When CBRE splashed £960m buying a 60% stake in project manager Turner & Townsend in July 2021, chair and chief executive Bob Sulentic said it would leverage a “tidal wave of opportunity”.
Now, almost three years to the day, as the firm ups its stake in the business and transfers its project management team into Turner & Townsend, Sulentic is ready to provide the capital to make sure none of that opportunity gets washed away.
“We see a lot of opportunity for growth across multiple dimensions of project management, cost consultancy, programme management, etc,” Sulentic tells EG in an exclusive interview at CBRE’s London headquarters.
“We have got a lot of capital to invest in direct growth. In the last year we probably invested about $1.5bn-$2bn (£1.1bn-£1.5bn). We want to push capital into this business to do acquisitions, if they are available.
“CBRE on its own was not well positioned to do acquisitions in the areas of green energy, natural resources and infrastructure.
“With Turner & Townsend now leading this, those opportunities will arise, and we will address them when they come up. And that will create some non-organic growth.”
In June, CBRE announced plans to combine its project management business with the majority-owned subsidiary Turner & Townsend, creating a global giant in Turner & Townsend and catapulting it to number one positions all around the world. The combined business will have more than 20,000 employees and will have a footprint that spans 60 countries.
For Sulentic, it is all part of the CBRE ambition to be an unequivocal global leader.
“We are in nine lines of business around the world, and we are global leaders in six of them,” he says.
“Maybe one day we will expand beyond those nine lines of business, but what I want to do is be the clear global leader and expand our lead and have a platform where we are always positioned to drive resources into places that our customers are looking for us to do more. Into places that are growing, places where we have what we call the ‘right to win’.”
And the investment in Turner & Townsend certainly has provided a win. Since the initial acquisition in 2021, revenue in the now combined business has grown at a double-digit rate with a net profit margin of 15%. For the 2023 full year, the combined businesses delivered a revenue of $3bn.
For Turner & Townsend chairman and chief executive Vincent Clancy, the combination allows his business to execute on its ambitions.
“From our perspective the deal unleashes a lot,” he says. “It allows us to combine two great businesses and overnight become number one project manager in the world in real estate, and number one cost manager in the world in real estate. We get unrivalled global coverage. Our combined footprint is the best in the world in terms of what clients can access.”
He adds: “We exist to be a partner to the world’s biggest corporate clients and if we are going to do that, we need to service everything that they do. That is where the complementary skillsets come in.
“CBRE is world class at running portfolios and day-to-day real estate project management for customers. Our reputation in the past has been largely on the larger-scale complex programmes, such as the Shard or Battersea Power Station here in London. Put those two things together and you have something unique.”
He adds that a “core part” of the business model is being able to solve all of the “pain points” for customers, and being the one place they can go to achieve that. Clancy says: “When you combine our core offer with CBRE’s verticals from brokerage, through to their investment capability, no one else can do that at the scale we can.”
And with Sulentic’s offer of capital to invest to further grow that scale, Clancy is readying himself to seize on the opportunities.
“While there is volatility going on in markets around the world, the longer-term fact is there is a lot of stuff that needs to get done in real estate. We are seeing our customers looking at how they consume real estate and reshape their portfolios. We’re seeing technology start to drive a massive investment in data centres and battery plants and advance manufacturing,” he says.
“Almost every country in the world needs to reinvent its infrastructure – not least here in the UK – and in clean energy, it is probably one of the biggest spends all around the world, particularly in transmission and power generation, which we are very well placed to be part of.
“We see a lot of opportunity across all of those sectors and this gives us firepower, it gives us access to capital, but also gives us capacity to go where demand is and actually deliver the solutions.”
Clancy says with 60 locations around the world, the combined business is now in every geography that it needs to be in, so growth will be focused on scale, particularly in the US and Asia.
“The end goal is to build the best project management business in the world,” says Clancy. “We’ve been very clear about that from day one.
“What we want to do over the next two years is continue to build capacity and capability around the world. We want to use the CBRE platform to invest in our product. Our industry is changing and the problems are getting bigger and more complex. Technology is coming into play so the size and scale of the enterprise we have created will allow us to invest, and to build what we need to build to be relevant in the future.”
“I think we can build a business like no other,” he adds. “That’s partly about what we can build as the project management business, but it is also about how we are going to combine with the other parts of CBRE to give solutions that no other company in the world can do.”
Photos © CBRE/Turner & Townsend
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