JLL Nearly Doubles Profits, Fueled By Leasing Rebound
A bounce back in sales and leasing activity helped JLL nearly double its net income in the second quarter, the brokerage giant announced Thursday.
Net income was $215.6M in the second quarter, up 92% from the same period last year, helped by a 24% bump in revenue from its leasing business and a 19% increase from capital markets.
The strong results are the latest signal that commercial real estate activity continues to accelerate despite deep-seated macroeconomic and geopolitical uncertainty.
“Our resilient businesses show what durable organic growth looks like in real estate services: high client retention, deeper enterprise relationships and a platform that becomes more efficient and resilient as it scales,” CEO Christian Ulbrich said during JLL’s earnings call Thursday morning. “We firmly believe continued investment in data and AI will make these businesses even more scalable and valuable to our clients.”
Adjusted earnings per share was up 59% year-over-year to $5.26, and JLL repurchased $110M in shares over the second quarter. That was $300M less than it repurchased in the first quarter, but Chief Financial Officer Kelly Howe said the brokerage was always considering whether to tap its $2.6B in remaining repurchase authorizations.
Total revenue was $6.9B, up 11%, driven by the double-digit growth in leasing and capital markets, with the management services segment up 8%.
William Blair analyst Stephen Sheldon called the results a “stellar quarter” in a note to investors Thursday morning. JLL raised its own annual earnings guidance, increasing its midpoint by 14 percentage points, which Sheldon said was “much bigger” than he expected.
Despite volatility in Treasury bonds, flatlining interest rates and broader geopolitical uncertainty, JLL anticipates deal momentum will continue to build, as it hasn’t seen clients move to the sidelines, Howe said. The impacts from growing conflict across the Middle East haven’t had an immediate impact on its pipeline, although some deals were taking longer to close, she said.
“There’s a lot of pent-up demand on the sidelines, and there’s a lot of capital,” Howe said. “The debt markets are very liquid at the moment, and so we don’t have huge concerns about the interest rate environment going through the rest of the year.”
Office leasing activity at JLL was flat for the quarter compared to the prior two years, at 10M SF globally. But rent growth for prime office assets was 4.3%, with Ulbrich highlighting the ongoing flight to quality as driving returns and new construction setting record rental rates.
“Even in those geographies where the economic environment is weak, we have that situation where we see new record rents, and at the same time, you go half a mile down the road, and you have vacant buildings,” Ulbrich said.
In industrial, second-quarter leasing volume in North America totaled 17M SF, up 5M SF from the same period a year prior, buoyed by third-party logistics and e-commerce leasing. U.S. activity was up 49% year-over-year, driven in part by businesses making decisions on deferred requirements.
Data centers were noticeably absent from conversation across Thursday’s earnings call, except for a mention that the sector was a tailwind for project management fee growth. In response to a question from an analyst, Ulbrich said it is targeting 80% recurring revenue and 20% transaction-related revenue from the asset class.
Capital markets revenue was up 19%, and adjusted earnings before interest, taxes, depreciation and amortization was up 74% to $95M. JLL’s investment management business was largely flat year-over-year.
JLL outperformed its competitors that have reported second-quarter earnings, despite gains from all the firms.
CBRE saw 16% revenue growth, with CEO Bob Sulentic highlighting the brokerage’s infrastructure and data center services business as a strong tailwind. At Newmark, revenue jumped 17% year-over-year on a boost from leasing in core markets. Colliers reported results Thursday, with revenue also up 17% to $1.6B and a 6% increase in earnings per share.
