In recent months, consumer sentiment had been very low; however, the Westpac-Melbourne Institute Consumer Sentiment Index demonstrated a slight increase in May 2026, up by 3.5 per cent to 83, due to a range of factors, including an easing in the rapid rise of fuel prices of the previous months. Consumers remain deeply pessimistic and indicated ongoing concerns about the economy and the continuing economic and financial impacts of geopolitical conflicts. Homebuyer sentiment declined sharply. Many consumers remain concerned about the challenging year ahead for their personal financial situations and the economy, including expectations of increasing unemployment levels.
Household spending growth has remained low over the past 12 months as consumers spend less on discretionary goods in response to cost-of-living pressures, high inflation, and rising interest rates. The Australian Bureau of Statistics Monthly Household Spending Indicator for April 2026 showed that monthly household spending fell 1.1 per cent from March 2026. Over the year from April 2025, annual household spending rose 4.9 per cent, demonstrating some resilience by consumers. Discretionary spending is likely to remain at low levels as households focus on essentials such as mortgage or rent payments, energy costs, and food.
Reduced retail spending in addition to rising costs such as wages and energy puts pressure on retailer affordability of rents and other outgoings. In many areas of Australia, leasing conditions remain challenging, and downward pressure on rents will continue for some retail tenancies. There are positive signs with increased leasing activity levels evident in many retail precincts, and landlords and tenants are more willing to negotiate to achieve mutually agreeable outcomes.
There has been a significant slowdown in the volume of new retail developments commenced in recent years due to very high construction costs, which are limiting project profitability. In some instances, achievable market rental levels on completion and high levels of tenant incentives result in projects being unfeasible. The supply of retail space is likely to remain constrained, and demand is forecast to increase as the population increases, particularly in growth corridors. With many large-scale residential developments of either apartment complexes or outer suburban estates, there is a requirement for retail space to service the needs of residents within the community.
Some new retail developments either underway or planned include:
Ferny Grove Central, in Ferny Grove, Queensland, approximately 12 kilometres north-west of the Brisbane CBD, is being developed by Honeycombes Property Group and MaxCap Group. Construction of the retail precinct is scheduled to be completed in late 2026. Upon completion, Ferny Grove Central will comprise a convenience-based retail centre of approximately 13,000 square metres, including a Woolworths supermarket, Dan Murphy’s liquor store, a Goodlife Health Club and a cinema. The Ferny Grove development includes a residential complex with 82 apartments. The site was the Ferny Grove railway station commuter car park and the new development will be integrated with the railway station.
The Bradmill Quarter retail precinct in Yarraville, Victoria, approximately 7.5 kilometres west of the Melbourne CBD, is being developed by Frasers Property Australia. Construction of the retail precinct is scheduled to commence in late 2026 and is expected to be completed in 2028. Upon completion, Bradmill Quarter will comprise a convenience-based retail centre of approximately 8,000 square metres, including a Woolworths supermarket, plus approximately 15 specialty stores, a childcare centre and a medical centre. Adjacent to the retail centre will be a food and dining precinct. Bradmill Quarter forms part of the Bradmill Yarraville mixed use project which will provide 1,500 townhouses and apartments on a 26 hectare former industrial site previously used as a cotton mill and denim manufacturer. The heritage-listed buildings will be retained.
Although some projects have been placed on hold in recent years due to rising construction costs and difficulty obtaining planning approvals, there remains a longer-term trend in the retail property sector toward increasing mixed-use and higher-density development on existing sites. Many retail landlords are seeking to redevelop or expand their properties to include other uses such as medical, childcare, office, and residential, particularly on large sites well located next to transport hubs, providing convenience and amenities for customers and residents.
Some examples of proposed longer-term redevelopments on existing shopping centre sites include:
Victoria Gardens Shopping Centre, an existing regional shopping centre in Richmond, approximately three kilometres east of the Melbourne CBD, is proposed for redevelopment by Salta Properties and Vicinity Centres. The proposed development which has received planning approval includes approximately 45,000 square metres of new retail and commercial offices and multi-level residential buildings of up to 17 levels providing over 1600 apartments.
Bankstown Central, an existing major regional shopping centre in Bankstown, New South Wales, approximately 16 kilometres south-west of the Sydney CBD, is proposed for redevelopment by Vicinity Centres into a large mixed-use precinct. The proposal includes the addition of 300,000 square metres within multiple new buildings on the 11.4-hectare site and will include retail and dining, offices, a hotel, serviced apartments, student accommodation, 1300 apartments and childcare facilities. Development has not yet commenced and is expected to be completed in stages over an extended period.
Westfield Belconnen, an existing major regional shopping centre and the largest shopping centre in Canberra, located approximately seven kilometres north-west of the Canberra CBD, is proposed for redevelopment by Scentre Group. The proposal includes a large-scale project which will provide a mix of retail and office space and residential apartment towers. Rezoning approval has been granted for the site, providing the opportunity for the development of buildings of up to 28 storeys.
Many retail centres have undergone recent refurbishments and expansions. Continuing areas of focus for consumers are convenience and ease of access to shopping centres and experiences. In recent years, supermarkets have been modified, expanded or redeveloped to include click and collect drive-through services and direct-to-boot facilities. Expanded and upgraded fresh food precincts and dining areas have also been a key trend in recent developments to meet consumer needs. Another factor driving change in retail property refurbishments, particularly from consumers and tenants, is a focus on sustainability, including improvements in energy efficiencies and the use of recycled and sustainable materials. Technology upgrades and integration will also continue to be very important moving forward for tenants and consumers in retail property.