Tariffs A Speed Bump On The Road To Brokerages' Planned Recovery

Commercial real estate’s biggest brokerages posted strong first-quarter results, largely beating expectations and offering an early indicator that a market recovery is in the making.

But despite robust first-quarter growth, the firms also hedged their expectations for the rest of the year as macroeconomic uncertainty casts a shadow over the financial bright spots that emerged at the start of the year.

“We were, I would say, at the beginning of the quarter, excited that things were stabilizing,” Colliers CEO Jay Hennick said during his firm’s May 6 earnings call. “And then, of course, all this tariff stuff started and all of a sudden transactions that were close to closing had financing tied up and a variety of other things just were put on delay.”

Toronto-based Colliers met analysts’ forecasts in the first quarter, posting a 14% increase in revenue compared to the prior year. Nearly all the other major brokerages posted first-quarter earnings at the high end or ahead of forecasts. None missed projections. But President Donald Trump’s turbulent trade war looms over commercial real estate.

As brokerages reported upbeat data, executives across the sector had something of a dual message: Tariffs were having only a modest impact on transaction activity, and they expect the uncertainty around trade policy to be resolved in short order. Still, not one firm opted to increase its guidance for the year.

“We’re seeing our pipelines continue to build on a year-over-year basis. For Q2, we’re seeing up about 10% or so in terms of our pipelines,” Newmark’s Chief Financial Officer Mike Rispoli said on an April 30 earnings call where the brokerage reported double-digit growth across its business lines.

“Had the macroenvironment been different, we certainly would have been considering guiding towards the higher end of the range or perhaps even increasing guidance. But the macroenvironment is what it is,” Rispoli said. 

It was a common refrain. 

CBRE opted not to increase its guidance despite increasing net income by a robust 30% in the first quarter compared to a year earlier. 

“We ended the quarter with strong pipelines, and as we've gone through the early part of April we've seen really good activity,” CEO Bob Sulentic said. “But we have seen some implications of what's going on with tariffs.”

Cushman & Wakefield Chief Financial Officer Neil Johnston told analysts that its guidance “remains essentially unchanged,” although he acknowledged that “the range of possible outcomes for the economy has widened.”

The year began with expectations that the commercial real estate sector was set to see a broad-based recovery as occupiers and corporate users broke free from the wait-and-see approach to decision-making that has dominated the postpandemic landscape. The first quarter saw some truth to that thesis, with the major brokerage firms, except Cushman & Wakefield, posting double-digit increases in net revenue. 

The ongoing trade war is injecting new uncertainty into a commercial real estate market that has yearned for predictability. Brokerage leaders conceded that the shifting sentiment could weigh on transaction volume, but they said the effects would be limited and short-lived.  

“We took a cautious outlook at the beginning of the year, given the macroeconomic and political uncertainty at the time, and we're sure glad we did,” Hennick said on Colliers’ earnings call.

Cushman & Wakefield CEO Michelle MacKay said she hadn’t seen the same slowdown in activity. During the firm’s earnings call, she told analysts that 5% or less of the brokerage’s clients had delayed deals as a result of macroeconomic uncertainty. 

“What we're not witnessing is a freeze in decision-making, and that's in large part why we see our Q2 numbers and, frankly, our 2025 performance staying intact,” she said.

Karen Brennan, chief financial officer at JLL, echoed MacKay on the brokerage’s May 7 earnings call. JLL rode strong transaction volume to beat first-quarter forecasts, with $5.7B in revenue and double-digit growth in both its transactional and resilient business lines. 

First-quarter office leasing volume in the U.S. exceeded 2019 levels and notched its fifth consecutive quarter of growth. Globally, office leasing was up 18% year-over-year at JLL, and Brennan said momentum was continuing to build despite the ongoing trade war.

“We have not yet seen it come through for office decisions, but we will continue to watch closely,” she said. “The backdrop is that the market overall is in a healthy position.”

Executives said that the tit-for-tat trade battle has had little bearing on space decisions across sectors, with industrial assets the most likely to be impacted. Macroeconomic uncertainty has wide-reaching implications across asset types, but most commercial real estate sectors are fundamentally undersupplied, making it an attractive sector for investors, said Alexander Goldfarb, managing director at Piper Sandler and an analyst covering Newmark. 

The pandemic kept developers from breaking ground on new retail developments, the office sector is seeing its worst assets be pulled out of total inventory for redevelopment or conversion, and most markets have thus far been able to absorb the Covid-era boom in apartment construction, Goldfarb said. Too much bulk distribution space might have been built in recent years, but new speculative construction for the product type has effectively disappeared. 

“Since the end of the second World War, we've never had a real estate cycle where you have declining supply, healthy occupancies and a banking system that's pretty healthy — that is not foreclosing left and right on buildings,” Goldfarb said. “What that's translating to is a pretty healthy real estate market.”

Still, Piper Sandler updated its guidance on Newmark following the Q1 results, maintaining an overweight rating but cutting its price target by three dollars to $16, higher than its current trading price of around $11.32 per share.

Tight supply dynamics are expected to continue to fuel transactions through the year, with CBRE Chief Financial Officer Emma Giamartino saying the firm expects deals will continue to close so long as the yield on 10-year U.S. Treasury bond stays below 5%. The 10-year yield was roughly 4.4% Friday, and it hasn’t been above 5% since 2007.

Recent developments at the White House have boosted hopes that the tariff battles will be sorted in short order, leaving the back half of the year open for a strong return to transaction volume, Goldfarb said. 

Peter Navarro, Trump’s 75-year-old trade adviser and the architect of the White House tariff policy, has reportedly been sidelined following the bungled rollout of tariff policies on April 2, which the president billed as America’s “Liberation Day.” 

Secretary of the Treasury Scott Bessent, a former hedge fund manager and professor of economic history at Yale, has taken a more central role in trade negotiations, which Goldfarb said provided some solace to the investment community and raised hopes of a relatively quick and orderly resolution to the trade disputes. 

“There's such a negative sense in it that we're all ready for the world to end. No one is really prepared for what if this actually works,” Goldfarb said. “Over the past week, there have been some pretty good indications.”