Why retail has emerged as Australia’s most sought-after commercial property
A perfect storm of increasing consumption, tight vacancy and limited land supply has pushed retail to the top of every commercial investor’s wish list in 2026.
Retail transactions surged by almost 20 per cent in 2025 to $11.3 billion, and experts are tipping another big year ahead, particularly in regional areas.
“Regional shopping centres have emerged as a highly sought-after investment class,” said Simon Rooney, CBRE’s head of retail capital markets, Pacific.
“Values have recalibrated post-COVID, and the sector offers strong performance fundamentals, underpinned by minimal new supply, increasing population off the back of high immigration, and strict planning regimes, which protect incumbent regional shopping centre assets.
“In 2025, we saw an almost insatiable demand to buy retail assets as evidenced by transaction activity picking up by nearly 20 per cent.
“Investors have picked up on multiple themes including rising consumption, tight vacancy, shrinking supply, reset rents and attractive valuations.”
Population growth will be the major driver of the strong performance in regional shopping centres, with Australia’s population expected to rise by 4.4 million by 2035.
Economic conditions are further boosted with a predicted increase in the average wage from $105,000 to $144,000 per annum and a workforce that’s set to add an extra 1.9 million workers by 2035.
Based on this, CBRE forecasts consumers will go on a retail spending bonanza, up from $450 billion in 2025 to $530 billion by 2030.
On the back of this predicted consumer confidence, rental growth for Australian shopping centres is tipped to be in the mid-single digits through 2026, with Perth expected to outperform at high single-digit growth.
Regional shopping centres investing in experience-based shopping and dining are performing stronger than most.
Owners redeveloping or refurbishing their retail centres are also reaping the benefits, said Chris Huxter, head of commercial property at buyer’s advocacy firm InvestorKit.
“Quality is being protected by active ownership,” said Huxter. “I’m seeing more reinvestment, more refurbishment, and more focus on mix. A good example is the Woolworths-anchored centre in Mount Gambier.”
The Woolworths in Mount Gambier, South Australia, which underwent major renovations in 2018, recently sold for $26.7 million.
A similar success story can be found in Raymond Terrace, NSW, where the Woolworths on Sturgeon Street sold for $44.1 million in August last year, reflecting a passing yield of 6.37 per cent. The store had been refurbished in 2022, and the business was committed to a 2032 lease.
Like their city counterparts, owners of regional retail hubs have found innovative ways to compete with online shopping platforms, Huxter said.
“Groceries, coffee, pharmacy, quick meals, services – these are the offline parts of life that e-commerce can’t fully replace,” Huxter said.
“The centres that keep leaning into that mix should keep outperforming in 2026, and any improvement in confidence becomes an added tailwind.”
Canny investors are also drawn to retail because of tight supply. A scarcity of suitable land, high construction prices and complex planning regulations mean there is only a trickle of newcomers to the space.
Regional shopping centres are expected to perform strongly this year, whether interest rates lift, as widely tipped by economists, dip or stay on hold.
“The fundamentals of well-located, needs-based retail should remain solid,” Huxter said.
“Rate moves will change the pace of transactions and the edges of consumer spending, but not the core need for brick-and-mortar retail in growing regional communities.”
