Much of what was said in JLL’s earnings call yesterday is already common knowledge. High interest rates are slowing sales while a contraction in office demand has taken a bite out of leasing activity. This slowdown has impacted JLL’s earnings by 42 percent compared to last year. But some of what came out of call was a bit more surprising. As CEO Christian Ulbrich put it “Dry powder is at near record levels with $386 billion sitting on the sidelines, down slightly from the end of 2021.” He expects this powder to be used once “interest rates stabilize and bid-ask spreads normalize.”
A few other interesting points from the call included the large difference between global markets. While North American and European companies are embracing WFH, the story is quite different in Asia. “The whole of Asia is back to the offices at a very normal level comparable to 2019 pre-pandemic,” Ulbrich said. JLL has also seen increased revenue from both its technology division and its “Workplace Dynamics” division. This suggests that while core activities like leasing might be down, JLL has been able to benefit from occupiers and building owners looking for more value-add services. But Ulbrich added that further layoffs are not out of the question. “I would expect some additional restructuring costs to come through in 2023,” he said.