Dive Brief:
- JLL’s Work Dynamics segment grew revenue 15% year over year during the fourth quarter to $4.56 billion, helping to increase its overall revenue 11% during that time.
- North America office leasing volumes were up 16% year over year in the fourth quarter due to higher office attendance and headcount growth that helped occupiers gain clarity on future space needs and led to a moderation in downsizing trends, JLL said Wednesday in its earnings report.
- “We continue to see growth in active tenant requirements and demand for higher quality assets,” Chief Financial Officer Karen Brennan said Wednesday on its Feb. 19 earnings call. “The recent acceleration in the U.S. provides optimism for continued leasing growth in 2025, but possible headwinds from geopolitical developments may impact decision making.”
Dive Insight:
Work dynamics revenue growth was led by a 15% year-over-year increase in workplace management, which grew to $3.47 billion in the fourth quarter, largely from “a balanced mix of client wins and mandate expansions,” in addition to incremental pass-through costs in the U.S., JLL said in its earnings presentation. Project management revenue grew 18% year over year to $936 million.
It was the fourth consecutive quarter of double-digit growth for the segment, led by strength in workplace management and project management, JLL said.
“We remain confident in the long term trajectory of the workplace management business as our sales pipeline is strong and we're focused on capturing mandate expansion opportunities,” Brennan said. “Looking at project management, the recovery and leasing activity goes well for securing additional mandates. The current level of corporate [capital expenditure] spending may dampen near-term growth rates.”
JLL’s markets advisory segment revenue increased 11% year over year in the fourth quarter to nearly $1.33 billion. Globally, the firm’s office leasing grew 20% over the prior quarter, outperforming market growth of 7%, it said, citing JLL Research.
“In the U.S., the fourth quarter marks the first quarter of positive absorption since the fourth quarter of 2021,” Brennan said, noting that JLL’s research team estimates that the U.S. office leasing market is now approximately 80% of the way through the downsizing cycle that has been going on.
“And approximately 30% of leasing activity is now new space requirements, [stemming from] either expansions or net new demand on top of what existed before,” Brennan added.
As a result of improved leasing volumes, leasing revenue grew 14% year over year, supported by double-digit growth across many geographies, most notably the U.S., India and Greater China, JLL said in its presentation.
Effective January 1, JLL’s property management business moved out of the markets advisory segment into work dynamics, which is being renamed Real Estate Management Services. Markets advisory will be renamed leasing advisory, JLL Technologies will be renamed Software and Technology Solutions and LaSalle, Investment Management, per the presentation.
Revenue for the JLL Technologies segment declined 9% year over year in the fourth quarter, per the presentation.
“We continue to align technology investments to drive superior client outcomes, platform scaling to enable further margin expansion to JLL Technologies. Continued growth in software services revenue was more than offset by lower technology solutions bookings over the past year, which drove the segment revenue for both the quarter and full year,” Brennan said.
