After years on the discount rack, bricks-and-mortar retail property has become an investor favourite once again thanks to scarce new supply and higher consumer spending.

Australian retail property transaction volumes reached $7.1 billion during the first half of this year, up 12% year-on-year, according to MSCI.

Retail bucked the broader trend, with total commercial property deal activity retreating 7% during the same period.

Investors have splashed some serious cash on retail this year, including the JY Group’s $670 million acquisition of Westfield Marion in Adelaide and Vicinity Centres’ $212 million purchase of Uptown in Brisbane.

Confidence in bricks-and-mortar retail, once hit by the rise of online shopping, is rebounding as population growth outpaces new retail development, which has been hindered by high construction costs.

Household spending continues to rise nationwide too, increasing 1.1% during July and jumping 7% compared to a year prior, according to the latest figures from the Australian Bureau of Statistics.

John Nockles, commercial real estate agent and director – agency at CVA Property Consultants, said confidence had returned to the sector, with more buyers competing for prime assets.

“Retail has been one of the stronger performing commercial property sectors over the past six months,” he said.

John Nockles of CVA Property Consultants. Picture: Supplied

“The biggest change over the past six months is definitely confidence. Buyers who were retail property investors pre-Covid shifted straight into industrial because of the known narratives around retail, but now they appear more comfortable that the interest rate cycle is stabilising and they are looking beyond today’s cost of debt.”

Mr Nockles said more bidders were competing for the same quality assets, which was supporting prices and putting downward pressure on yields.

“There is a real flight-to-quality story happening, with prime assets continuing to outperform secondary stock,” he said.

“But I wouldn’t be painting all retail with the same brush and saying it’s all flying because there are sections that are very hard to move.”

Vicinity Centres has taken full ownership of Uptown Brisbane. Picture: Supplied

That renewed confidence is being echoed in the debt markets, with finance brokers saying that banks and other lenders were warming to well‑located retail centres.

Jean-Pierre Gortan, managing director at commercial finance broker Simplicity Loans, said lenders and investors were returning due to rising rents and strengthening tenant demand.

“Retail was a very unloved part of the market, with even the banks pulling back,” he said.

“It’s been pretty subdued for quite a long time, and as a result rents have now caught up, which makes it an attractive asset class again.

Simplicity’s Jean-Pierre Gortan. Picture: Supplied

“For a well‑positioned property, whether it’s a high‑street location or a suburban centre, there’s good demand from tenants, which is giving lenders more confidence.”

Yet the rebound comes with caveats.

Anne Flaherty, senior economist at realcommercial.com.au, said the biggest risks that retail investors faced at the moment were tenant failure and rising interest rates.

While household spending continues to rise, Ms Flaherty said cost of living pressures were contributing to Australians cutting back on spending, creating a growing risk for some businesses operating in the discretionary retail space.

Realcommercial.com.au’s Anne Flaherty. Picture: Supplied

“For investor borrowing, higher interest rates can also be a challenge,” Ms Flaherty said.

She said expectations of further interest rate rises had increased recently, which could put pressure on yields and reduce capital values.

“Location is also key when assessing risk and investors should consider the underlying factors driving foot traffic near a particular asset,” Ms Flaherty said.

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Bunnings and Masters have left multiple large-format retail sheds in their wake. Here’s what really drives them out — and who’s racing to move in.

Drive through Australia’s outer suburbs and you’ll pass one: a huge green shed, or a beige one, sometimes red, with a car park built for a footy crowd.

Today’s gym may have sold decking timber a decade ago. A discount store might once have been a hardware megastore — and before that, something else entirely. These buildings never get demolished, just passed on and relabelled.

Take Panda Mart, the international mega-discount chain dubbed ‘Temu in real life’ that now has three stores in Australia. In March 2025, it opened its first on an old Masters site in Cranbourne — to a 1,000-strong crowd so raucous police were called in.

