There's Something About Sydney

Waterloo's swift turn from light-industrial wasteland to buzzy arts district has happened so fast that the neighborhood isn't even listed in most guidebooks or on tourist maps. But it's only 20 minutes by taxi from the Central Business District (CBD), or a 15-minute walk south of Surry Hills. "This is the new hip bohemian area," says Beatrix Van Dissel, a salesclerk at Salvage, a six-month-old store stocking antiques and intriguing objets d'art, such as a 1920s Argentinian glass candy dispenser.

A decade ago, however, Waterloo was nothing but warehouses and a few public-housing buildings. "There would've been no point to come before, unless you wanted to buy a washing machine or whatever," says Barry McDonald, whose Italian-style grocery Fratelli Fresh is an icon of Waterloo's growth spurt. After selling an online-grocery operation to a giant supermarket chain, Barry and his brother Jamie chose a Waterloo printing factory for their latest ...