Dive Brief:
- Cushman & Wakefield reported a decline in its services segment revenue in the second quarter of 2024 and the first half of 2024. Revenue from its leasing business, however, climbed marginally driven by the Americas and the Asia-Pacific, the company said.
- Revenue for the firm’s services business, formerly property, facilities and project management, fell 3% in U.S. dollar terms year over year to $864.5 million in the second quarter and about $1.74 billion for the first half of 2024. Revenue for its leasing business rose 2% year over year to $450.3 million in the second quarter and increased 3% year over year to $832 million in the first half of the year, the company said in an earnings release Monday.
- The company also signed a definitive agreement in June to offload its non-core assets to an undisclosed buyer and expects to receive about $130 million in gross cash proceeds when the deal closes, expectedly in the third quarter, Cushman & Wakefield CFO Neil Johnston said on an earnings call Monday evening. Johnston and CEO Michelle MacKay said the company plans to channel the proceeds toward strategic growth investments and reducing the company’s financial leverage through debt paydowns.
Dive Insight:
Cushman & Wakefield’s total revenue dropped 5% over year to $2.28 billion in the second quarter of 2024. Total revenue for the first half of 2024 dipped 4% year over year to about $4.47 billion, the company said.
Within the services business, facility services grew 2% and property management revenues were flat, while project development services dipped as “office clients deferred expansion plans,” Johnston said. “We expect to see improvements in this business line as office leasing activity accelerates.”
Johnston noted that the company's facility services business in the U.S. “is a very large business” for Cushman & Wakefield and that management expects growth in its U.S. facility business to return to the mid-to-high single digits “as we look through [2025].”
The company, however, has had some pressure in its property management and project management businesses, Johnston reported. “[With] the office and the constraints being built out of office, we’ve seen that business challenged in the short term … [but] we expect that to pick up quite quickly and really drive the growth through 2025,” he said.
*Americas fee revenue for its services business, which has accounted for 54% of fee revenue in the last 12 months, decreased approximately 3.5% year over year to $607 million in the second quarter. Americas fee revenue for its leasing business rose 2% to $352 million, representing 31% of fee revenue in the last 12 months, according to the company’s earnings presentation.
Cushman & Wakefield experienced its “third consecutive quarter of leasing revenue growth,” MacKay noted on the call. The company continues to see a robust performance in mid-sized leasing deals in the Americas, demonstrating stabilization in the leasing market, with growth in industrial, office and retail leasing, according to Johnston. In the second quarter, the company’s office leasing activity in core and mid-sized deals in the Americas was at 19%, compared with 8% in the first quarter, Johnston said. “Overall, I think it’s working out. … We’re ahead of plans through six months,” he said.
Johnston also noted that offices require space for employees to come in at least three days a week since the work-from-home phenomenon is now “in the rear-view mirror.” This trend is broadening, and alongside consistency in geography and global leasing growth, points to a healthier market in the second half of 2024, he said.
Looking ahead, Cushman & Wakefield expects flat organic revenue growth in its services business, excluding divestitures, with leasing revenue growth in the low to mid-single digits through 2024, according to its earnings presentation.
Revenue for the company’s capital markets business declined 15% year over year to $163.2 million in the second quarter of 2024 and decreased 9% in U.S. dollar terms year over year to $304.8 million during the first half of 2024, according to its earnings release. Revenue for its ‘valuation and other’ segment fell 4% in U.S. dollar terms year over year to $105.7 million in the second quarter and 1% year over year to $208.9 million in the first half of 2024.