It launched its second in an 8,300sqm former Bunnings in Melbourne’s Preston in September 2025, while a third location took over a Bunnings shed in Rocklea, Brisbane, in August 2026.

When Masters collapsed in 2016 — after Woolworths’ failed bid to break Bunnings’ grip on hardware — the market was flooded with sheds; Charter Hall alone bought six for $187m, leasing them straight back to Bunnings. And as Bunnings keeps upgrading to bigger stores, it leaves fresh vacancies in its wake.

Some have become shopping centres, others mixed-use residential developments. One in West Gosford on the NSW Central Coast briefly became a classic car museum. So why all this movement — and who’s next in line to pounce on the next wave of vacant sheds?

Why retailers move

In most cases, it isn’t retreat — usually the opposite, says Ray White Commercial CEO Julie Ryan. When Bunnings closed its Preston store, it wasn’t pulling out; it opened a $59m rebuild nearby, freeing the old shed for Panda Mart.

“Big-box retail is highly successful in Australia, so vacancies usually appear when a retailer moves to a superior location,” she said.

Retail historian Matthew Bailey says there are usually overlapping drivers, such as changes in the surrounding demographic, growth strategy or a small store outgrowing itself. Bunnings is a prime example.

Established footprint, parking and consumer familiarity can make leasing former Bunnings attractive. Picture: Ray White Commercial

“It developed a lot of smaller ‘home centres’, which helped establish a footprint in any given area, and probably led to the demise of surrounding competing hardware stores. The firm later turned these into large footprint ‘warehouse’ stores,” he said.

Will Goldsworthy, Director of Large Format Retail Leasing at Colliers, says retailers are often leaving the site, not the catchment.

“They are looking to better position their stores to service their existing customer base, whether that means a larger footprint, improved accessibility, or a location that better suits their operating model.”

What makes a good large-format retail site?

According to Ms Ryan, developed or brownfield sites beat empty or greenfield land, hands down; repurposing is far cheaper and faster than building from scratch.

Plus you typically inherit road access, parking, an established population, and zoning that already supports retail.

So why does one ex-Bunnings get snapped up in months (like Preston, taken by Panda Mart) while another sits empty for years (like Cairns, vacant for five years before becoming a pop-up basketball arena)?

Sometimes it’s speed of match. One fast transaction was the former Bunnings at Underwood near Brisbane, taken whole by Area 51 to create a 10,000sqm entertainment centre.

Brownfield sites such as former Bunnings can be more popular for new businesses to move in than greenfield sites. Picture: Ray White Commercial

Other times a site is deliberately land-banked, says Ms Ryan.

“An example of this is the clever purchase of a large number of Masters sites by the Spotlight Group.”

Spotlight bought them not to trade immediately, but to hold — for future use, for another of its brands, or simply as an appreciating asset.

Demand increasing as supply remains tight

With big-box sites scarce — especially in metro markets — landbanking can be lucrative. Demand far outpaces supply, with Ray White Commercial putting vacancy rates in this sector at just 1.5–3% nationally.

New sites are hard to make feasible given construction costs, Ms Ryan says, so tenants tend to be “sticky” — preferring long leases and staying put once a centre gets the basics right.

Panda Mart now occupies the former Bunnings warehouse in Preston, keeping some of the hardware store’s livery. Picture: Supplied

Large-format retail is also unusually resilient, since many people still prefer to see before they buy sight unseen.

That scarcity bites hardest for international newcomers like Costco and Panda Mart.

Mr Bailey says securing sites in Australia is “a highly competitive and complex process” due to rigorous planning legislation — Aldi struggled for years, with Coles and Woolworths having locked up the best sites almost everywhere, and only found a way in by leasing inside shopping centres, letting the centres handle zoning and approvals.

Use of large retail sheds evolving

A decade on from Masters’ collapse, most of its 63 sites have been absorbed — by HomeCo, Spotlight, Bunnings and now Panda Mart. But what moves in next is changing.

