CBRE is the largest commercial brokerage, so when they report earnings it can be a way to gauge the market for commercial property as a whole. Yesterday CBRE held its quarterly earnings call, which, expectedly, showed that earnings were down for the company as a whole. Even though the earnings fell around 55 percent from this quarter last year, the call had a rather rosy tone. One of the reasons for CBRE to be optimistic is that earnings did not drop as much as analysts expected. The main driver of the losses was a drop in sales revenue due to the limited number of transactions taking place. Interestingly, losses in capital markets, advisory, leasing, and investment were offset by a 12 percent increase in revenue from facilities management and a 16 percent increase in project managements. Looks like more building owners are willing to put money into better spaces and better management in order to find tenants in this tough market.
The other reason that CBRE is optimistic is the better-than-expected economic conditions. “The economy performed better than we had anticipated going into the quarter in terms of both GDP and employment growth,” the report said. However, it did admit that the opposite was true when it comes to interest rates, which are higher than they predicted last year. CBRE also thinks that the global economy has created a light at the end of the tunnel, “we are beginning to see signs in our own business that will eventually lead to improved performance, likely starting next year.” If this is true, then 2023 might just be a small dip for the commercial property industry, not the end of days that so many have predicted.