Stores gain 3.2 percent as food leasing takes 39.6 percent

As of 2 November 2026, the Retail Insights report published by the Shopping Centre Council of Australia and Urbis shows retail sales rising 3.2 per cent in the year to June, with specialty retailers up 4 per cent and shopping centre foot traffic up 2 per cent nationally. Retail tenant occupancy reached 98.8 per cent. Leasing demand was not spread evenly: food catering accounted for 39.6 per cent of transactions, apparel 19 per cent and retail services 17.1 per cent. The headline number suggests a healthy market, but the composition underneath tells a more useful story about which store formats are being funded and which are being squeezed.

Where the growth actually came from

Known facts	Unverified	Needs verification
Retail sales rose 3.2 per cent in the year to June, specialty retailers up 4 per cent, foot traffic up 2 per cent nationally, occupancy 98.8 per cent	Whether the sales figure is nominal or adjusted for inflation	The deflator used, and how it compares with the ABS consumer price series
Leasing transactions split 39.6 per cent food catering, 19 per cent apparel, 17.1 per cent retail services	Whether transaction counts are weighted by floor area	Average lease term and rent per square metre by category
Retail turnover rose about 4 per cent in the ACT and WA, against about 2 per cent in Victoria and Tasmania	What drove the state divergence beyond general demand	State-level population and wage data to separate demand from migration effects

Specialty retail at 4 per cent against a 3.2 per cent headline means the growth was concentrated in smaller-format tenants rather than anchors. That is consistent with what centre owners have been doing for several years: carving former department store space into smaller units and filling it with categories that generate repeat visits. Mini-major retailers now account for 19 per cent of occupancy, according to the report, which is a meaningful shift in how floor space is allocated.

The state split is worth noting for network planning, because consumer demand is not moving at the same pace across states. Turnover growth of around 4 per cent in the ACT and WA against around 2 per cent in Victoria and Tasmania is a two-to-one difference. A national rollout plan built on the average will over-invest in slow markets and under-invest in fast ones. Store selection should be driven by state-level demand, not by a single national growth rate.

Category	Share of leasing transactions	Implication for store planning
Food catering	39.6 per cent	Corridors feeding dining areas gain dwell time
Apparel	19 per cent	Fashion clusters stay relevant but compete harder
Retail services	17.1 per cent	Service tenants extend visit frequency

Why food catering takes the biggest share

Food catering at 39.6 per cent of leasing transactions is the clearest signal in the report. Dining extends visit duration, and visit duration is what makes a centre a destination rather than a convenience stop. For a retailer, the implication is structural: the corridor that matters is the one people walk to reach food, not the one closest to the entrance.

Trade area reach matters more than occupancy

Urbis argues that Australian centres need to move beyond occupancy and focus on productivity by extending trade area reach, encouraging longer visits and increasing visitation frequency. That is a direct challenge to the way many brands evaluate sites. Occupancy at 98.8 per cent means almost every centre looks full, so occupancy no longer distinguishes a good site from a mediocre one.

Department store space is being repurposed

Centre owners have been converting former department store and discount department store space into entertainment, restaurants, hotels, wellness facilities and mixed-use destinations. Each conversion changes the anchor that generates foot traffic. A store that relied on a department store anchor for passing trade needs to re-examine its catchment after the anchor changes, because the new tenant may attract a different visitor with a different dwell pattern.

What this means for store planning

The first implication is that sales growth is not evenly distributed across formats. Specialty tenants growing at 4 per cent are outperforming the headline, which suggests small-format stores in the right corridors are still worth opening. Bellroy, a wallet and accessories brand, opened its first physical store after 16 years and is planning an international rollout, which is the same bet placed in a different category. The second is that anchors are unstable. Any site whose traffic depends on a single anchor should be stress-tested against the possibility that the anchor is replaced by something with a different visitor profile.

The third implication is about rent negotiations. With occupancy near 99 per cent, landlords have little incentive to discount. Brands going into renewal conversations should expect rent to be defended, and should bring data on their own corridor's performance rather than the centre's headline sales growth. A centre-level number is a weak negotiating position.

Build the catchment case before the lease

A catchment case has three parts: who lives and works within the drive time, what they currently buy elsewhere, and how long they stay when they arrive. The report supplies the third indirectly through foot traffic and dwell patterns, but the first two have to be built locally. Brands that walk into a negotiation with only centre-level data are arguing about the wrong unit of analysis.

Across the sector, the centres supporting 1.4 million jobs and around 200 billion dollars in annual retail trade are not a single market. Treating them as one leads to national averages applied to local decisions, which is how networks end up with stores in the right city and the wrong corridor.

Two numbers to track

Field name	Example value
Market code	AU-WA-02
Turnover growth	4
Anchor category	Food catering
Visit duration in minutes	62
Single anchor dependency	Yes

The first number is corridor-level visit duration. It predicts whether a store will convert passing traffic, and it moves before sales do. The second is the share of a portfolio dependent on a single anchor. When that share is high, one anchor replacement can move a whole cluster of stores from healthy to marginal in a single quarter.

Both numbers are local, which is the point. National growth of 3.2 per cent and occupancy of 98.8 per cent describe an industry, not a site. The decisions that determine whether a store network makes money are made one corridor at a time, and the data that supports them has to be collected the same way.

FAQ

Is 3.2 per cent sales growth a strong result for retail?
It depends on the deflator. Without knowing whether the figure is nominal or inflation-adjusted, the growth rate alone cannot be compared with cost growth. Specialty retail at 4 per cent is the more informative line in the report.
Why does food catering dominate leasing activity?
Because dining extends visit duration, and duration is what turns a centre into a destination. When nearly four in ten transactions are food, the corridors that feed dining areas become the ones worth paying rent for.
Does high occupancy make lease negotiations easier for brands?
The opposite. At 98.8 per cent occupancy landlords have alternatives, so rent is defended rather than discounted. Brands need corridor-level performance data to argue their case, because centre-level numbers favour the landlord.
How should a brand react when a department store anchor is replaced?
Re-run the catchment. A new anchor brings a different visitor with a different dwell pattern, so the traffic a store relied on may not survive the change. Stress-test any site that depends on a single anchor.