Look out below: Major real estate services firms brace for falling earnings

Coronavirus-related inactivity and volatility in Q2 will likely spell big trouble for giants like CBRE, JLL and Cushman, analysts say

TRD NATIONAL /
Jul.July 24, 2020 01:00 PM
(iStock)
(iStock)

The latest earnings reports are approaching for major real estate services firms like CBRE, JLL and Cushman & Wakefield, but there likely won’t be much in the way of optimism in the industry.

The U.S. economy bore the brunt of the coronavirus pandemic in the second quarter, and some analysts expect those April through June declines to be more drastic than the ones experienced a decade ago, according to Business Insider.

“During the last recession, you saw an 80 percent to 90 percent drop in real estate transactions over a two-year period,” said William Blair analyst Stephen Sheldon told the outlet. “This time you’ve seen nearly the same decline in a much shorter time frame year-over-year.”

Sheldon said he expects 40 percent to 50 percent year-over-year declines in earnings for the four biggest firms — CBRE, Cushman & Wakefield, JLL and Colliers International. He predicts as much as a 100 percent drop for Marcus & Millichap, because the firm relies so heavily on sales.

Cushman reported a 70 percent decline in net income in the first quarter. Declines in leasing and capital markets business were buoyed by steady income from property management. As of May, the firm had put acquisitions and mergers on hold.

Shares for Cushman were trading below $11 as of Friday morning, down from highs of around $20 earlier this year. CBRE shares were down 30 percent for the year. JLL and Colliers shares were both down around 40 percent. [BI] — Dennis Lynch 


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