QIC wants to triple $500m convenience retail fund

“Low vacancy rates and the lack of new development is leading to some outstanding opportunities for returns in stabilised retail assets, particularly in the everyday retail space,” QIC’s managing director of real estate Deborah Coakley said.

“This fund has consistently outperformed benchmark through economic cycles, and sharpening its focus on everyday retail allows us to leverage the current market dynamic and tap into the resilient income profile these assets enjoy, driven by stable tenant and customer demand.”

The rebranded open-ended fund focuses on the non-discretionary retail market by holding assets in locations locals habitually shop. Five of the fund’s initial six seed assets are in Queensland and one is in NSW, but it will look at all areas with strong population growth and retail spending.

As Australia’s super funds grow in size, they are playing an increasingly large role in influencing real estate funds management.

QIC’s newly rebranded everyday retail fund complements a separate fund, the $4.5 billion QIC Town Centre Fund it has managed since 2002, and this would allow its super fund customers a range of retail property opportunities, Coakley said.

“They want to be able to invest in distinct strategies and then do that diversification themselves,” she said.

The fund is also building up its war chest by selling fund assets that don’t fit the new profile, such as a 12-level office building in Sydney’s lower north shore suburb of St Leonards.

The building at 1 Chandos Street, with 7625 square metres of net lettable area and 95 secure basement car spaces, sits between St Leonards Train Station and the Crows Nest Metro that opened last year. It has a price guide of $45 million, market sources said.

Cushman & Wakefield’s Bridhe Woods and Stanton Hillier Parker’s Bevan Kenny have been appointed to market the asset.

It was a good time to focus on smaller-scale retail, agency Colliers’ Asia Pacific head of retail capital markets Lachlan MacGillivray said.

“Regional and neighbourhood centres have led the post-pandemic recovery in income return growth, outperforming both office and industrial sectors,” MacGillivray said.

“This outperformance has been a key driver of heightened investor interest, with these centres accounting for 53 per cent of total core retail transaction volumes since 2020. Their strong income profiles, underpinned by resilient tenant demand and sustainable occupancy costs, continue to position them as highly attractive investment opportunities.”

Larger shopping centre assets – more exposed to discretionary spend – have struggled to recover while smaller centres have improved, said Ben Martin-Henry, head of private assets research at data provider MSCI.

“Super and major regionals, once dominant, have delivered modest long-term returns of 3.6 per cent annualised over 10 years, while neighbourhood centres outperformed at 6.5 per cent over the same horizon,” Martin-Henry said.

“Over the past three years, subregional centres have delivered the strongest performance at 5.2 per cent annualised, while neighbourhood centres, despite volatility, continue to demonstrate structural strength with 6.3 per cent annualised returns over five years.”

MSCI’s latest figures to June 2025 show annualised one-year results ranged from 7 per cent for regionals to 8.7 per cent for subregional shopping centres.

Five of the seed assets in the QIC fund – Big Top Shopping Centre at Sunshine Coast, Kippa-Ring Shopping Centre at Moreton Bay, The Village Upper Mount Gravatt in Brisbane, Nerang Mall in Gold Coast and Pittwater Place at Mona Vale in NSW were convenience-focused and classed as neighbourhood centres under the Property Council of Australia’s definitions of shopping centres, Martin-Henry said.

Forest Lake Shopping Centre in Brisbane was classed as a subregional centre as it was anchored by three supermarkets and a discount department store, he said.

Clean Energy Finance Corporation head of property Michael Di Russo said the federal government body was investing in the fund as it created an opportunity to improve the energy efficiency of retail assets that were often the largest users of power in their community but often lacked the sustainability investment of larger centres.