JLL, the world’s second-biggest brokerage, reported higher revenue and a $66 million profit as office leasing and other deal activity picked up early in the year.
The Chicago-based company said revenue grew to $5.1 billion for the quarter, a 9% increase over the same time a year earlier, led by the firm's nontransaction businesses such as property management, valuation and risk advisory services and workplace management.
JLL’s leasing revenue ticked up 2% in the quarter to $497.3 million as an increase in U.S. office deals offset declines in other regions such as Asia Pacific.
The brokerage’s capital markets revenue rose 6%, despite investment sales that fell to a 12-year low across the industry in the first three months.
The brokerage reported a profit of $66.1 million, compared with a $9.2 million loss in the year-earlier period, as it cuts costs in such businesses as JLL Technologies.
"The impact of our cost actions over the last year allowed us to meaningfully improve our profitability while still investing in our business to take advantage of growth opportunities ahead," CEO Christian Ulbrich told investors during the company’s earnings presentation Monday.
JLL’s leasing increases reflect similar results reported in recent days by other global brokerages, including CBRE, Cushman & Wakefield and Colliers, seeing signs that office deals are increasing in a reflection of a rising number of companies bringing employees back to the office.
Global office leasing volume across the industry was up 7% in the quarter as businesses upgraded their space to improve the experience for returning employee, according to JLL Research.
Double-digit increases in newly leased square footage across the United States and Asia-Pacific drove the activity, offsetting an 8% decline in Europe, the Middle East and Africa.
The year started with “green shoots” such as an increase in the number of bidders for properties and the closing of several large deals in North America, showing that investors are willing to deploy capital in real estate activity when market conditions warrant, Ulbrich told investors.
“However, once the inflation data came in higher than expected and the hope for several interest rate cuts later this year diminished, real estate capital market became much quieter again,” Ulbrich said.
Ulbrich said he expects deal activity to pick up significantly in the second half of the year, similar to CEOs' forecasts at Cushman & Wakefield, Colliers, CBRE and Newmark.
“The market will adapt to a higher-for-longer interest rate environment,” Ulbrich said. “Pricing for the very best assets is beginning to stabilize in the U.S., U.K. and Australia. In leasing, we expect the strong demand for high-quality sustainable space to continue and drive an increase in rental rates.”