Real estate agents say the lack of available space in the region's traditional industrial areas, including Caringbah and Taren Point, is driving the shift.

Matthew Herrett of Jones Lang La Salle, a commercial real estate agency, said many shire-based companies were getting "pushed out'' because of high prices.

"What we are seeing is a push-pull trend, where the demand and supply is having a significant impact on the industrial market,'' Mr Herrett said.

"More recently, those areas have become fully developed, which means land supply remains scarce.''

He said Kurnell had "suffered with a stigma'' attached to the desalination plant and the suburb's distance from other areas, but it had excellent potential for business growth.

"There is an abundance of cheap land because so much of it has been unlocked it's an affordable alternative to popular Sydney sites such as Waterloo or Alexandria.''

He said the availability of industrial space would bring more business back into the area.

"This is a positive boost for the shire economy and will provide employment opportunities,'' Mr Herrett said.

Mark Parsons, the business owner of BCSands at Taren Point, said he had considered establishing his business at Kurnell but decided the location was not ideal.

"We were lucky to get this place because there aren't many left. It's just about developed out, but we have to be central,'' Mr Parsons said.

Ray Miller of L.J. Hooker Commercial Sutherland Shire said Kurnell had potential, but the short-term capital growth investment for small businesses was not viable.

"I can't think of too many people who haven't been affected by the economic downturn, so the demand for strata factories is considerably down,'' Mr Miller said.

"The market was hot about three years ago but as people have become less secure about their job, confidence has decreased.''