The company expects full-year earnings growth of 2.5 per cent, consistent with last year.

Mr Johnston said the group had solid leasing success in Melbourne to replace Deloitte at 100 Queen Street and is progressing with the planned 20,000 square metre office complex above Melbourne Central, which will integrate with the retail centre below.

"We see education as a strong tenant, particularly in Melbourne, as is the co-working segment with Space & Co," Mr Johnston said.

The softer consumer sentiment has meant that retailers are taking longer to make decisions.

Bob Johnston

GPT will also focus on increasing the logistics portfolio to be 20 per cent of the overall business from the current 17 per cent, while office and retail are 40 per cent each.

But the theme was the retail performance, which was also impacted by the redevelopment of the food court at Melbourne Central and the upgrades at Casuarina Square in Darwin.

Weak retail 

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"The softer consumer sentiment has meant that retailers are taking longer to make decisions. Remixing has also been a factor in a number of our shopping centres, as we continue to exit underperforming retailers and respond to competition," Mr Johnston said.

In order to stem declines in the negative 0.7 per cent leasing spreads - the difference between new leases signed and the renewal of existing leases - GPT has lowered the exposure to the struggling apparel tenants with more focus on the internet-proof food, technology and beauty retailers.

The recently-appointed head of retail, Chris Barnett said the retail assets had delivered comparable net income growth of 1.4 per cent.

"Whilst our results have been positive, they do reflect a reduction in turnover rent, particularly from the cinemas category, which has one of the slowest starts to a year that we have seen for over a decade," Mr Barnett said.

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JP Morgan analyst Ben Brayshaw said it was a "reasonable result from GPT with increased divergence between retail versus office and industrial as expected, but the development pipeline has increased which is an incremental source of future earnings growth".

Saranga Ranasinghe, vice-president, Moody’s Investor services said the result highlighted the underlying strength of GPT's portfolio of assets that is diversified across retail, office and logistics.

"Strong performance in the office and logistics segments, driven by strong market fundamentals in both Melbourne and Sydney, showcase the company’s successful strategic shift to these two segments as primary growth drivers," she said.

"Despite the weaker retail environment, GPT’s operating performance and financial metrics remain in line with our expectations. GPT’s balance sheet remains well-positioned, with its recent equity raising providing conservative funding for growth initiatives."

The unlisted fund's assets under management grew by 7.2 per cent to $13.3 billion driven by acquisitions and
valuation growth in the wholesale office fund. GPT generated a total return of 8.2 per cent on its significant co-investment in the two funds, office and shopping centre, which is currently valued at $2.6 billion.

GPT reported an interim distribution of 13.11¢, payable on August 30.

Shares closed down 2.9 per cent to $6.06.