As big-box retailers upgrade and relocate, they’re freeing up space for a broader mix of tenants, says Mr Goldsworthy — not just furniture, bedding and discount retailers, but increasingly health, wellness and indoor recreation.

“These operators can take advantage of the scale of large-format buildings without necessarily needing to undertake a completely new development.”

Revo Fitness took over Masters’ very first site in Braybrook, Melbourne. BCF also occupied the space for a time. Picture: Revo Fitness Facebook

Take Area 51’s takeover of the old Bunnings at Underwood, and Masters’ very first Australian store in Braybrook, in Melbourne’s west, now a Home Co centre housing a Revo Fitness gym.

“The broader trend is that these buildings are becoming increasingly adaptable,” Mr Goldsworthy said. “Rather than simply replacing one large-format retailer with another, we’re seeing a wider range of retail, entertainment, recreation and service uses finding ways to make these large footprints work.”

Another decade from now, these sheds could be almost anything.

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OPINION

“So long, suckers,” says Australia’s smiling assassin.

Walking through my suburb’s lifeless pedestrian mall on the way home from work last night, sidestepping tumbleweeds where small businesses are now shuttering on a near-daily basis, I caught the unmistakeable and very pungent whiff of an ill wind.

Look, I’m not a property analyst, nor am I an economist. I have no financial qualifications and no in-depth legislative or property law knowledge either.

So what do I know? Likely nothing. Only time will tell.

But passing another abruptly vacated commercial premise – a boutique clothing retailer located next to a garish pink matcha store whose curious survival until now does nothing to displace its neon-lit announcement of impending doom – I felt an unmistakeable chill down my hunched and withered Gen X spine.

“Uh oh,” I thought. “While everyone’s been distracted by the latest season of MAFs, the nation’s true unholy union has been breeding like rabbits!”

Another abandoned commercial premise.

These two sloppy desperados – our foreign investment laws and the smiling assassin’s new property IED (improvised explosive device) – now look to be wedded in a bad marriage that is, I suspect, going to be uglier to watch than whatever that nasty-sounding MAFS “fingerbang” episode was all about.

Take my suburb, which has had a commercial property problem for a long time.

I first became interested in the proliferation of empty shopfronts years ago, when I read that a group of locals was trying to persuade the new owner of the little local cinema to lease it to them so it could be reopened and serve the neighbourhood cinephiles. How good!

But the new owner was an overseas investor. She didn’t care at all that the property was gathering dust. She didn’t care that the community was permanently without its cinema. Evidently, she still doesn’t care, because all these years later, the cinema continues to sit empty, abandoned and forlorn since September 2013.

Mind those tumbleweeds!

The question of why an overseas investor would buy such a slice of commercial real estate in Australia, only to point-blank refuse to look for tenants to fill it with something people might actually want or need, is a mystery for the ages.

Another sad looking commercial strip. Generic Blacktown photos.

I’ve long assumed it was evidence of an overexposed loophole for wealthy overseas buyers to get their sticky mitts on the real prize: Australian citizenship, and with it access to the nation’s tempting smorgasbord of prestige residential titles, but I checked the relevant bits of the current legislation and that does not seem to be the case. Apparently we do not have a “citizenship by investment” model.

“Curiouser and curiouser,” said Alice.

But we do have foreign investment aplenty in Australian real estate and nothing says “overseas buyer ghetto” quite like these long stretches of long-term shopfront vacancies, now visible everywhere I go and everywhere I look.

If the loophole to foreign investment is that they have to “buy into an Australian business”, then the hole is, in reality, a gaping maw, an ugly, insatiable Sarlacc slurping up commercial property sales with no intention of holding up the “business” end of the bargain.

You can’t miss the fact that commercial sites are languishing in huge numbers.

