CBRE’s latest Business Insights report points to strong spending, tight supply and increased investor activity across the sector.
Transaction volumes across the category in 2025 increased by almost 34% year-on-year to $12.7 billion - the highest level since 2021.
Regional retail was the standout performer, up 148% to $6.9 billion.
The underlying driver is consumption, according to CBRE’s Pacific Head of Research, Sameer Chopra.
“Australia’s population is expected to grow by 4.4 million by 2035, with the workforce expanding by an additional 1.9 million people," Mr Chopra said.
“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.”
That growth is already feeding through. Retail sales reached $450 billion in 2025 and are forecast to climb to $530 billion by 2030.
Food – described as the “engine room” of shopping centres - continues to drive visitation, dwell time and cross-spend, and is growing at a +4.7 per cent compound annual growth rate (CAGR).
On the supply side, conditions remain very tight.
Vacancy in shopping centres and large-format retail is expected to stay below 5 per cent, with many regional centres currently sitting around 2 per cent.
With construction costs up around 30% over the past five years, most future supply is limited to refurbishments rather than new builds. What new supply is entering the market is largely smaller format.
“The only meaningful supply entering the market is via the redevelopment of existing centres or new smaller neighbourhood centres, and supermarket builds typically being completed by Coles, Woolworths or Bunnings,” said Simon Rooney, CBRE’s Head of Retail Capital Markets, Pacific.
Looking ahead, the report suggests steady consumption growth and limited new supply will support tight vacancy, improving leasing outcomes and further yield compression across regional centres and large-format retail in 2026.
Market Snapshot:
- Transaction Growth: Retail transactions rose 34% in 2025 to $12.7 billion, reflecting strong investor demand across the sector.
- Regional Surge: Regional centres hit a record $6.9 billion in transactions (+148% year-on-year), making them the standout segment.
- Spending Outlook: Retail spending is forecast to reach around $530 billion by 2030, driven by ongoing population and income growth.
- Tight Vacancy: Vacancy sits below 5 per cent across shopping centres and large-format retail, with many regional centres closer to 2 per cent.
- Supply Constraints: New supply remains heavily constrained by rising construction costs and planning limitations, restricting development to refurbishments and smaller-format projects.
- Yield Compression: Yields are expected to compress further in 2026, supported by tight supply conditions and continued investor demand for retail assets.
