Some companies are hanging on by their fingernails, others are talking about taking a hair cut – Vicinity, the nation's biggest mall manager, is happily doing both.
According to the retail landlord, it is service tenants that are driving growth as shoppers dedicate more of their spending to grooming.
"We've also seen an increase in other services such as manicurists, laser clinics and teeth-whitening booths. And we'll continue to proactively evolve our tenancy mix through the portfolio to embrace these changing customer preferences," said Vicinity's chief investment officer Michael O'Brien.
More established categories such as hair, beauty and optometrists were also trading strongly. Technology shops, cinemas and food courts are also expanding space.
All of that drove a key revenue metric – comparable specialty store moving annual turnover (MAT) – up 3.4 per cent over the last six months of last year.
Vicinity also benefited from a turnaround in the performance of its department store tenants, redevelopment of key centres, asset sales and a shift away from online sales back to bricks and mortar shops.
Vicinity is also developing a new Legoland at its massive Chadstone mall, as it expands the entertainment precinct.
Vicinity chief executive Angus McNaughton said Chadstone and the Emporium Melbourne were enjoying strong performance too.
"The improvement in our sales performance is pleasing, considering that two of our prime assets, Chadstone and Emporium Melbourne, are not in the comparable reporting basket. At Chadstone, which is in the midst of a significant development, same-store MAT growth for specialties was 5 per cent.
"At Emporium Melbourne, monthly same-store specialty sales growth has been averaging 18 per cent compared to the previous year. "
Due to the improved retail conditions, boosted by the low interest rates and housing market boom, the group said its full-year 2016 underlying earnings per security guidance has been firmed to 19.1¢, the top end of its previously announced guidance range.
$3.1 billion development pipeline
Post last year's merger between the then Federation and Novion, the development pipeline is about $3.1 billion which includes the $622 million Chadstone project in Melbourne.
A rise in inbound tourists has been a bonanza for the Direct Factory Outlets' (DFO) sales over the period and The Glen upgrade in Melbourne is in full swing. Sydney's Roselands mall is also slated for a $480 million upgrade.
The retail landlord posted underlying earnings of $377.6 million, a rise of 10.1 per cent for the half-year to December 31. Due to the merger last year, exact comparable figures for the half-years were not available.
The interim distribution, on an aggregate basis, was 8.8¢ cents, up 4.8 per cent on the prior corresponding period and will be paid on March 2. The underlying earnings per security (EPS) rose 9.3 per cent to 9.5¢, compared to the six months to December 31, 2014, also on an aggregate basis.
Vicinity has also identified $750 million to $1 billion in asset sales, with the funds being used for future developments.