Article | Intelligent Investment
Business Insights | Retail Built to Endure: The Resilience of Australian Shopping Centres
Delivering income stability in uncertain markets, Australian shopping centres are benefiting from strong population growth, limited new supply and healthier tenant economics, positioning retail as a defensive, future-ready asset class with resilient, income-led returns.
May 26, 2026
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In an environment characterised by interest‑rate uncertainty, elevated construction costs and evolving consumer behaviour, the retail sector has demonstrated a capacity not just to adjust, but to remain resilient and excel.
With rebased rents, essential‑led tenant mixes, constrained supply and income‑aligned growth, Australian shopping centres are structurally better positioned to absorb volatility than at any point in the past decade.
For investors seeking stable income, inflation alignment and defensible cashflows, CBRE believes retail is no longer just resilient, it is strategically well positioned for the next phase of the cycle.
CBRE’s 2026 Australian Shopping Centres Outlook points to a market supported by structural demand growth, limited new supply, healthier tenant economics and improving income fundamentals, key attributes of a resilient real estate asset class.
This “triple boost” is expanding the retail spend pool in a way that is structural rather than cyclical, underpinning expenditure across essential, food, services and experience-led categories that dominate modern shopping centres.
CBRE’s Pacific Head of Research Sameer Chopra said, “We estimate there will be another 1.9 million Australians working, each earning an extra $40,000 pa over the next decade. A material share of this incremental $1,000 billion of consumer income will find itself into goods, services and home expenses. This is the bedrock of Retail.“
High construction costs and feasibility challenges have significantly constrained new projects, while shopping centre GLA per capita is declining nationally. Together, these conditions are lifting productivity across existing centres and reducing competitive pressures.
“The shopping centre GLA per capita is 0.69, low by global standards, and we see limited scope to build competing product. In turn this allows for more productive shopping centres, with the majority exhibiting sales performance of at least $9,000/square metre.” says Sameer.
These conditions are supporting consistent re-leasing spreads and providing landlords with clearer income visibility.
Sameer noted, “Since 2023, we have seen a consistent pattern of positive re-leasing spreads. At sub 5% vacancy, most landlords have also managed to re-lease under-performing tenancies with higher performing retailers.”
Neighbourhood centres have delivered 9.4% per annum returns over the past decade, while CBRE forecasts regional shopping centres to generate ~9% per annum over the next three years, led primarily by income growth.
CBRE’s Pacific Head of Retail Capital Markets Simon Rooney says, “Return profiles for shopping centres are considered more resilient relative to other commercial asset classes, due to the diversity of income streams, re-based income levels, shorter lease terms providing opportunity for positive leasing spreads together with fixed income growth mechanisms, offering a buffer against volatility and economic headwinds. Importantly, landlords can actively curate and remix tenancy profiles, driving income growth and create ancillary revenue stream, further strengthening the sector’s defensive characteristics and long-term investment appeal.”
Retail is increasingly being viewed as defensive infrastructure aligned to daily consumer needs rather than discretionary exposure.
"Both domestic and global capital is actively reallocating back into the Australian retail sector, driven by renewed conviction, compelling risk-adjusted returns, and an increasingly competitive market, with offshore capital typically partnering with domestic managers. While investor sentiment remains positive, demand is becoming asset-specific, with income sustainability and future growth central to overall pricing. High-quality, core metropolitan assets anchored by non-discretionary spending and strong covenants attract significant interest, whereas secondary assets are facing greater scrutiny on pricing, capex, and execution risk," Simon noted.
While not universal, this optionality enhances the strategic appeal of high-quality assets.
Simon highlighted that, "The inherent optionality in shopping centre landholdings, particularly those occupying land rich sites within metropolitan locations close to major transport infrastructure offers unparalleled flexibility and scale, as witnessed in the CBRE managed sale process for a 50% interest in Bankstown Central, which JY Group purchased for $318.6 million in 2025. Investors are taking a longer-term view on the likely mixed-use future value-add potential, with a clear focus from State and Federal governments to utilise major sites with exceptional amenity already in place.”
With rebased rents, essential‑led tenant mixes, constrained supply and income‑aligned growth, Australian shopping centres are structurally better positioned to absorb volatility than at any point in the past decade.
For investors seeking stable income, inflation alignment and defensible cashflows, CBRE believes retail is no longer just resilient, it is strategically well positioned for the next phase of the cycle.
CBRE’s 2026 Australian Shopping Centres Outlook points to a market supported by structural demand growth, limited new supply, healthier tenant economics and improving income fundamentals, key attributes of a resilient real estate asset class.
