Retail sales at Westfield’s shopping malls rose significantly in the first quarter.

By Ross Kelly

A milder winter in some parts of the U.S. and an improving economy encouraged shoppers to spend more in Westfield Corp. WFD 0.11 % ’s malls at the start of the year, helping the company boost rental income in cities such as New York and Chicago.

Westfield said retail sales at its mostly U.S. shopping malls rose significantly in the first quarter as American shoppers ventured out more often and fretted less about the looming prospect of higher interest rates.

Sales in specialty stores at Westfield’s 40 existing malls—38 of which are in the U.S. and two of which are in London—jumped by almost 10% from a year earlier, the company said. Unlike a department store, a specialty outlet is one that focuses on a particular niche, such as clothes or electronics.

The better retail conditions helped Westfield increase rental income by 5.2% to A$88.42 (US$71.86) a square foot in the year through March. The quarter’s higher sales also bodes well for what the company can charge existing and new stores in future. Westfield said its malls in the U.S. and U.K. were together 94.3% leased as of March 31.

“This is probably the strongest quarter we’ve seen,” said Steven Lowy, joint chief executive, following Westfield’s annual shareholder meeting on Thursday. “It needs to be tempered a little bit because last year the weather on the East Coast was really poor,” he added, referring to a cold snap the previous winter that kept many shoppers away.

To be sure, several parts of the U.S. East Coast experienced a tough winter this year as well.

According to Mr. Lowy, factors other than the weather fueled U.S. retail sales in the first quarter, including the country’s ultra-low interest rates, falling gasoline prices, and an improving economy marked by lower unemployment and rising wages. The Westfield result comes a month after the largest U.S. mall operator by market value, Simon Property Inc., SPG 0.41 % said it boosted first-quarter earnings by 6.2% on higher occupancy and rental rates.

Still, the longer-term outlook for the U.S. economy remains uncertain, with consumers apparently cautious about spending more before knowing when the Federal Reserve might start raising rates from post-financial-crisis levels. Retail sales across the country were little changed in April, and have been down or flat in four of the five past months.

Like Simon Property, Westfield has been benefiting from focusing attention on larger malls in denser population centers. Last year, the Sydney-listed company spun off its stable of older properties in Australia and New Zealand to seize riskier, though potentially more lucrative, opportunities in the U.S. and Europe.

It has also been shedding smaller U.S. shopping-mall assets, and plans to sell another six properties by the end of the year, when Westfield is set to begin opening a mall at the site of the World Trade Center. According to Mr. Lowy, the site has already been almost fully leased. Meanwhile, construction on a new “flagship” mall in Milan, Italy, is expected to begin within the next three years.

The company is considering further geographic expansion, said Chairman Frank Lowy. “We’re looking everywhere,” he said in response to a shareholder who asked whether Paris and Berlin were in Westfield’s sights. “We’re seriously considering all options for these big population centers.”

Write to Ross Kelly at [email protected]