I don’t know how many of these empty premises are owned by nonresident and non-citizen investors but I suspect it’s a goodly few. And the last tenants were likely sent broke by the rent and overheads because “small business” is often just a euphemism for a couple of dreamers who watched too many Hugh Grant rom-coms featuring charming, quirky little uber niche businesses where no one makes a penny but the owner still gets to marry the biggest star in Hollywood so that’s all right then.

A young, dreamy, Hugh Grant in the iconic film, Love Actually. Photo: YouTube.

In reality, tenants can’t get their landlord to fix anything or lower the rent because the landlord either can’t afford the repairs or to lower the rent or in many cases really, self-evidently, doesn’t want the bother of an actual business operating on the premises. They just want the empty husk, once the Sarlacc has sucked out all the entrails and picked the bones clean.

Is it a problem, at a time when millions of Australians either can’t afford to buy a home or can’t quite afford the repayments on the home they did buy, that we are so willing to sell off untold amounts of real estate to people who don’t even live here and are not Australian, when their buying power and numbers surely must help drive up both commercial and residential property prices?

If you want a glimpse at the monstrous appetite for offloading Australian interests, the mining industry is currently estimated to be 86 per cent foreign owned! Eighty-six per cent! And that’s just mining – we’ve also blithely sold off whole islands, and farms you need a Cessna to see in full, to overseas interests.

Exactly how much of Australia is no longer even Australian at all?

And one of the things suffocated to death in all this – a silent death, because all its victims generally have no pride, no tears, and no more fight left by the end – has to be the nation’s small businesses, because would-be operators either can’t afford to buy the space, or cannot pay the extortionate rental prices for the lots advertised for rent, and nor are they likely to be able to raise overseas owners of empty commercial spaces whether they’re listed as available or not.

Small businesses struggle as commercial properties rent and mortgages become out of reach. Picture: Alan Barber

But that’s not where this problem ends, is it? It takes two to tango. Enter the smiling assassin’s residential property investment policy, skipping down the aisle to join hands with the foreign investment Sarlacc, with Australians merely the unwilling witnesses forced to watch Jim gleefully put a ring on it.

Because now joining all the For Lease signs in commercial zones at the altar of broken dreams is the alarming overnight proliferation of For Sale signs outside residential properties. And they aren’t selling. Homes in my area that guaranteed would have sold before auction at a premium just a couple of months ago are being passed in and the wilting, overlong display of sale signage out front is as shocking as fiction’s famous scarlet letter, only this one screeches SCREWED.

The combined portrait of inactivity in the market is bracing. This is not a scene of economic confidence or prosperity. People are under the pump.

I can’t help but spare a thought for those small operators, like the ones who woefully misjudged the size of the matcha market, but also the local baristas and the woman with the laundry at the end of the street who probably did a pretty solid trade washing and ironing business shirts pre-Covid. Chances are she has never quite recovered – people iron their own shirts now, and many have already stopped buying coffee too.

Jenkins slams Albo’s First Home Buyers Assistance scheme. Picture: NewsWire / Martin Ollman

Even the perpetually packed cafe nearest to our place was empty the other morning. Not a soul in the place during their usually brisk breakfast trade. I’ve never seen that before. Not ever.

Add all that to this morning’s revelations that you don’t even need to be an Australian to access the First Home Buyers Assistance scheme and that’s not the smiling assassin and the Sarlacc’s joyously ribboned vintage wedding mobile driving happily through a thronging community of wellwishers, replete in their own good fortune to be living in the Lucky Country.

No, that’s a runaway clown car, careening out of control and kicking up noxious dust through the whisper quiet, boarded up streets of this sad and nameless place, where Australians’ well-earned retirement plans; decades of hard graft to ensure meaningful intergenerational wealth transfer; years of tough slog to try to reach long-term housing security and the spectre of drained savings caused by repeat bill shock, find themselves gathered shivering around this raging bin fire.

Mmmm. I really don’t think that’s confetti the crowds are throwing at the happy couple as they pass by.

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