been internally renovated and are occupied by long-standing tenants.
“At the same time, it sits within a Transport-Oriented Development precinct, which creates future uplift potential.”
The Park Street listing comes to market as new data points to increasing stability across the Illawarra commercial investment sector, despite ongoing uncertainty around interest rates and construction costs.
Ms Thomas said the Park Street property was attracting a “diverse pool of buyers”, with some investors interested in holding onto the property until development conditions improve.
“We have buyers who are looking at holding it as an investment, but we also have developers who are interested in increasing the building space on the site. For developers who have a strong pipeline, this provides a perfect future opportunity.”
The interest in Park Street comes as the Reserve Bank of Australia lifted the cash rate to 3.85 per cent, indicating inflation is expected to remain above target until early 2027.
Ms Thomas said analysis from Colliers’ annual commercial investment report showed that the Wollongong and Shellharbour investment market had remained resilient across multiple economic cycles, including COVID, peak inflation, and interest rate fluctuations.
“Our yields have stayed remarkably consistent,” she said. “Even when rates peaked at 4.35 per cent, we didn’t see yields blow out because the fundamentals remained strong.”
“Our local market doesn’t react to national cycles. We’re absorbing them, and that is giving investors confidence. We are positioned for a mature, balanced and resilient commercial market, and we’re ready to help clients capitalise on that.”
According to the report, average commercial yields in Wollongong have held within a narrow band of roughly 5.5 to 5.7 per cent over the past five years. Over the same period, more than $1.1 billion in commercial transactions were recorded, including the $402 million sale of Wollongong Central in 2021.
After that transaction is removed, the market has averaged about $118 million in annual sales.
Elsewhere in the Illawarra, development sites are also attracting attention, with a clear shift toward lower-density outcomes.
Land, formerly used by the Slovenian Catholic Church, on the Princes Highway at Figtree, sold for $3.25m on Thursday, February 5.
It generated more than 100 enquiries ahead of the auction, driven largely by townhouse developers.
Construction costs remain a constraint. Build rates that were around $4,500 per square metre several years ago are now closer to $7,000, a shift Ms Thomas described as “the new norm”.
As a result, she said confidence around 2026 is strongest in established, income-producing assets rather than speculative construction.
“The positive outlook really applies to commercial investments with tenants already in place,” she said. “The construction market is tougher, but for income assets, the signals are much more stable.”