- CBRE saw a 12% increase in facilities management revenue during the second quarter, according to the firm’s Q2 earnings report.
- The firm saw a notable jump in first-generation outsourcing clients and a 46% increase in project management revenue, which offset weaker demand for property sales and advisory services.
- CBRE's earnings report showed strong demand for project management and enterprise services, alongside geographic expansion of its U.S.-based facility management business.
Solid growth in the facility and project management segments combined to drive a 13% increase in CBRE's Global Workplace Solutions segment, helping limit net revenue to a 6.8% decrease from the second quarter of 2022.
Chief Financial Officer Emma Giamartino ascribed the growth of its local facility management service to CBRE’s purchase of Norland in 2013. She said the acquisition drove CBRE’s efforts to self-perform technical engineering services for commercial buildings and provide clients with outsourcing services.
Although the acquisition was originally intended to drive CBRE’s Europe, Middle East and Africa business segments, it has rapidly expanded to serve the U.S. market, CBRE said.
“Our local business represents a tremendous growth opportunity, particularly in the U.S., which is expected to account for just 15% of this business line's net revenue this year,” Giamartino said. She added that the business has grown significantly from its original U.K. focus and cited an expectation of more than 20% growth in net revenue this year.
CBRE also noted that the slight decline in GWS’s operating profit margins was due to higher operational investment spend during the second quarter. That investment has been channeled toward expanding its local business line across multiple geographies, and also includes expenses related to integrating recent acquisitions.
“You’re seeing [those costs] in this quarter,” Giamartino said during the earnings call, stating that the local business line is expected to be a strong contributor to GWS’ growth over time. “We expect that to steadily alleviate through the rest of the year… with the GWS margin in line with last year,” she added.
An overall decline in sales was largely driven by a steep drop in advisory service and property sale revenue, which fell 21% and 44% from last year’s record highs. During the company’s second-quarter earnings call, Giamartino said these drops include a more-than-expected 49% fall in U.S. property sales.
CBRE’s Americas leasing revenue also nosedived 22% in the second quarter, driving a 16% decline in global leasing revenue, which the firm noted was in-line with expectations.
The company also posted a $6 million loss in its non-core operating expenses, attributing that figure to an unfavorable fair value adjustment of its investment in EV-charging and local solar generation firm Altus Power. CBRE had acquired Altus Power in a SPAC deal in December 2021.