Colliers Says Office Leasing Spiked 32% In The Americas Last Quarter
Buoyed by strong leasing, especially in the office market, Colliers reported revenue growth of 6% compared to the same quarter last year.
The Toronto-based brokerage said it saw an across-the-board uptick, including in its once-moribund capital markets division, despite high interest rates and flat sales.
“Colliers had a successful second quarter marked by growth across all our service lines and segments,” Colliers CEO of Real Estate Services Chris McLernon said on a Thursday morning earnings call.
“Reflecting the strength of our diversified platform, leasing revenues were up 13%, driven by strong activity in the office and industrial asset classes in the Americas and the [Europe, Middle East and Africa] regions, as occupiers are becoming more confident in their business plans.”
Executives said office leasing in the Americas increased 32%, reflecting a clear increase in return to work over the past quarter. Industrial leases grew 11% over the same period.
“Our new real estate services segment, which will include targets and leasing as well as outsourcing, is very well positioned for the coming rebound in transactional activity,” Chief Financial Officer Christian Mayer told analysts on the call.
Colliers collected a total of $1.1B in revenue over the second quarter. Its quarterly earnings of $1.36 per share just missed the Zacks consensus estimate of $1.37 per share, an improvement after missing its first-quarter consensus estimate by 18%.
Executives highlighted last month's $475M acquisition of Englobe, an engineering, environmental and inspection services platform. That acquisition, which came from a $1B war chest for acquisitions and closed last week, will bolster its engineering as well as project management services, they said
Global CEO Jay Hennick said that combined with Colliers' own project leaders business, the purchase would make Colliers the leading supplier of real estate services in Canada. That country's cheaper cost of labor will also make the provider an attractive cross-border option.
The Englobe business “aligns with our strategy of increasing our high-value recurring revenue streams, which will now represent 72% of our [overall] earnings,” Hennick said.
Colliers also saw its capital markets business grow for the first time since the second quarter of 2022. However, revenue of $183M for the quarter was flat from a year ago.
Hennick said he expects the segment will fully return to annual growth soon.
“Leasing revenues exceeded expectations, while capital markets saw modest growth for the first time in 24 months, albeit from a relatively low bar,” he said. “With lower interest rates, greater availability of debt and the narrowing of bid-ask spreads, we anticipate the deal activity, and therefore sales volumes for Colliers, should begin to recover from here.”
The firm reported Q2 net earnings of $72M, up more than 50% from the same period last year, when the firm recorded $35M in net earnings. Revenue in the Americas totaled $683M, up 8% from a year ago, thanks to strong leasing and growth in its outsourcing and advisory services lines, executives said.
Colliers stock closed the day up more than 5.6%.
