CBRE revenue rises despite market uncertainty
Revenue at CBRE’s Pacific Advisory Services ticked up 4 per cent in the third quarter, despite the broader slowdown of activity in the commercial property market as rising rates and economic uncertainty weigh on business confidence.
Doing the heavy lifting for the New York-listed CBRE’s local arm were its property management and valuation and advisory services businesses, which both recorded strong double-digit revenue growth. Adding to the uplift was the acquisition of TelferYoung, New Zealand’s largest independent property valuation and advisory firm.
“Leasing revenue rebounded despite economic uncertainty,” Phil Rowland, chief of CBRE Australian and New Zealand operations, said.
“Office occupier activity was underpinned by healthy levels of white-collar employment growth and a heightened focus on high-quality space to strengthen the employee value proposition. However, we’re seeing some signs that rising wages and input costs are impacting business certainty, with leasing decisions taking longer to execute.”
The slowdown was evident on the transactions front as well, with $8 billion in deals struck by CBRE and its peers in the 2022 third quarter across the office, retail and industrial markets, down from $12.1 billion in the previous corresponding quarter.
“Sales performance for the quarter was subdued reflecting lower volumes of transaction activity as interest rate rises, inflation and a deteriorating global economic outlook weighed on investor sentiment,” Mr Rowland said.
Also noteworthy were the efforts of its agribusiness, hotel and retail teams, which nailed down a number of significant transactions, Mr Rowland said. The debt and structured finance team also had an active quarter as owners and investors looked to adjust to a rising interest rate cycle, he said.
The local results reflect broader trends across its global operations, with the commercial property powerhouse posting a 19 per cent drop in its core earnings per share measure over the third quarter. Headquartered in Dallas, CBRE reported core pre-tax earnings of $US606 million ($944 million) last week.
“Lower third quarter core earnings-per-share reflected a sharp deterioration in the macro environment, particularly with regard to capital availability for transactions,” chief executive Bob Sulentic said in a statement. “Nevertheless, core earnings-per-share was well above any third quarter in our history, except for last year’s especially strong result.”
