Cushman & Wakefield, the world's third-largest commercial property brokerage, reported higher quarterly profit as it looks for an interest rate cut at some point later this year to set off a “waterfall effect” of real estate sales.

The Chicago-based firm reported second-quarter profit rose to $13.5 million from the year-earlier $5.1 million as leasing revenue rose and it made progress on cost-cutting and restructuring since Michelle MacKay took over as CEO a year ago.

Cushman, the second major brokerage to report results for the quarter, joined CBRE in mentioning a general uptick in market optimism as sentiment grows that the Federal Reserve will cut rates at least once in 2024 and help fuel a gradual return of deals and capital market activity.

“What we’re looking at here is what we’re calling internally a waterfall effect,” MacKay said during an earnings call with analysts on Monday. “The majority of the uncertainty around rates and inflation has started to move into the rear-view mirror. We’ve seen better inflation data, and the economy has remained resilient, and this is positive for capital markets.”

The company reported revenue of just under $2.3 billion for the second quarter, down 5% from $2.4 billion in the same time last year, as capital markets revenue declined 15% to $163.2 million from the year-earlier quarter. Cushman reported its third consecutive quarter of increases in leasing fee revenue, driven by heightened deal activity in the Americas and the Asia Pacific region.

“We are confident in our position and energized about the increase in market optimism,” MacKay said.

MacKay announced millions of dollars in cost cuts and a full review of the company's operations when she took over as CEO in July of last year. This has included a deeper evaluation of cash flow and growth expectations, and eliminating or restructuring less profitable services.

The company has refinanced over $1 billion in debt over the past year and is already halfway toward its goal of cutting total debt by $200 million by the middle of next year, MacKay said, adding that Cushman expects to trim another $50 million in debt during the current quarter.

“It is clear from our results over the past few quarters that our strategy has paid off,” she said.

Cushman continues to expect leasing revenue growth in the low- to mid-single-digit range for the full year of 2024, fueled by solid performance in large and mid-sized industrial, office and retail deals in the second quarter, chief financial officer Neil Johnston said in the earnings call.

The company also expects capital markets revenue to improve through the rest of the year, returning to mid-single-digit growth during 2025 with an anticipated decline in interest rates and a pickup in multifamily and other property sales.

In another sign that activity is already picking up, the brokerage said its net loss of $15.3 million during the first half of the year narrowed from $71.3 million for the first half of 2023.

Colliers International and Newmark are also expected to report their results this week, with JLL and Marcus & Millichap scheduled for next week.