In another sign of a weakening global economy, CBRE said in its recent third-quarter earnings call that it plans to cut costs by $400 million, including $300 million in permanent cuts to reduce staffing. CBRE’s CFO Emma Giamartino said during the earnings call that most of the reductions will come in the first quarter of 2023, though she didn’t say how many jobs would be affected.
CBRE, the world’s biggest commercial real estate firm, employs more than 100,000 people globally, but even they aren’t immune to the deteriorating macroeconomic environment. The company posted a year-over-year increase in net income to more than $451 million, but it struggled in other areas in the third quarter. Global sales revenue decreased by 11 percent, and sales revenue in CBRE’s Americas region dropped by 16 percent. The company’s global mortgage origination revenues also fell 28 percent as the real estate lending environment worsened.
Earlier this year, CBRE predicted a mild recession that would peak in the first quarter of 2023, but they’ve changed their tune. The firm now thinks a deeper and more painful recession is imminent. CBRE, of course, is far from the only real estate firm taking a hit. Although real U.S. GDP grew at an annualized rate of 2.5 percent in the third quarter, residential and commercial real estate investment is down.
Many real estate professionals are predicting a recession in the U.S. in the coming months, but most think it will be “short and shallow,” according to the 2023 Emerging Trends in Real Estate report. The report predicts that multifamily and industrial assets, red-hot during the pandemic, will suffer the most from a recession, while hotel and retail may fare better.