CBRE’s Net Income Dropped 55% Year-Over-Year in Q3

It’s been a rough year for CBRE Group, and it’s likely to remain that way into 2024.

The Dallas-based global real estate giant’s profits dropped by more than 55 percent year-over-year in the third quarter to almost $191 million, down from nearly $467 million in profits in the third quarter of 2022, the Dallas Morning News reported.

Moreover, CBRE’s net quarterly revenue fell by 4.2 percent year-over-year to $4.4 billion. The firm’s struggles reflect how challenges like high interest rates, economic uncertainty and shifts in the office market have hindered commercial real estate across much of the nation.

“Commercial real estate capital markets remained under significant pressure in the third quarter,” CBRE CEO Bob Sulentic said. “As a result, we experienced a sustained slowdown in property sales and debt financing activity, which drove the decline in core earnings-per-share. This decline was exacerbated by delays in harvesting development assets which we will sell when market conditions improve.”

CBRE’s revenue from property sales declined by roughly 39 percent last quarter compared to the same stretch in 2022, and it lost a little over $22 million in development operations, “reflecting a delay in asset sales amid the uncertain capital markets environment.”

There were a few silver linings in the quarterly report, though. CBRE’s revenue from workplace solutions operations jumped nearly 17 percent from a year prior, and its loan servicing revenue increased by 4 percent. The firm also experienced gains in its facilities and project management businesses.

After CBRE’s net income fell 58 percent year-over-year in the second quarter, the company anticipated continued struggles for the rest of 2023, with hopes of a big bounceback in 2024. Now, it has adjusted its outlook ever more, forecasting that a meaningful recovery in the commercial real estate sector is unlikely until the second half of 2024, primarily contingent on a reduction in interest rates and improved access to credit. CBRE expects its earnings per share to decline by more than 30 percent in 2023, the outlet reported.

In response to ongoing industry declines, CBRE is planning further cost reductions, having already reduced its workforce and postponed certain projects. It’s also exploring merger and acquisition opportunities.

—Quinn Donoghue