Home News JLL Increases Severance Costs As It Reckons With Slowing Investment Climate

JLL Increases Severance Costs As It Reckons With Slowing Investment Climate

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JLL cuts its global earnings forecast for 2022 amid worsening economic conditions.

Global economic headwinds are intensifying JLLOne of the world’s largest commercial real estate brokerages has decided to cut headcount after months of hiring.

Office spent $9.4 million in the third quarter Severance and other employment-related expenses, including those related to external service providers, increased from $1.2 million in the same period last year and expanded from the second quarter. When JLL spent $8.3 million.

Brokerage revenues increased 6% in the third quarter, but net income fell more than 40% to $140.2 billion. Globally, his CRE investment fell 18% year over year to his $234 billion in the quarter, according to JLL research.

JLL executives did not provide details of the job cuts on the Nov. 2 earnings call.

JLL Chief Financial Officer said: Karen Brennan Said talking.

She added that JLL is accommodating more requests for consulting work throughout this period.

“Our clients are asking for more advice than ever before, so we are certainly strict in terms of cutting discretionary spending and really focusing on costs,” she said. “But we also make sure we balance talent with the people we meet with clients who are currently seeking advice.”

JLL is the latest CRE company to consider the impact of rapid change. rising interest rates Investor demand is on the rise, especially as rising borrowing costs raise questions about property values ​​and yields. Last week, JLL’s biggest rival, CBREannounced that it will spend $400 million on cost reductions. come from downsizing.

“In real estate markets around the world, rapidly rising interest rates and significantly widening spreads have created a noticeable imbalance between overall funding costs and yields. is getting tougher,” said JLL CEO. Christian Ulbrick said on the phone. “Bid-ask spreads continue to widen, and the desire to discover more prices is increasing the time it takes to close a trade. The flow is restricted.”

JLL follows CBRE, Newmark When Colliers By reducing annual projected revenue growth, Reported by CoStarBrennan said he expects JLL’s full-year 2022 adjusted margin before interest, taxes, depreciation and amortization to be below its initial forecast range of 16% to 19%. .

Ulbrich expects the investment climate to improve in the second half of 2023. Especially given that investor demand is on the sidelines, waiting for interest rates to definitely return.

“What that means is that we have to raise yields, which is what we call price discovery. said Mr. “For North America, like we said, we expect it will probably take a few more quarters and we see a lot more transaction volume in the second half of next year. There is none.”

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