Australia’s retail property market continued its steady recovery through the September quarter, with renewed investor confidence driving momentum across shopping centres and large-format retail assets. While consumer conditions remain mixed, the third quarter of 2025 underscores a market that is adjusting to lower interest rates, stabilising demand, and a renewed appetite for income-producing assets.
National Trends
CBRE’s latest Australia Retail Figures Q3 2025 report reveals that retail transaction volumes reached $2.1 billion across 38 deals, the highest year-to-date total since 2016. The bulk of activity was concentrated in Neighbourhood, Sub-Regional and Regional centres, reflecting investor confidence in non-discretionary retail and strong tenant retention.
Yields compressed across all major retail segments, led by Regional centres (down 9 basis points) and Large Format Retail (down 6 bps). Neighbourhood and Sub-Regional centres followed closely, with tightening between 5 and 6 bps as private investors, syndicates and REITs competed for limited stock.
Rents are trending upward, Regional centres saw the sharpest quarterly rise at +1.3%, while Sub-Regional and Neighbourhood centres grew between 0.5% and 0.9%. Demand continues to be driven by food, medical, and service-based operators rather than purely discretionary retailers.
Across the board, foot traffic is strengthening in well-located centres, aided by migration, population growth in outer-metro corridors, and returning tourism.
Opportunities
Landlords: Reposition ageing assets toward experience-driven and service-anchored formats. With consumer spending rebounding in key categories, proactive upgrades and tenant curation can lift asset performance and valuation.
Investors: Yield compression highlights continued demand for quality. Regional and Neighbourhood centres offer stable income and liquidity, while Large Format assets remain in favour for their strong covenants and low vacancy risk.
Retailers/Occupiers: Expand selectively in high-growth corridors where population and infrastructure trends align, particularly in outer Sydney, South East Queensland, and Perth.
The Outlook
Australia’s retail investment market is entering a more confident phase. Lower borrowing costs, limited supply, and the resilience of essential retail are creating a foundation for sustained growth into 2026.
As CBRE’s data suggests, yield compression and steady rent growth are setting the tone for the next phase of retail investment. The coming year will reward those who act early, landlords repositioning assets, investors securing well-located centres, and retailers capitalising on the evolving balance between experience, convenience, and value.
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