From the aisles of yesteryear’s corner grocer to today’s sprawling retail complexities, supermarkets have long been a foundation of Australian life. They’re more than just a place to pick up milk and bread; they’re community anchors, essential service providers, and increasingly, they’re becoming one of the most resilient and sought- after commercial property investments.
Even as shopping habits shift and consumer behaviour evolves, supermarkets have retained their enduring appeal among both shoppers and investors alike. Recent sales figures underscore this strength.
According to CBRE from CBRE data, more than $268 million worth of supermarket assets have transacted since July 2024 alone with average yields falling 15 basis points to 5.49%. That level of activity highlights the depth of demand for these properties, reflecting their reputation as defensive investments with stable cash flow and reliable long-term tenants.
For investors, the attraction of supermarkets lies in their fundamentals. Unlike some retail categories that are vulnerable to e-commerce disruption, supermarkets trade in essentials, fresh food, pantry staples, household basics, that Australians need regardless of broader economic conditions.
This gives them a resilience that few other asset classes can match. When the economy softens, discretionary spending might shrink, but people still head to their local supermarket.
Supermarkets also offer scale and adaptability. At one end of the spectrum, national chains like Coles and Woolworths anchor large shopping centres, driving traffic that benefits surrounding tenants.
At the other end, smaller independent operators, such as IGA stores, thrive on their ability to connect with local communities. These independents often adapt their offerings to reflect the unique character and preferences of their neighbourhoods, providing both consistency and a sense of familiarity. For investors, this means the opportunity to invest in assets that not only generate income but also carry a strong social connection.
The tenancy profile of supermarket assets adds to their appeal. Leases are typically long-term, often spanning 10 to 20 years with 10 year options, and frequently include fixed annual rental increases or market reviews. This creates certainty of income, which is particularly attractive in periods of inflation or economic uncertainty. Moreover, supermarkets tend to be operated by highly capitalised, creditworthy tenants, further reducing investment risk.
Another key factor is the limited supply of quality supermarket properties. With only so many prime locations available and supermarkets strategically expanding into existing stores or growth areas, competition for available assets is strong. This keeps prices firm and yields competitive, making supermarkets a highly sought-after investment.
Investor appetite is diverse, spanning institutions, syndicates, and private buyers. Institutions and funds are drawn to the security of income and defensive qualities, while private investors often see supermarkets as a generational asset, something to hold long term with minimal management hassle. For syndicates, supermarkets offer the opportunity to spread exposure across multiple investors while still securing blue-chip tenants.
The sector’s performance also reflects broader consumer dynamics. While online grocery shopping has gained traction, penetration remains relatively low compared to other retail categories. Many shoppers still prefer the tactile experience of choosing their own produce, browsing specials, or making last-minute meal decisions in store. This behaviour reinforces the foot traffic that underpins supermarket success.
Supermarket investments are also buoyed by demographic trends. As Australia’s population continues to grow, demand for food and grocery retailing rises in tandem. New housing developments require new retail infrastructure, ensuring supermarkets remain central to urban planning and community life. This ongoing demand pipeline provides confidence to investors considering long-term commitments.
The spread of recent sales illustrates the market’s breadth. Assets range from metropolitan trophy sites, often achieving record yields, to regional and suburban supermarkets where affordability and necessity combine to create stable returns. In every case, the common denominator is strong investor demand and the recognition that supermarkets offer a unique blend of defensive and growth characteristics.
Looking ahead, supermarkets are likely to remain a cornerstone of property investment strategies. The sector balances the heritage charm of small-format community grocers with the scale and efficiency of national operators, ensuring a spectrum of opportunities for investors at all levels.
With over a quarter of a billion dollars in property sales since July 2024 already, the momentum is clear: supermarkets are not just where Australians shop, but where investors continue to find long-term value.