Brokerages Report Losses, Await Distress Business
National Real Estate Investor reports: Times are tough in brokerage land these days, forcing real estate service providers to make deep expense cuts and mine for future business in distressed properties. Confirmation of the challenging business climate came in the latest round of quarterly earnings releases from two of the largest publicly traded services firms.
First, Chicago-based Jones Lang LaSalle (JLL) announced that it lost $61 million, or $1.78 a share, in the first quarter of 2009 compared to a year ago. Revenue fell 12% to $494.2 million from $563.9 million in the same period. The next day, April 29, Los Angeles-based CB Richard Ellis (CBRE) said it lost $36.7 million in the first quarter, with revenue falling 26% to $890.4 million from $1.2 billion in first quarter 2008.
At the crux of the slide is a dearth of transactions. Slowed investment sales and companies holding off on leasing plans translate to lower revenues. According to New York-based research firm Real Capital Analytics, first quarter office building sales nationwide totaled just $3.6 billion. That is the equivalent of only 6% of the peak sales volume of $77.5 billion recorded in the first quarter of 2007.
As more properties and their owners become financially distressed, sales could climb. To date, however, the lack of deals has meant cutbacks and layoffs for every major services firm. Until transaction volume returns in a meaningful way, service providers have shifted to client advisory work and property management mode for the time being.
View the full article on National Real Estate Investor: Brokerages Report Losses, Await Distress Business
Posted by: Mark Alferman