Dive Brief:
- JLL recorded nearly $5.9 billion in revenue in the third quarter of 2024, a 15% year-over-year increase, driven by robust performance in its Work Dynamics business and growth in leasing within its Markets Advisory business, the company reported Wednesday.
- Work Dynamics segment revenue climbed 16% year over year to just over $4 billion in the quarter, driven by workplace management revenue, which rose 20% to about $3.2 billion, the company said. Leasing revenue grew 21% year over year to about $665 million, with “broad-based geographic and asset class growth” led by activity in the U.S. office sector, JLL noted.
- JLL announced in September that it would consolidate its building operation groups, with the property management business moving under Work Dynamics CEO Neil Murray, effective Jan. 1, 2025. As part of this realignment, Work Dynamics will be renamed as Real Estate Management Services, while Markets Advisory will be rechristened as Leasing Advisory, with the aim of better capitalizing on “synergies across platform, operation, innovation and client experience,” CEO Christian Ulbrich said on an earnings call Wednesday.
Dive Insight:
The new Real Estate Management Services segment will include workplace management, property management, project management and portfolio services businesses, Ulbrich said.
Revenue from JLL’s resilient businesses — which include workplace management within Work Dynamics; property management within Markets Advisory; value and risk advisory and loan servicing within Capital Markets; JLL Technologies; and advisory fees within LaSalle — collectively rose 16% in local currency terms in the third quarter, per JLL’s earnings release.
Within JLL’s Work Dynamics business, project management revenue increased 3% year over year to $771.3 million in the third quarter, while portfolio services and other businesses were up 1% in local currency during that time, the company reported. “Project management revenue performance varied across geographies, given shifts in business mix,” as lower pass-through costs partially offset mid-single-digit increases in management fees, per JLL’s earnings release.
The 16% year-over-year increase in workplace management in the third quarter was largely attributable to U.S. mandate expansions, JLL said in the release. That means JLL has increased its scope of services for clients seeking workplace management solutions. CFO Karen Brennan pointed to new client wins for workplace management in the third quarter. “So, the sustained growth of 29% on a two-year stack basis has exceeded our expectations in project management [and] we remain focused on securing additional mandates,” she said on the call.
Revenue for JLL’s Markets Advisory business rose 15% year over year to $1.14 billion in the third quarter. Global office leasing volumes in the third quarter climbed 12% year over year, “with the start of the Fed’s loosening cycle, moderating downsizing trends and progress on office attendance policies” contributing to a 25% growth in the U.S., JLL reported in its earnings presentation. “The office sector, which saw both increased yield size and transaction volume, led to acceleration with 34% growth globally,” CFO Karen Brennan said on the call.
While U.S. office activity led the growth in leasing, global activity in the industrial sector declined during the third quarter, with “occupiers looking to push utilization of existing space and delaying decisions amid high interest rates and energy costs,” per the presentation. The U.S. industrial pipeline continues to decline with a 22% drop in new completions for the quarter, marking the third consecutive quarter of slowing deliveries, JLL said.
The number of larger-scale leasing deals, however, has increased year over year in nearly all asset classes, according to JLL’s earnings release. “We continue to see growth in active tenant requirements and demand for high-quality assets,” Brennan said, expressing optimism for a continued pickup in activity.
Property management, currently in Markets Advisory, grew revenue 8% year over year to $452.3 million in the third quarter. This revenue growth was led by expansion in the U.S. and several countries in the Asia-Pacific region, including “incremental revenue in the U.S. associated with pass-through expenses,” JLL said.
Revenue for JLL Technologies dipped 4% year over year to about $56.7 million in the third quarter, according to JLL’s earnings release. The firm attributed the decline to “lower contract signings for service offerings over the last few quarters, partially offset by growth in software offerings.”JLL reported $298.1 billion in adjusted earnings before interest, taxes, depreciation and amortization in the third quarter — a 37% improvement year over year.
