Neighbourhood Centres Emerge as Community Hubs Amid Shifting Consumer Habits

Neighbourhood and convenience centres are evolving beyond simple shopping destinations as daily convenience trips replace traditional weekly shopping, according to a retail property expert.

Ray White Group, Head of Research, Vanessa Rader said the shift in consumer behaviour has significant implications for how these assets are managed and valued by investors.

“The weekly trolley push is becoming a relic,” Ms Rader said.

“Consumer habits have shifted markedly, with daily convenience trips now replacing the traditional big-shop model, turning neighbourhood and convenience centres into something closer to daily community infrastructure.”

Ms Rader said the investment case for neighbourhood centres has strengthened considerably, with the latest MSCI data for the year to December 2025 showing total returns of 8.5 per cent with capital growth of 2.7 per cent, sitting within a retail sector that has outperformed both office and industrial for consecutive quarters.

“2025 marked the first time in Australian history that retail became the most traded commercial asset class, with institutional investors increasing their sector weighting,” she said.

“Australia’s structural under-supply of retail space is keeping specialty vacancy tight while making new supply increasingly costly to deliver.”

She said the tenants that survived recent disruptions have emerged with stronger businesses and more sustainable rent structures.

“This is providing a more durable income base than the sector has carried for some time,” Ms Rader said.

According to Ms Rader, neighbourhood centres have offered consistency compared to larger retail formats.

“MSCI data shows that through both the GFC and the pandemic period, neighbourhood centres held their ground while larger discretionary formats experienced sharper contractions,” she said.

“For investors navigating a more uncertain rate environment, that steady return profile across the cycle is increasingly part of the appeal.”

Ms Rader said upward pressure on interest rates combined with high fuel costs is likely to weigh on discretionary consumer spending.

“That environment tends to concentrate activity closer to home, and history supports the view that needs-based, locally anchored retail outperforms during periods of household financial stress,” she said.

“Centres that give people a genuine reason to linger, through quality food offerings, community programming, thoughtful design, and a sense of belonging, are converting the daily convenience trip into something longer and more valuable.

“Shoppers are more likely to spend time in centres enhanced with cultural or design-focused improvements, and that dwell time flows directly through to specialty tenant turnover and renewal rates.”

She said non-retail uses are also gaining ground in neighbourhood centres.

“Dedicated community space for after-school programs, fitness, and social services are helping maintain foot traffic through traditionally quiet afternoon periods,” Ms Rader said.

According to Ms Rader, neighbourhood centres occupy a particular position within the broader retail recovery saying “The centres performing best are not simply those with the right anchor, they are the ones that have become somewhere people genuinely want to be”.

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