Investors are paying record sums for local shopping centres anchored by retail giants like Kmart, Coles, Woolworths, and Target. Source: Stonebridge
Australia’s mega-wealthy elite and offshore tycoons are using a clever pricing loophole to quietly snap up the hottest suburban moneymakers, triggering a wild land grab.
In a jaw-dropping market anomaly, investors are shelling out record sums for local shopping centres – driving pricing yields down to a decade low – despite rising interest rates for hubs anchored by retail giants like Kmart, Coles, Woolworths, and Target.
Melbourne’s Burwood One – home to the nation’s iconic 24-hour Kmart and a major Coles – sold off-market for a staggering $210m. Source: Stonebridge
Their now not-so-secret strategy comes down to a simple mathematical imbalance: subregional shopping centres trade at a massive 25 per cent discount compared to smaller neighbourhood centres, and there is now an almost complete freeze on new construction.
That’s put a hard limit on the likeliest candidates for takeover if you are hunting in that space – ensuring a new frenzy as major investors reprice the entire asset class.
Fresh national data from commercial real estate firm Stonebridge flagged there are just eight subregional developments across the entire eastern seaboard that fit the brief, with no new ones planned inside established capital city catchments until at least 2030.
With virtually zero new shopping centres arriving this decade, property tycoons are locked in a high-stakes race with cashed up institutions and offshore buyers to snap up the massive landholdings and bulletproof rental income of the hubs that already exist.
Stonebridge revealed $1.16 billion changed hands across just 11 subregional deals over the past year – because existing owners now simply refuse to sell.
The sudden heat has seen major suburban hubs trade for record sums, headlined by Melbourne’s Burwood One – home to the nation’s iconic 24-hour Kmart and a major Coles – selling off-market for a staggering $210m; alongside Bendigo’s Lansell Square, which fetched $110.1m, and Pialba Place in Hervey Bay that was undisclosed but benchmarked at $65-70m.
Pialba Place Shopping Centre in Hervey Bay was bought for $36m in 2019 and believed to have been benchmarked at $65-70m when it sold recently.
To everyday buyers, accepting a record-low yield in a high-interest-rate market sounds like a loss – but to billionaires, paying top dollar today isn’t about this year’s rent cheque, but a high-stakes play to lock up irreplaceable suburban land before it disappears forever.
Stonebridge national partner Carl Molony confirmed buyers were looking well beyond today’s retail rent roll, actively underwriting the sprawling, low-density land beneath them for future expansion and mixed-use redevelopment.
“The investment case has broadened considerably for subregional centres,” Mr Molony said. “Investors are recognising the value of large retail landholdings, multiple income growth drivers and pricing that remains attractive relative to comparable formats.”
“The fact yields have continued to sharpen despite higher funding costs speaks to the market’s conviction in the long-term fundamentals of the sector.”
Unlike smaller neighbourhood strip shops, subregional centres sit on massive blocks of land with low site coverage, averaging just 38 per cent across the format. That leaves vast chunks of prime, well-serviced land under-utilised as carparks and low-density retail inside established catchments.
Bendigo’s Lansell Square sold for $110.1m. Source: Stonebridge
Stonebridge Partner Justin Dowers said those on the hunt in this severe supply shortage include local tycoons, private syndicates and Asian offshore capital.
“Sub-regional centres occupy a unique position within the retail landscape as large-scale assets at a price point accessible to a genuinely broad range of capital,” Mr Dowers said.
“FY26 deals ranged from $65 million to $210 million, which brings private and high-net-worth buyers, syndicates, institutions and offshore groups into the same contest.”
“When opportunities are this scarce and the value proposition remains this compelling, it’s no surprise that competition will only sharpen.”
Among the surprise elements working in its favour is the centres have held up far better than many expected despite cost-of-living pressures hitting everyday families.
Stonebridge Partner Philip Gartland said retail spending has proven surprisingly durable under pressure.
“Retail spending has proven more resilient than many anticipated, with supermarket anchors on long leases underpinning the sustainable income profile of subregional centres,” Mr Gartland said.
“In addition, with specialty rents that in many cases sit below market, there is real reversion potential to capture. The conversion of under-utilised discount department store space is also one of the most immediate value levers available in the sector.”