The commercial real estate industry’s biggest service firms continue to slash expenses as the economic slowdown squeezes their business.
UPDATED, Nov. 2, 4:38 p.m.: JLL and CBRE recently made layoffs and budget cuts to trim costs as revenues from business lines such as office leasing and property sales continue to dwindle, according to sources and company disclosures.
Chicago-based JLL, the second-largest commercial real estate services firm with a market cap of $5.8 billion, made a round of national layoffs in mid-October, sources told The Real Deal.
The company’s third-quarter earnings show its global headcount was down about 2 percent to 92,000 in late September from 94,000 in March.
A spokesperson for JLL declined to comment, citing the quiet period before the firm’s third-quarter earnings call scheduled for Monday. But in a company email reviewed by The Real Deal, JLL discussed its plans for what it called “winning the downturn.”
“We now have greater clarity about the economic downturn and the resulting changes in client needs, and we continue to take action to best position our people, clients and business overall,” read the email, which pointed to a “limited number of structural changes and personnel decisions.”
“Structural changes and staff reductions of any kind are difficult and painstakingly considered,” it continued. “Ultimately, we have a responsibility to remain competitive as markets shift, to preserve the strength and resilience of our business and to support our people through this period of uncertainty.”
One source said the majority of the cuts affected employees in the legal, sourcing, finance and operations departments, though they did hit brokers as well.
JLL’s biggest competitor also recently made a round of reductions.
CBRE, whose market cap of $16.6 billion makes it the world’s largest CRE services firm, announced a round of late-September cutbacks on its third-quarter earnings call Thursday afternoon. The company incurred costs for lease terminations and employee severances.
Earlier in the year, CBRE scaled back its workforce in response to Covid-19, and on Thursday’s call company CFO Leah Stearns said the firm is preparing for the recovery taking longer than expected.
“We do expect it to be a more moderate recovery, therefore we are being very cautious around the expense structure for our advisory business,” she said.
CBRE has said that a number of cost-saving measures had been planned before the pandemic.
This story was updated to include figures on JLL’s reduced headcount from its third-quarter financials.