Agents urged to ‘not lose the plotline’ in recovery

Bosses at some of the world’s largest real estate agencies have found cause for optimism over the start of the year, with the first-quarter earnings season delivering an outperformance in several business lines. Cushman & Wakefield chief executive Michelle MacKay urged industry players to “not lose the plotline”, which is for an expected strong market recovery despite continued near-term volatility. “Although the recent uptick in rate volatility will mostly likely cause a pause in transaction volumes in Q2, the improvement that we experienced in Q1 gives us more confidence that global investment sales pipelines are solid, and investors are ready to engage when the time is ripe,” MacKay said on an earnings call, adding: “I’m very bullish for the recovery and that point of view hasn’t changed.” Back to the office Leasing activity in Europe was a highlight for Cushman & Wakefield in the first quarter of the year, helping the region to post the highest year-on-year revenue growth across the business. Global leasing revenue increased by 5% for Cushman, led by growth of a third in Europe, the Middle East and Africa. Valuation revenue was up by 1%, while services and capital markets declined by 3% and 1% respectively. In EMEA, revenue of $222.4m was 8% ahead of Q1 2023. Capital markets revenue in the region rose by 15%, while valuation nudged up by 3% and services dipped by 7%. The EMEA division made a loss of $10.5m, compared to a $24.3m loss a year ago. MacKay said the agency had seen a shift in the type of deals driving office leasing activity. “In Q4 of last year, it was largely larger leases being cut in higher-quality buildings,” she said. “Now, we are starting to see a mix in a combination of those same leases, we are starting to see a mix-in of smaller tenants, still in high-quality buildings… but smaller leases in the first quarter of this year.” There was a similar story at CBRE, which said companies’ “progress” on bringing workers back into the office had helped boost leasing revenue over the start of the year. Leasing revenue grew by 4% year-on-year in the three months, with a 9% lift in Asia-Pacific and 4% increases in the Americas and EMEA. Office leasing posted a double-digit rise globally. Elsewhere in the agency’s advisory segment, the firm said EMEA had “bucked the downward global trend” in capital markets, with sales revenue up 8%, driven by the UK and Spain. Chair and chief executive Bob Sulentic said earnings had “exceeded our expectations heading into the year”. “Leasing outperformed expectations, driven by office leasing growth globally that reflects a resilient economy and companies making progress on bringing their employees back to the office,” he added. Guess work JLL posted growth in capital markets revenue across all business lines over the first quarter of the year, helping the agency turn around the loss of a year ago. The agency said investment sales and debt and equity advisory revenue were up by 8% year-on-year at $258.7m, with value and risk advisory, and loan servicing also increasing. JLL pointed to strength in Japan and Germany, specifically in offices. In the markets advisory division, revenue growth of 5% was largely driven by property management and a mid-single-digit increase in US leasing revenue. Leasing also saw a lift at Colliers, where chief executive Jay Hennick said a focus on recurring service lines “is paying off handsomely, reshaping and repositioning our business for the future”. Capital markets, however, remained in the doldrums, dropping by 9% and acting as a reminder that the outlook for the rest of the year is not universally rosy. “From my perspective, the outlook is really quite straightforward. All of our businesses are doing extremely well with the exception of capital markets, which everybody knows and that’s very interest rate-driven,” Hennick told an analyst on the firm’s earnings call. “So your guess is as good as mine as to when that’s going to change. But when it does it has a material positive impact not only on Colliers, but any other business in the industry. It really will have a significant impact.”