A critical incident has been declared in Sydney after a man died after falling from a unit balcony while he was being pursued by police.

Police allege the man robbed a nearby grocery store with a knife before he fell from the home in Surry Hills about 9.10pm yesterday.

CCTV from a shop on the next street shows a man in a mask wielding a large knife.

The man allegedly threatened two people in the shop around 8pm yesterday and took a cash register.

Shop owner Faris Alwiswih said a customer in the shop tried to stop him using a mop.

“We refused to give him him any cash, he took the whole cash register and ran away from the shop,” Alwiswih said.

Police headed to the apartments in Belvoir St an hour later as part of their investigations.

When officers entered the unit block a man, believed to be involved in the earlier alleged armed robbery, ran from police towards a unit balcony before jumping and falling five stories, according to police.

He was rushed to hospital but died on the way.

During the incident, police also arrested a 21-year-old woman who allegedly closed the unit door on officers after the man ran from police.

She has been charged with offences including robbery.

A critical incident team from Inner West Police Area Command will investigate the circumstances surrounding the incident.

The investigation will be subject of an independent review by the Professional Standards Command and oversight by the Law Enforcement Conduct Commission.

A report will be prepared for the Coroner.