Structural Demand Is Anchoring Performance
Australia’s retail sector continues to benefit from a powerful alignment of population growth, rising employment and improving household incomes. CBRE forecasts total retail sales will grow to $530 billion by the end of the decade, supported by a larger and wealthier consumer base.This “triple boost” is expanding the retail spend pool in a way that is structural rather than cyclical, underpinning expenditure across essential, food, services and experience-led categories that dominate modern shopping centres.
CBRE’s Pacific Head of Research Sameer Chopra said, “We estimate there will be another 1.9 million Australians working, each earning an extra $40,000 pa over the next decade. A material share of this incremental $1,000 billion of consumer income will find itself into goods, services and home expenses. This is the bedrock of Retail.“
Constrained Supply Is Reinforcing Defensive Performance
While demand continues to build, supply remains tightly controlled. CBRE estimates just 0.7 million square metres of new shopping centre supply between 2026 and 2028, with the majority skewed toward neighbourhood developments.High construction costs and feasibility challenges have significantly constrained new projects, while shopping centre GLA per capita is declining nationally. Together, these conditions are lifting productivity across existing centres and reducing competitive pressures.
“The shopping centre GLA per capita is 0.69, low by global standards, and we see limited scope to build competing product. In turn this allows for more productive shopping centres, with the majority exhibiting sales performance of at least $9,000/square metre.” says Sameer.
Stronger Retailers Are Supporting Income Stability
Retailer fundamentals have also improved meaningfully. Occupancy cost ratios across regional and sub-regional centres remain below pre-2020 levels, particularly within fashion and services. Sector margins are holding firm, hiring has stabilised and vacancy remains tight, with nearly 60% of centres operating below 5% vacancy.These conditions are supporting consistent re-leasing spreads and providing landlords with clearer income visibility.
Sameer noted, “Since 2023, we have seen a consistent pattern of positive re-leasing spreads. At sub 5% vacancy, most landlords have also managed to re-lease under-performing tenancies with higher performing retailers.”
Returns Are Shifting to an Income-Led Model
The current cycle marks a transition for retail investment returns. Rather than relying on yield compression, returns are increasingly driven by rental growth, an important distinction in a higher-rate environment.Neighbourhood centres have delivered 9.4% per annum returns over the past decade, while CBRE forecasts regional shopping centres to generate ~9% per annum over the next three years, led primarily by income growth.
CBRE’s Pacific Head of Retail Capital Markets Simon Rooney says, “Return profiles for shopping centres are considered more resilient relative to other commercial asset classes, due to the diversity of income streams, re-based income levels, shorter lease terms providing opportunity for positive leasing spreads together with fixed income growth mechanisms, offering a buffer against volatility and economic headwinds. Importantly, landlords can actively curate and remix tenancy profiles, driving income growth and create ancillary revenue stream, further strengthening the sector’s defensive characteristics and long-term investment appeal.”
Capital Is Returning, Drawn by Stability
Investment activity rebounded strongly in 2025, with CBRE observing renewed interest from institutional and offshore capital. Despite elevated bond yields, retail cap rates have adjusted more moderately than other sectors, reflecting confidence in the durability of income streams.Retail is increasingly being viewed as defensive infrastructure aligned to daily consumer needs rather than discretionary exposure.
"Both domestic and global capital is actively reallocating back into the Australian retail sector, driven by renewed conviction, compelling risk-adjusted returns, and an increasingly competitive market, with offshore capital typically partnering with domestic managers. While investor sentiment remains positive, demand is becoming asset-specific, with income sustainability and future growth central to overall pricing. High-quality, core metropolitan assets anchored by non-discretionary spending and strong covenants attract significant interest, whereas secondary assets are facing greater scrutiny on pricing, capex, and execution risk," Simon noted.
Optionality Adds a Further Layer of Protection
Beyond income durability, select shopping centres offer longer-term resilience through embedded optionality. Larger, well-located sites can support mixed-use intensification, particularly residential integration, providing future flexibility and downside protection.While not universal, this optionality enhances the strategic appeal of high-quality assets.
Simon highlighted that, "The inherent optionality in shopping centre landholdings, particularly those occupying land rich sites within metropolitan locations close to major transport infrastructure offers unparalleled flexibility and scale, as witnessed in the CBRE managed sale process for a 50% interest in Bankstown Central, which JY Group purchased for $318.6 million in 2025. Investors are taking a longer-term view on the likely mixed-use future value-add potential, with a clear focus from State and Federal governments to utilise major sites with exceptional amenity already in place.”
