Cushman & Wakefield, the world’s third-largest commercial property brokerage, reported higher revenue driven by its largest leasing growth in more than two years.
The Chicago-based company said revenue increased 3% in the third quarter to $2.3 billion — including a 13% gain in leasing revenue to $492.7 million — driven by strong industrial and office leasing activity in its Americas and Asia-Pacific regions.
Cushman, the second major brokerage to report results for the quarter, joined CBRE in citing more confidence that commercial property markets are recovering as interest rates come down and more businesses take advantage of lower lease rates to rent office and industrial space.
CEO Michelle MacKay called Cushman's latest results “an important turning point" as the industry recovers from several quarters of depressed real estate transaction activity.
“We are seeing a broadening of capital markets activities in the market and increased optimism among buyers and sellers,” MacKay told investors during a conference call on Monday. The Federal Reserve's "rate cut in September, and actions by the central banks outside of the U.S., have been important first steps in the revitalization of the capital markets."
While Cushman & Wakefield’s revenue from real estate sales and other capital markets activity dipped 4% from the year-earlier period to $169.5 million, the company’s capital markets revenue in the Americas, its largest region, increased for the first time since the second quarter of 2022.
The three months ended Sept. 30 also marked the strongest quarter for year-over-year leasing growth — as well as the first increase in capital markets revenue in the Americas region — since the second quarter of 2022, MacKay said.
Two more expected interest rate cuts by the Fed this month and in December "should continue to catalyze growth in the coming quarters," MacKay said.
Following the third's quarter strong results, Cushman now expects leasing revenue to grow in the mid-single-digit range for the full year of 2024, higher than the company's prior growth projection of low- to mid-single digits.
The company also expects roughly 20% growth in capital market revenue in the final quarter of the year compared with the year-earlier period.
'Inflection point'
Cushman's “strategic and targeted investments” in hiring brokers over the past year are producing "clear and measurable results" in boosting leasing revenue, MacKay added.
The company reached what MacKay called an important milestone in reducing the company’s debt leverage in October, fully repaying roughly $200 million in loans set to mature in 2025. While Cushman will continue to focus on reducing debt, “we’ve already begun accelerating our growth investments as we pivot to more offense,” she said.
The company will prioritize investing in its brokerage business “while leaning into the capital markets recovery,” MacKay said. Cushman also aims to achieve stronger growth in services revenue and profits by investments in targeted acquisitions of companies and talent.
Leasing revenue increased for the fourth consecutive quarter, led by a 16% increase in the Americas, with double-digit growth in both industrial and office leasing revenue, Chief Financial Officer Neil Johnston said. Capital markets revenue was up 2% in the Americas, with increases in office, industrial and retail transactions.
“Overall, sentiment has improved in the past several months and while some market uncertainty persists, we feel confident that we’ve passed the floor in U.S. capital markets activity,” Johnston said.
The company's services revenue declined 2% in the quarter. Facilities and property management revenue grew while project management declined as office expansions and renovations continued to be delayed, Johnston said. The company is focused on growing services platforms and revenues in 2025, executives note.