Some of the biggest names in the real estate agency market are lining up cost cuts ahead of a potential recession, including slowing hiring and limiting travel.
Emma Giamartino, CBRE’s global group president, chief financial officer and chief investment officer, said the agency expects a slowdown in the third quarter and a recession in the final months of the year, continuing into 2023.
“We are already taking steps to limit new hires, eliminate non-client related travel and entertainment, and reduce other discretionary expenditures,” Giamartino said on a call to discuss the agency’s second-quarter results. “And we are prepared to go further if we decide more reductions are needed. While achieving these cost efficiencies, we will continue to make very targeted organic investments into areas where we expect a high return.”
Giamartino added: “CBRE has had a track record of moving aggressively with targeted cost reductions when market conditions soften. We have invested in leadership, processes and systems to enable these reductions, and we now consider it a core competency.”
Cushman & Wakefield chief executive John Forrester said the agency’s focus during the second half of the year is how to be “very careful about how we use every dollar in the company”. Asked by analysts about hiring plans, he said the firm aims to continue adding expertise in markets including life sciences, biotechnology and data centres, but could move to cut costs in areas of the business not demonstrating growth.
“We continue to want to hire into those secular growth areas at weight, at global connectivity, and then the flip side [is] we’re being very careful on those sectors when there’s less growth,” Forrester said.
He continued: “You’ve got variables that are still in the market, such as travel, marketing, research, support. All of [those] we can boil down on a sector-by-sector, location-by-location basis, and ensure that we’re not allowing any part of the business to either be starved of resources for growth – which is critical, as much of our portfolio will continue to grow through a downturn – but we’ll be very sharp on costs, as we always have been, in any other area which sees less than positive growth.”
At JLL, chief financial officer Karen Brennan said the team anticipates revenue growth moderating in the coming months due to “a somewhat less constructive macroeconomic backdrop”.
“In terms of the levers we can pull, we’ve already started to pull some of them as it relates to looking at more limitations on future growth and investment in certain areas of our business,” Brennan said. “Certainly, we demonstrated during the Covid environment that we can pull levers and pull back significantly on spending. They can start with specific variable expenses such as T&E and marketing and then go into more constraint on hiring.”
On hiring, she added: “We’ll definitely be focused on keeping a close eye in terms of the macroeconomic environment, looking at our pipelines more broadly and hiring in accordance with what we see in terms of the outlook and the long-term prospects. We certainly are taking a more prudent look in certain areas of our business. But there’s other areas where now is a good time to hire talent in a market environment where there’s a little bit more uncertainty. So we’ll be taking a balanced view.”
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