CB Richard Ellis (NYSE: CBG) and Jones Lang LaSalle (NYSE: JLL), two of the largest publicly traded global commercial property brokerage firms, posted double-digit increases in revenues for the second consecutive quarter, with rebounding investment sales and leasing continuing to drive improvements on their bottom line.
A third global property services firm, Toronto-based FirstService Corp., (Nasdaq:FSRV) parent of Colliers International, reported second-quarter revenue of $217.1 million from its commercial real estate division, a 52% jump over the weak second quarter of 2009. Total revenue was $501.4 million, an 18% increase over the same quarter last year.
“Overall, we were pleased with our quarterly results, with our commercial real estate operations rebounding sharply over the prior year, and both residential property management and property services delivering solid results despite economic conditions, which remain challenging,” said Jay S. Hennick, founder and CEO of FirstService Corp., during a conference call with analysts last week.
CBRE reported its strongest revenue growth in two years. Second-quarter revenue of $1.2 billion was up 22.7% from last year, mostly due to improvements in sales, leasing and outsourcing activity. Net income was $54.8 million, or 17 cents a share, compared to a loss of $6.6 million, or 2 cents per share, during the second quarter a year ago.
CB Richard Ellis CEO Brett White said the company “saw a very strong pickup in property sales and leasing, reflecting recovering market conditions,” especially in the U.S.
“As compared to the second quarter of 2009, investment sales revenue increased more than 60%. Leasing revenue rose 29%, driven by longer term and larger square footage transactions,” White said.
CBRE’s financial performance continued to strengthen across most business lines globally, and “we have good momentum entering the year’s second half,” White said.
“We are mindful of concerns about the pace of economic recovery, but the rebound in commercial real estate activity is progressing,” he said. “During the 2008-2009 downturn, we removed more than $600 million of expense from our platform. We predicted then that even a modest recovery would produce outsized gains in profitability due to this cost reduction, and this is precisely the result we are now seeing.”
Jones Lang LaSalle reported earnings of $32 million for the second quarter, compared with a net loss of $14 million for the same quarter a year earlier. Second-quarter revenue was $680 million, compared with $576 million a year earlier, an 18% increase.
“A key priority has been to improve our operating margins by maintaining cost discipline as markets recover,” Lauralee E. Martin, chief operating and financial officer, told investors in JLL’s earnings conference call last week. “We are now benefiting from increased productivity of our professionals as transaction activities increase.”
The quarterly report “showed a solid performance based broadly across our geographies and service lines,” said Jones Lang LaSalle CEO Colin Dyer.
“Business prospects for the year remain good, and we are moving forward with confidence while watching market and economic dynamics. Our competitive position is strong in real estate markets, which continue their cyclical recovery.”
FirstService’s Hennick said while the company still has work to do to strengthen its platform, “there’s no question that as the commercial real estate market rebounds, our results from this segment of our business will follow suit.”
CBRE’s White urged caution, noting that while the real estate recovery continued to progress in the second quarter, “the trajectory of this recovery is difficult to determine.”
“It is set against the backdrop of a muted and bumpy recovery of the broader economy, with wide geographic variability, from a very quick snap back in most of Asia Pacific to a moderate rebound in the U.S. and to a rebound and stabilization in Europe.”
Hennick voiced a similar caveat, noting that many of the indicators that suggested an accelerating economic recovery at the beginning of the second quarter are now suggesting that growth has slowed moving into the third quarter.
“For this reason, we intend to continue to manage our business very closely this year on a region-by-region basis and see how things roll out,” Hennick said. (credit costar. r.drummer)