All shopped out: Where to next for Australia’s retail property sector?

Author: Peter Rose


If the UK experience is anything to go by, many local malls and shopping strips face an uncertain future.

It’s been said that distance gives perspective; perhaps even greater objectivity than you’re able to muster when you’re in the thick of things. Returning to the Antipodes in August 2022, after several months working to establish Forbury’s headquarters in London, I was immediately struck by the number of empty and boarded-up shops in capital city central business districts and malls around the country.

The statistics tell the story: retail vacancy rates of 14.9 percent, 18.9 percent and 28.4 percent in Melbourne, Brisbane and Perth, respectively, according to CBRE research released around the time of my return. Only Sydney bucked the trend; its vacancy rate dropping a smidge to 6.9 percent.

Across the ditch, it’s a similarly sad state of affairs, with seemingly every second store on Queen Street, Auckland’s once-bustling main drag, now standing empty.

Retailers in both countries have come to the unfortunate realisation that they can’t turn a dollar, or at least not as many dollars as they need to break even, nevermind make a profit, in the post-COVID environment, and they’re, quite literally, shutting up shop.

Game over?

The economic conditions that have prompted established players to call it a day aren’t giving new contenders the confidence they need to sign multi-year leases. Hence, the dismal sight of hollowed-out inner cities and half-empty malls that don’t look like filling up again any time soon.

Online sales, meanwhile, remain on the up and up. Australians spent an estimated $56.01 billion on online retail in the 12 months to July 2022, according to the NAB Online Retail Sales Index: July 2022. That figure represents around 14.5 percent of the total retail trade estimate.

Wind the clock back to July 2019, and our collective annual spend was “just” $29.33 billion and growing steadily, at the rate of 11.5 percent per annum.

A taste of what’s to come?

A similar scenario has played out back in the UK, only faster and more dramatically, as COVID and the ongoing e-commerce explosion have conspired to keep customers out of the shops.

Over the past two years, shopping centres have sold for 58 percent less than their original purchase prices, according to a recent report from property consultancy Lambert Smith Hampton.

Owners are being forced to ponder the unpleasant question of whether to cut their losses now or hang in there and risk seeing their devalued holdings continue to plummet.

And, with over half the country’s shopping centres considered ripe for demolition or repurposing, developers are, in many instances, eyeing off the prime locations upon which they sit. Prospective uses include last mile logistics, education and residential accommodation.

New and better uses

Will large-scale retail real estate repurposing occur Down Under too? It’s hard to see why it wouldn’t.

Some decidedly non-traditional businesses are already taking root in classical retail heartland — car showrooms where jewellery and fashion shops once sat, in Sydney’s Martin Place and Brisbane’s Indooroopilly Shopping Centre mega mall, for example.

In September 2022, Lendlease general manager of operations for retail development Marnie Devereux reportedly flagged the likely emergence of more mixed developments in the property behemoth’s portfolio.

“Urban growth centres are traditional retail cores on large landholdings,” Ms Devereux told a Property Council Queensland breakfast, according to The Urban Developer.

“They offer opportunities to introduce mixed-use, predominately residential and commercial, and they offer benefits in doing so, particularly when sites are centrally located, have great transport links, have low site utilisation, have surrounding amenities, and beneficial planning fundamentals always help.”

Survival of the strongest

Bottom line: as I see it, retail businesses (and the premises that house them) will eventually fall into one of two categories: those offering high amenity, “experiential” shopping that can’t be replicated online; and the also-rans whose future might best be described as dire.

Local property owners and investors will need a realistic idea of the value of their holdings by using a property valuation tool, and an understanding of how repurposing or redevelopment might affect those values, prior to making some big, brave decisions.

The good news is, those with a little vision and innovation may, in time, find themselves once again in possession of blue-chip assets. At Forbury, we’ll be watching the transformation of this space with interest.


Keen to learn more about Forbury? Contact our AU Sales Manager, Ashley Lane at

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