Third-quarter revenue at CBRE remained relatively flat with a decline in capital markets continuing to hit income levels.
The adviser reported Q3 revenue of $7.8bn (£6.4bn) for the three months ended 30 September, down by 4.5% on the same period in 2022. Revenue in the firm’s advisory segment, which includes capital markets and leasing, was down by 17.3% year-on-year at just over $2bn. Global leasing revenue was down by 16%, led by the Americas (down 21%) and EMEA (down 11%).
Capital markets revenue fell by 38% as buyers and sellers paused activity amid sharply rising interest rates. Transactionary revenue declines were most stark in EMEA – down by 47% – followed by the Americas, where revenue dropped by 41%.
“Commercial real estate capital markets remained under significant pressure in the third quarter,” said president and chief executive Bob Sulentic. “As a result, we experienced a sustained slowdown in property sales and debt financing activity, which drove the decline in core earnings-per-share. This decline was exacerbated by delays in harvesting development assets, which we will sell when market conditions improve.”
He added: “Interest rates have increased more than 100 basis points since we reported second-quarter results 90 days ago, continuing the sharpest rise in rates in nearly 40 years. The unexpected jump in rates has pushed back the capital markets recovery.”
CBRE’s global workplace solution division was the star performer, reporting a solid 16.6% increase in revenue to $5.6bn. Facilities management was up by 14%, with project management revenue growing by 15%.
In light of the continuing challenges in the real estate capital markets, CBRE said it now expected 2023 core earnings-per-share to decrease by mid-30%, compared with a 20% to 25% decline anticipated when the company reported second-quarter results 90 days ago. The reduced outlook is almost entirely attributable to the company’s interest-rate-sensitive businesses.
The adviser said it believed 2023 would be “the trough for earnings”.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
