Three of the world’s largest property agencies have seen their combined third-quarter revenue fall by almost $1bn (£760m) year-on-year, in an earnings season that has underscored the damage wrought on real estate by the coronavirus pandemic.
At Cushman & Wakefield, the latest agency to report, revenue for the three months to 30 September was $1.9bn – $187.2m, or 9%, lower than in the same period a year ago. Revenue fell in every business line other than property management, pushing the company to a $37.3m loss for the quarter.
Cushman & Wakefield described the impact of Covid-19 on its quarterly results as “significant”, contributing to falls of roughly a third in its revenue from both leasing and capital markets.
Last week, JLL revealed quarterly revenue of $3.9bn, missing last year’s top line by $517.5m. Together with revenue of $5.6bn at CBRE, down $280m year-on-year, the combined third-quarter revenue for the three agency giants is some $984m behind its 2019 level.
Adding results from the first half of the year suggests diverging fortunes for the agencies. Nine-month revenue through to 30 September shows both C&W and JLL down on 2019 by single-digit percentages, but CBRE is marginally ahead of where it stood a year ago, by about 1%, or $141m.
Despite the financial pressures of the pandemic, some agencies are eyeing expansion opportunities through mergers and acquisitions. CBRE chief executive Bob Sulentic said Covid-19 is “putting downward pressure on parts of our business and creating larger opportunities in other parts”.
Discussing the outlook for industry M&A on an earnings call with analysts, Sulentic said: “We are pretty excited about what’s out there for us right now, but I will say we are going to be patient. We are not going to run out just because we have the dry powder we have, because we’re in a low point in the market cycle, and buy up a bunch of stuff unless we think we can integrate it well.”
On JLL’s analyst call, chief executive Christian Ulbrich said: “We are cautiously evaluating the different opportunities we have for our capital allocation. M&A is one of them and the opportunities are increasing quite significantly at the moment. And so we will continue to stay very close to it. But for the time being, we haven’t seen anything which we would think was worth spending our shareholders’ money on.”
Analysts and executives alike are now looking ahead to the fourth quarter and any tentative signs of an economic recovery. JLL chief financial officer Karen Brennan said the agency is “cautiously optimistic” of an improvement in margins.
“We saw the pipelines increasing from the end of the second quarter to end of the third quarter,” she added. “But in the current environment, every day we are hearing some additional bad news out there as it relates to different government lockdowns and actions taken to control the virus, so definitely an area to watch on our top line.”
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