Dive Brief:
- Cushman & Wakefield grew fee revenue 6% year over year in the Americas to nearly $1.18 billion during the third quarter of 2024, with growth in leasing revenue helping offset flat services revenue in the region, the company reported Monday.
- Leasing fee revenue in the Americas grew about 16% year over year to $396 million, driven by broad strength in the industrial and office asset classes as a result of improved business optimism. Services fee revenue in the Americas remained flat year over year in the third quarter at $605 million, with global revenue in the segment declining 2% to $865.2 million, according to its earnings presentation.
- “Overall, we see tremendous opportunity in the services business and as we look at pipelines, 2025 will be a key year for that growth to start happening,” Cushman & Wakefield CFO Neil Johnston said on an earnings call Monday. Johnston noted that the company expects the project management side of the business to pick up as it starts seeing stronger leasing and capital markets activity.
Dive Insight:
The company’s global leasing fee revenue climbed 13% year over year in the third quarter, marking its fourth consecutive quarter of global leasing fee revenue growth, according to Cushman & Wakefield’s earnings presentation.The growth in leasing contributed to Cushman & Wakefield’s total revenue, which grew 3% year over year to $2.3 billion in the third quarter and declined 2% year over year to $6.8 billion year to date through Sept. 30, the company said.
For the first three quarters ended Sept. 30, leasing revenue recorded roughly 7% year-over-year growth, reaching $1.32 billion driven by broad strength across all segments, particularly in the Americas, while services revenue dipped 2% to $2.6 billion.
Within the services business, project and property management growth has been slower this year, especially in multifamily and short-term project management, Johnston said on the call.
On Aug. 1, the company offloaded Cushman & Wakefield Facility Solutions, formerly known as Quality Solutions, Inc., to facilities maintenance company Vixxo. The sale of this non-core services business in the Americas led to a loss on disposition of $4.5 million during the quarter and $17 million during the first three quarters, Cushman & Wakefield reported.
On the call, CEO Michelle MacKay noted that reaccelerating revenue and profitability for the services business through “organic investments and tuck-in acquisitions” will be a key capital allocation priority looking forward.
Johnston expressed confidence in that growth acceleration and highlighted facilities management as a central component. Cushman & Wakefield’s facilities services business is seeing positive momentum with low-single-digit growth, supported by healthier contracts and a robust business development pipeline, in addition to strong performance in the Asia-Pacific region, he noted.
The company is “most excited” about its global occupied services business, which has presented “some really nice wins recently,” Johnston said. “We see a lot of potential in fully integrating our businesses with the [global occupied services] business. That will take longer to translate the wins into the positive revenue growth, but [it’s] certainly an area that we are very, very focused on and we see a nice growth path there.”
“We are making targeted investments to connect talent, data and technology across our platform to drive both efficiencies and revenue opportunities,” MacKay said. Partnering its multi-market account with internal data analytics and services teams to provide integrated services to mid-sized companies seeking advisory solutions and brokerage execution, for example, resulted in a 50% year-over-year increase in requests for proposals, MacKay said.
“We have identified opportunities for meaningful labor management improvements, especially in our services businesses. Strengthening these capabilities allows us not only to better manage costs, but also enhance our global platform offerings,” MacKay said. “With a focus on talent, we have already achieved a 260 basis point improvement in top talent retention over the past year.”
The cost and efficiency initiatives Cushman & Wakefield has been undertaking will “mostly offset” full year cost headwinds, the real estate services firm said in its earnings presentation.
“[We’re] raising our 2024 leasing revenue growth expectation to mid-single digit growth from low to mid-single digit growth, primarily based on the third quarter's strong performance,” Johnston said on the earnings call. “In services, we continue to forecast flat organic revenue growth in 2024 with a target of returning to mid-single digit growth in 2025.”
