JLL Expects Commercial Real Estate Rebound in 2024
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Episode Transcript:
Leading brokerage JLL endured a punishing 2023 but spying "green shoots" of recovery this year, as cooling rates lure buyers back and narrow the perilous pricing gap with sellers.
The firm saw full-year net income plunge 64% amid a transactions deep freeze. Q4 leasing fees dropped 5% while investment sales remained 60% below pre-pandemic marks, per its latest earnings release.
Yet CEO Christian Ulbrich asserts stabilization is materializing - a "clear willingness" now exists to trade after savage rate hikes subside. Though modest for now, Ulbrich expects deal momentum to steadily crescendo towards mid-2024.
This embryonic revival punctuates JLL's resilience through commercial real estate's tempestuous cycles. The brokerage did outperform profit expectations in Q4 despite contracting fees. And several business lines notched revenue growth - including management, tech solutions, and corporate advisory.
Still, leasing headwinds linger, especially in the office sector where average deal sizes shrank. JLL has weathered the drought partly through repeated workforce cuts to align with shrinking transaction volumes.
Yet leaner teams may soon see workloads rise if Ulbrich's optimism proves warranted. He hints that after years of paralysis, the bid-ask pricing canyon may incrementally narrow to reactivate sales.
JLL is also exploring M&A opportunities to buttress service capabilities as asset valuations cool from frothy heights.
The firm knows crises spawn both risk and reward. While questions remain on the scope and pace of a commercial rebound, JLL seems confident the destabilizing plunge that decimated profits is finally reversing course.
And the brokerage giant looks to regain solid footing through the rubble by capitalizing on recovering investor appetite in a healing marketplace.
This is Tyler Cauble, Signing off