Two of the world’s biggest commercial real estate brokerages joined their larger rivals in posting higher profits as stepped-up leasing and sales activity added to signs that property markets are in recovery mode.
Colliers International, the fourth-largest brokerage ranked by revenue, said growth across all its segments in the third quarter, including jumps in its leasing and capital markets business, drove a 12% increase in revenue to $1.18 billion compared to the same time last year. The Toronto-based company's net income rose to $37.2 million from $25.1 million for the year-earlier period.
Newmark, the fifth-largest brokerage, reported its fourth straight quarter of double-digit percentage gains in capital markets deal volume, fueling an 11.3% increase in total revenue to $685.9 million. The New York-based brokerage reported a $17.8 million profit, higher than the $9.9 million for the same time last year.
"Our office leasing pipeline continues to be strong," said Newmark Chief Financial Officer Mike Rispoli, who cited businesses requiring workers to be in the office as a driver of optimism for the next year.
Colliers and Newmark joined CBRE and Cushman & Wakefield in reporting increases in office and industrial leasing that helped drive higher revenue as the industry recovers from depressed real estate deal activity.
Falling interest rates are giving executives more confidence that lending conditions will loosen, creating better conditions for real estate investment sales in the coming year.
Diverse revenue streams
“As we enter 2025, we anticipate additional upside from an improving capital markets environment,” Colliers CEO Jay Hennick told investors during a conference call on Monday. “We are well positioned to sustain mid- to high-single digit growth going forward.”
Colliers reported a 7% bump in leasing revenue to $266.3 million in the quarter, driven by several large deals in the United States and the company’s Europe, Middle East and Africa operations. It also saw a stronger-than-expected 17% increase in capital markets revenue in the third quarter, leading solid growth across its three business segments: real estate services, engineering and investment management.
Engineering revenue grew by 21%, driven by recent acquisitions such as Canadian engineering and environmental services firm Englobe, part of a broad move by global real estate brokerages to expand business lines that are not as reliant on commission-driven revenue generated by property sales and other transactions.
Newmark reported a 5.6% increase in leasing in the quarter, based on growing activity in the retail and industrial sectors.
"We remain bullish on the fundamentals of retail leasing, where availability in the U.S. remains at historic lows, and asking rents continue to climb," CEO Barry Gosin told investors on Tuesday. He added industrial leasing is expected to continue to benefit from "growing demand for data centers, as well as reshoring and near-shoring of North American manufacturing."
Gosin also noted bullishness on office leasing, driven in part by companies committing to space as more employees return to the workplace.
"We're winning a lot of big mandates, and I think year-over-year, we'll have good leasing performance," Gosin said.