With More Companies Shifting into Expansion Mode, Leasing Starts to Overtake Capital Markets as Income Motorist for International Brokerages
Benefitting immensely from the strong capital flows into realty and an uptick in leasing activity, CRE brokers and other service providers are taking pleasure in lots of fee-based revenue, with international giants CBRE Group, Inc., JLL and Colliers International all reporting double-digit earnings boosts and solid revenue gains in the 2nd quarter of 2015.
For the 7th time in 8 quarters, Los Angeles-based CBRE posted international double-digit boosts in revenue (12 %) and earnings (17 %) during the 2nd quarter of 2015. Chicago-based JLL reported a 21 % boost in revenues and 7.5 % boost in income, with fee-based income increasing 17 % to a record $1.2 billion in the quarter. JLL’s capital markets and hotels divisions led all company lines with a 22 % rise in earnings.
Senior executives for the two business stated that while financial investment sales continue to make up the bulk of commission-based profits and total earnings, leasing activity is ramping up in the current realty cycle, driven by task growth, business growths and the widening economic recuperation.
JLL said international leasing volumes grew by 8 % in the second quarter compared with a year back, reaching the highest level in more than 3 years, matching the growth rate of financial investment sales volume for the first time in the present cycle during the second quarter, JLL CEO Colin Dyer said.
“Growth is now increasingly heading business agendas, so leasing market need principles strengthened further in the quarter, together with rental rates,” Dyer said. “Momentum and confidence are remaining to build in industrial realty markets worldwide.”
CBRE’s U.S. leasing income grew at a double-digit clip for the eighth successive quarter, showing enhanced productivity from current brokers along with contributions from brand-new producers who are migrating to CBRE at an impressive rate, CBRE CFO Jim Groch stated.
“Leasing in the Americas is still reasonably early in the recovery stage, but it remains to move strongly,” Groch said. “We have actually only recovered the jobs we lost in the last economic downturn [considering that] April of in 2013, and it is the pick-up in jobs that has actually been at a modest pace however constant, and that’s assisted gradually enhance rental rates and has actually offered some fuel behind the [renting] business.”
In its inaugural quarter as a standalone different public business after splitting off from FirstService Corp. previously this year, Colliers International Group Inc. (Nasdaq: CIGI) on Wednesday reported an 11 % year-over-year increase in second-quarter profits to $409.8 million. Colliers also reported that changed EBITDA (earnings prior to incomes before interest taxes, depreciation and amortization) increased 30 % to $44.6 million.
Colliers reported strong financial outcomes in spite of taking an outsized hit on international currency issues, as 65 % of the company’s earnings are created outside the U.S., stated Colliers Chairman and CEO Jay S. Hennick.
“Strong internal earnings growth and significant margin expansion was achieved throughout the board, specifically in our European operations. We anticipate our strong momentum in the very first half of the year to continue for the balance of the year,” Hennick stated.
The ongoing strength in capital markets was reflected in the quarterly results reported by CRE debt and equity intermediary and companies HFF, Inc., which saw profits increase about 32 % in the second quarter of 2015 year-over-year to $125 million.
Earnings jumped 68 % to $21.2 million from $12.6 million a year ago, driven in part by a 64 % spike in financial obligation positioning volume to $9.82 billion in 320 deals, up from $6 billion a year ago. HFF’s financial investment sales jumped 20 % throughout the quarter to $8.2 billion from $6.8 billion a year ago.
“The huge bulk of U.S. loan providers continue to be very determined, very thoughtful, extremely positive in how they’re underwriting the business,” HFF CEO Mark Gibson told experts. “It appears that there has been no memory loss from 2008, 2009, with the participants in the marketplace.”