Two of the world’s biggest commercial real estate brokerages posted lower income from property sales and leasing in the third quarter as deals slow across the industry.
JLL, the second-largest brokerage ranked by revenue, said steep decreases in real estate fee income from property sales, lending and leasing caused total revenue to fall 2% to $5.1 billion in the quarter compared to the same time last year. Net income decreased 57% to $59.7 million.
Colliers, the fourth-largest brokerage, reported a 6% decline in revenue to $1.06 billion. The Toronto-based company reported net earnings before interest, taxes, depreciation and amortization of $144.9 million in the quarter, slightly below the $145.1 million for the year-earlier period.
JLL and Colliers executives joined CBRE, Cushman & Wakefield and Newmark, brokerages that also reported results in the past week, in outlining major declines in transactions due to rising interest rates, tighter lending conditions and ongoing uncertainty regarding tenants' plans for returning their workers to offices.
“Conditions have softened since we last spoke in early August,” JLL CEO Christian Ulbrich told investors in an earnings call. “Global commercial real estate investment totaled $131 billion in the third quarter, reflecting a year-over-year decline of 48%.”
Both companies also joined their peers in pushing back projections for a significant recovery in real estate deals until later next year.
"Capital markets and leasing are truly essential services for investors, owners, and occupiers of real estate assets," Colliers CEO Jay Hennick told investors during a call Thursday. "They may be temporarily impacted right now, but they will rebound once the market stabilizes, potentially as early as the second half of 2024.”
JLL and Colliers reported that non-transaction income from such services as property and facility management, investment management and consulting helped buoy their results for the quarter. The gains blunted some of the impacts from the industry-wide slowdown in investment sales and leasing.
For instance, JLL reported a 7% revenue increase from its Work Dynamics business line, which helped corporations manage and evaluate their real estate needs. JLL Technologies, which uses software, data and expertise to help businesses optimize their real estate footprint, increased revenue by 4%.
Colliers reported a 12% increase in its property management and advisory division and a 23% jump in investment management income.