Leaders at CBRE have started 2024 with a tentatively bullish outlook for the year, after posting its third highest full-year earnings in its history.
The global firm posted total revenue of $31.9bn (£25.3m) yesterday, up by 4.1% on 2022. While revenue rose, core EBITDA was down by almost 24%, at $2.2bn, however.
Chief executive Bob Sulentic said: “Even though 2023 was a difficult year for commercial real estate, we delivered the third highest full-year earnings in CBRE’s history as our resilient businesses continued their strong growth. This partly offset market-driven revenue declines in businesses that are sensitive to interest rates and debt availability.”
He added: “We start 2024 with strong new business pipelines across our company. We also see attractive M&A and REI co-investment opportunities. Investor and lender sentiment has improved and we anticipate this will lead to increased transaction volumes, starting in the second half of the year when short-term interest rates are expected to fall.”
Backing up Sulentic’s optimism, chief financial officer Emma Giamartino said she expected 2024 to be the beginning of a market recovery, albeit a more gradual one.
“We are on track to deploy more than $2bn of capital for the 12 months ending Q1 2024,” said Giamartino. “This deployment includes M&A, mostly in our resilient businesses and a record level of co-investment commitments in REI. By thoughtfully using our balance sheet we made targeted opportunistic investments, while other investors have been largely on the sidelines.”
Those investments include its recent acquisition of USD defence department contractor J&J Worldwide Services for $800m.
Giamartino predicted that the agent would grow its advisory revenues by mid to high single digits in 2024, with capital markets also bouncing back. She expects mid-single-digit increases in revenue.
“We expect leasing to grow modestly in 2024,” said Giamartino. “We are cautiously optimistic that the worst is over for office leasing, particularly for class-A properties, where we generate approximately two-thirds of leasing revenue. Leading indicators from our data partner VTS indicate US office demand has been gradually turning up over the last six months. The growing consensus about an economic soft landing coupled with the apparent stabilisation of office utilisation rates may make more employers confident enough to commit to office leases.”
She added: “We are not expecting a material uplift in capital markets activity, but we do expect it to grow at a mid-single-digit rate globally. If the recovery picks up faster than we are expecting and if rates come down further than the market is expecting then there could be upside from there. But our base case scenario is that there won’t be a significant uplift.”
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