Colliers boosted its first-quarter revenue as its property management and advising services offset a decline in real estate sales and financing.
The Toronto-based brokerage reported revenues rose 4% to $1 billion from the prior-year quarter, driven by an uptick in leasing and a 9% revenue jump in non-transaction services such as property and project management, engineering and consulting.
The brokerage’s capital markets revenue declined 9% to $138.7 million as Colliers joined rival Cushman & Wakefield in forecasting that property sales and financing transactions will probably start to recover later this year, when some analysts expect the Federal Reserve to begin cutting interest rates.
“We expect this momentum to continue through the remainder of the year, providing growth, stability and balance,” Chris McLernon, CEO of real estate services, told investors during the company’s earnings call Thursday. “This growth helped offset expected soft transaction volumes in capital markets.”
Revenue gains came as the company raised $300 million in an equity offering in the first quarter, increasing its total available cash for potential acquisitions to $1 billion, executives said.
Colliers is especially focused on expanding in the United States, where it trails its larger competitors in market share, executives said on the call. Colliers recently expanded to Louisiana and purchased its Philadelphia affiliate to boost its operations in the mid-Atlantic region.
Market Expansion
Colliers, the fourth-largest commercial real estate brokerage by revenue, expects to enter new U.S. markets, buy more of its affiliates and recruit more talent in the near future, McLernon said. He cited interest in acquiring operations in Houston, Denver, South Carolina and Columbus, Ohio.
“Our focus on expanding high-value recurring service lines is paying off handsomely, reshaping and repositioning our business for the future,” CEO Jay Hennick told investors.
The firm's acquisitions of affiliates and other businesses have bolstered the brokerage's revenue, with about a $1 billion in free cash flow for more acquisitions in the United States and overseas, as the brokerage positions for the recovery expected to start this year.
Colliers and other commercial property brokerages said in February they expect this year’s earnings will be more heavily weighted to the second half of 2024 as they look for capital markets and leasing activity to start a tentative recovery.
CBRE, the world’s largest commercial real estate brokerage, and Newmark are set to report earnings on Friday. JLL, the second-largest by revenue, is expected to report on May 6, and investment sales brokerage Marcus & Millichap is scheduled to report on May 8.