JLL reports $9.2M loss

The damage done by the commercial real estate downturn was enough to push JLL’s bottom line into the red.

The Chicago-based firm reported a net loss of $9.2 million in the first quarter — a massive drop from the same period last year when it netted $145.6 million in profit, and down from the $174.5 million it made in the fourth quarter of 2022, Bisnow reported.

Hiked interest rates, banking fallouts and low demand for office space have all contributed to a rough stretch for JLL and the commercial market as a whole. Vacancy rates soared to new heights this past quarter in Chicago as they have in many cities amid company downsizings, remote-work trends still intact from the pandemic and general worries about the economy.

For JLL, most of the decline came from its capital markets group, which handles investment property sales, with revenues declining from $600 million to $357 million year-over-year. The company’s leasing revenue fell by 15 percent, as well.

The brokerage’s CEO Christian Ulbrich is optimistic, however, that the market will bounce back later this year and that the worst of the banking crisis has passed.

“Domestic banks, as well as the large major banks in the U.S., are back in the market and providing competitive bids on deals,” Ulbrich said. “I take that as a sign that the banks seem to believe that … the overall need to devalue commercial real estate assets is coming close to the point where it has to kind of get to. And that they also believe that the crisis of the small and mid-sized banks, regional banks in the U.S., is under control.”

Other firms are experiencing similar struggles. CBRE’s capital markets activity shrunk by over 40 percent in the first quarter, resulting in a net income of $125 million, compared to $396 million one year prior.

In addition, Cushman & Wakefield reported a 20 percent dip in year-over-year leasing revenue for the first quarter and a 51 percent drop in property sales. 

In February, JLL announced plans to cut costs by $125 million this year, most of which will stem from layoffs.

— Quinn Donoghue