Agency bosses on their $230m capital markets beat

When Barry Gosin is this excited, he just can’t hide it. And the chief executive of Newmark isn’t the only agency boss feeling upbeat as the third-quarter earnings season draws to a close. After tough years, the all-important capital markets divisions are back in business at all but one of the big US-listed real estate firms. Across Newmark, CBRE, JLL and Colliers, capital markets revenue for the three months to 30 September was a combined $228.3m (£178m) higher year-on-year. Only Cushman & Wakefield posted a fall in quarterly revenue from that business, at 4%. At Newmark, capital markets revenue was up by 18.5% year-on-year to $188.7m, the fourth consecutive quarter of growth. The surge was led by a 45% increase in origination fees, and Gosin said he expected a “strong pipeline of capital markets transactions” to continue into 2025. “We are more excited than ever about Newmark’s future,” he added. “You’ve had four years of headwinds,” Gosin told analysts on an earnings call. “Once the discovery of pricing [is achieved] and the appropriate amount of capitulation on values, there will be a lot of trades, and we are seeing that now. It started over a couple of months ago, but the move in short-term interest rates always puts a little bit of [a] damper on activity. So it’s hard to predict exactly when, but we see a lot of activity.” We are so back JLL’s top team also welcomed a rebound in the real estate capital. Chief financial officer Karen Brennan said a 14% lift in capital markets revenue to $498.8m over the three months came on the back of “improved investor sentiment along with interest rate reductions from many central banks, pent-up demand, significant dry powder and improved debt availability”. “We are in the early stages of recovery for the real estate capital markets,” added chief executive Christian Ulbrich. “Bidder activity further improved in the third quarter from what we saw in the first half of the year, particularly for larger institutional transactions.” Ulbrich said the agency had yet to see “any pause” in what he expects to be a steady recovery. “There will be no flood of new deals coming, but we will see a seasonal uptick now in the fourth quarter and then we expect a continuous improvement over the course of 2025,” he added. Colliers’ third-quarter capital markets revenue rise beat the firm’s expectations at 17%, reaching $188.2m, the best growth in the agency’s real estate services division. The firm expects more to come on that front, with real estate services chief executive Chris McLernon telling analysts that the fourth quarter is “a seasonably strong quarter for us” in which the team expects 25% quarter-on-quarter growth. “Some deals will slip over,” he added. “But it seems like there is good strong belief that it will come through in that 25%.” Steady not steep Some agency bosses have been more cautious. When CBRE kicked off earnings season last month, chief executive Bob Sulentic said: “Our current expectation is not that it’s going to be a steep capital markets recovery. We think it will be a steady recovery. We think buyers and sellers have largely come together for most asset classes or are very close to having come together. Not yet for office, obviously.” But Sulentic emphasised that CBRE’s performance will not hinge on that business line. “We share the market’s enthusiasm and expect to benefit from a capital markets recovery over the next several years,” he said. “But it’s important to stress that CBRE’s strong short- and long-term growth prospects are excellent regardless of the real estate capital markets impacts. This owes to the progress we have made in building our resilient businesses, our leadership in the global leasing markets, and the large and growing total addressable market for our business.” He added: “Real estate capital markets are important to our business, but their lower relative contribution to our performance underscores the extent to which we have evolved and diversified CBRE’s business and underpins our confidence in our strong long-term outlook.” No firm has more to play for than Cushman, the sole agency not to benefit from a pick-up in activity during the third quarter. Chief executive Michelle MacKay is hopeful of an eventual upturn: “As we said in the past, we are expecting this to be a long multi-year recovery in capital markets. In our last earnings call, I referred to it as waterfall effects, with the market producing more and more velocity in volume over time.” Image © Gerd Altmann/Pixabay