Business Insights | Why shopping centres are set to be one of the strongest investments in 2026

Retail was the standout performer in 2025. According to CBRE Capital Flows data, retail transactions increased nearly 34% year‑on‑year, totalling $12.7 billion, the highest volume of transactions since 2021 when transaction volumes reached $13.2 billion.

The resurgence in investor confidence in the Australian regional retail market was evident with $6.9 billion worth of super regional, major regional and regional centres transacting in 2025, the highest volume of transactions on record and an increase of 148% YoY says Simon Rooney, CBRE’s Head of Retail Capital Markets, Pacific.

Major deals completed in 2H 2025 totalling $4.6 billion include

• Bankstown Central (50%) – sold to JY Group, Top Ryde City (100%) – sold to MA Financial and Keppel REIT
• Two tranches for Westfield Chermside (25%) sold to two separate Dexus managed funds
• Hyperdome SC (100%) sold to MA Financial
• Westfield Sydney (19.9%) sold to ART
• Erina Fair (100%) sold to Fawkner Property

CBRE Research also shows that investor interest is broadening. Both domestic and offshore capital are actively reallocating back into the retail sector, driven by renewed conviction in the outlook, compelling risk-adjusted returns, and an increasingly competitive market environment which we expect to continue through 2026.

Consumption strength driving performance

The most powerful driver of retail performance is consumption.

CBRE’s Pacific Head of Research, Sameer Chopra, says the decade ahead is set to deliver
a significant demand uplift across the entire retail spectrum.
 
"Australia’s population is expected to grow by 4.4 million by 2035, with the workforce expanding by an additional 1.9 million people," he says.

"Average wages are projected to rise from $105,000 to $144,000. Combined, this adds nearly $1 trillion in incremental income, much of which flows directly into residential, retail and everyday services."

This momentum is already visible in the data.

Retail spending reached $450 billion in 2025 and is forecast to climb to $530 billion by 2030. Food and dining categories, which now anchor shopping centre visitation, continue to demonstrate resilience and growth, with food spend outperforming discretionary categories and remaining firmly e‑commerce‑resistant.

Low vacancy and a tight supply pipeline

Vacancy across regional shopping centres remains exceptionally tight at around 2.0% in many markets.

This stability is reinforced by:

• Limited new supply: Most future developments are restricted to refurbishments.
• High construction costs: This has risen ~30% over five years, challenging new builds.
• Strict planning regimes: These protect incumbent shopping centres.
• Strong demand for food, dining, services and mini‑majors

As employment growth, migration and urban density rise, demand for convenience‑based centres and well‑anchored regionals remains robust.

"The only meaningful supply entering the market is via redevelopment of existing centres or new smaller neighbourhood and supermarket builds typically being completed by Coles, Woolworths or Bunnings," says Rooney.

Rebased rents and strengthening yields

Another tailwind for retail is the reset in rental levels during the COVID pandemic period where average rents adjusted by roughly 20% to 25%, and as these spaces are released, they are achieving mid‑single‑digit rental uplifts – a trend CBRE expects to continue across 2026.

At the same time, yields are tightening, with compression of 25 bps to 50 bps expected across regional centres, sub‑regionals and large format of retail as demand continues and limited stock is being offered to market.

This tightening reflects not only improved income confidence but also the absence of new competing supply and the rebasing of values between 2018 and 2022, which has given new capital attractive entry points.