Quay Global Investors warns that Australia’s e-commerce boom may be reaching its peak, as physical retail experiences a resurgence. Portfolio manager Chris Bedingfield notes that online sales penetration appears to be plateauing at approximately 12 per cent of total retail sales. This mirrors trends observed in the United States, where e-commerce penetration stabilised at 16.3 per cent in April 2020. Quay Global Investors is a property investment manager. The company focuses on providing real estate investment solutions to institutional and retail clients.
Bedingfield suggests this shift has considerable implications for the real estate sector. He believes the outlook for industrial development and the demand for warehouse space is becoming less positive. Simultaneously, the risks associated with physical retail assets, such as shopping centres, are diminishing. This perspective signals a potential recalibration of investment strategies within the property market.
Investor confidence in retail real estate is showing signs of improvement, supported by limited new supply and increased leasing activity. Quay highlights the transaction market is beginning to recover, pointing to Scentre Group’s 25 per cent sale of Chermside Shopping Centre – the first transaction of its kind since 2019 – as evidence of renewed market activity. This renewed confidence suggests a potential shift in investment focus back towards traditional retail spaces.
Looking ahead, the demand for additional warehouse space is anticipated to slow next year. Bedingfield specifically highlights Amazon’s growing self-sufficiency in warehouse construction as a significant factor. Amazon’s increasing tendency to build its own warehouses reduces its reliance on third-party leasing, which subsequently limits growth opportunities for industrial landlords and potentially reshaping the industrial property landscape.
