Trends and Opportunities Shaping Convenience Retail Investment

Following a challenging period marked by fluctuating cap rates and economic uncertainty and questions over the long-term future of traditional fuel retail, Australia’s convenience property sector is showing renewed strength. According to Romanor Falconer, Senior Executive at JLL, specialising in freestanding retail investments, the market is not only stabilising, it’s evolving.

“The fuel retail property market is a sub-sector within retail that’s gaining wider recognition among investor groups,” Falconer says. “After the volatility of 2023 and 2024, this year we’ve seen a strong rebound in transaction volumes and investor confidence.”

So far in 2025, there has been $215 million in convenience retail transactions compared to $178 million in 2024. Falconer attributes this uptick to more favourable investor conditions fueled by inflation stabilisation, a downward trend in interest rates, and an increase in appetite for reliable, defensive-essential service income producing assets.

Yields tighten as investor confidence grows

Investor demand is intensifying. “Over the past 12 months, yields for metro-located assets nationally have compressed significantly, from an average of 6.26% last year to around 5.41% in 2025,” Falconer notes.

This compression hasn’t dampened demand or investor appetite. “Every campaign we run in this space attracts growing enquiry levels. The investor base is broadening as more groups recognise the sector’s resilience and compelling characteristics — multiple income streams backed by national covenants, large and highly visible locations that are increasingly scarce with prime potential to future develop or re-purpose.”

However, Falconer points out that Victoria’s limited development pipeline, driven by high building and holding costs, is constraining supply. “Investors are looking to capitalise on buying below replacement value which is seen across the board in Victoria. New builds are capital intensive, so existing sites with strong fundamentals are incredibly attractive right now.

Mobility Hubs and the EV Opportunity

The rise of electric vehicles continues to shape investor sentiment, but Falconer says the perceived risk is often overstated. EVs still represent under 10% of new car sales, but growth is accelerating. Sites that can accommodate EV charging infrastructure are maintaining value, while those restricted to fuel-only formats risk long term erosion.

Despite lingering concerns around electric vehicle (EV) adoption, Falconer believes investor apprehension often comes down to education. “There’s still some hesitation from investors worried about the future of fuel, but operators are already evolving. We’re seeing the emergence of mobility hubs — sites that integrate EV charging infrastructure with expanded convenience retail and food offerings. "Convenience retail is the real differentiator, “It now contributes 40–50% of total site revenue, up from around 30% traditionally. Larger format stores, 300–500 square metres, are commanding a premium because they cater to changing consumer behaviour, reflecting the way people use these spaces, not just to refuel, but to refresh and restock.”

Operators are increasingly focusing on the retail side of their sites, expanding convenience offerings rather than relying solely on fuel sales. This shift reflects changing economics of fuel retail in Australia, where compressed margins drive operators to maximize revenue from convenience offerings and extended retail formats.

“Falconer concludes. " Leading operators are reimagining their sites as integrated convenience  destinations rather than traditional fuel stops, diversified revenue streams are essential for long-term viability.

A specialised, capital-intensive asset class

While convenience retail sites are typically income defensive, “Banks treat them as specialised assets, requiring lower loan-to-value ratios typically between 55% - 65% for newer sites and higher upfront capital requirements for older sites with environmental risks.” 

That higher barrier to entry keeps the investor pool relatively tight. “You don’t see a lot of ‘mum and dad’ investors competing here unless they’re sophisticated or well-capitalised,” he says. “But for those who can enter, the returns are strong and stable.”

What the future holds

Looking ahead, Falconer’s message for retailers and distributors is simple: Focus on quality, not quantity. Prioritise high-traffic, high-visibility sites with room to expand and adapt for EV adoption.

He also advocates diversification and strategic partnerships. “Work with fast-food operators to strengthen your food offerings, and partner with EV charging providers to share infrastructure costs and leverage their expertise and accelerate rollout. Partnerships will be critical in the next phase of growth.

Falconer encourages operators to restructure portfolios, divesting older, fuel-focused sites with declining vehicle traffic or limited potential to evolve into future mobility hubs. Despite the sector’s ongoing evolution, Falconer remains confident. “We’re very bullish on this space,” he says, noting that large, strategically located sites with high exposure to passing traffic remain scarce. From a long-term investment perspective, fuel retail continues to be a strong and compelling proposition.

About Romanor Falconer

Romanor Falconer is a Senior Executive in the Retail Capital Markets team at JLL Melbourne, specialising in retail investment transactions. A licensed estate agent with a Bachelor of Property and Real Estate from Deakin University, he has a proven track record representing high-net-worth private investors and institutional clients across Australia.