US Real Estate Brokers "Fundamentals Remain Constructive But Macro..."

Research evidence excerpt

US Real Estate Brokers "Fundamentals Remain Constructive But Macro..."

US Real Estate Brokers UBS Research

Commercial real estate recovery intact, but outlook slightly less

favorable

Following a very constructive narrative earlier in the year, we see increased risk to the

underlying commercial real-estate recovery. We believe the outlook for capital markets

businesses in particular is not as favorable as it appeared three months ago. However,

our expectations for leasing businesses are largely unchanged. Additionally, outsourcing

businesses continue to show solid growth though performance between the three

companies is increasingly diverging. Our FY26 EPS estimates are 1% below consensus

for all three companies as we tweak forecasts to incorporate slightly lower brokerage

activity in the near term, but our EPS estimates remain within FY26 guidance ranges.

The environment was supportive in the first few months of 2026. After a strong 1Q for

all three companies with healthy pipelines coming out of the quarter, CBRE and JLL

raised guidance and CWK maintained FY26 guidance. CBRE currently expects EPS

growth of 19-22%, JLL +16-25% and CWK +15-20%.

We believe the gradual CRE rebound continues, particularly in leasing, but the

environment for capital markets is not as favorable as it appeared three months ago.

With the continuing closure of the Strait of Hormuz impacting the business environment

in Europe and APAC and contributing to higher rates in the U.S., we see potential

downside risk to capital market businesses. The 10yr UST rate has increased from below

4% at the end of February to almost 4.6% currently. With the cost and predictability of

financing less favorable, it is not surprising that transaction data through the end of May