Cushman & Wakefield Plays Down Tariffs, Says Its Multiyear Recovery Is Just Starting

The impact of President Donald Trump's tariffs looms for much of the industry, but it had little effect on Cushman & Wakefield's first quarter, according to CEO Michelle MacKay.

In an earnings call Tuesday, MacKay pointed to strong sales and leasing as well as the best capital markets growth since the beginning of 2022 as signs of an improving market, one the Chicago-based brokerage doesn't anticipate being derailed by tariff uncertainty.

“We're continuing to see improving trends in office and strong demand for high-quality products, and in the industrial sector, we also continue to see absorption of space is performing in line with our expectations for the year,” MacKay said on the call.

Tariffs have frozen deals and heightened uncertainty across commercial real estate. But nearly all of Cushman & Wakefield's clients are moving forward with decisions on their existing timelines, with MacKay estimating 5% or fewer of the firm's clients have opted to delay decisions to later in the year. 

“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,” MacKay said.

Sales of nearly $2.3B bested analyst estimates by 2.5% and were up 4.6% over the firm's results for the same quarter last year. Revenue fell shy of the $2.6B the firm posted in Q4 of last year, but net income of $1.9M was a major turnaround from the $28.8M loss it took this time last year.

The brokerage's results were buoyed by leasing growth of 8%, driven by strong performance in the office and industrial sectors in the Americas.

Even with the specter of recession, MacKay said office leasing remained strong through the quarter, and companies are standing firm with their return-to-office strategies. 

“Lease terms are getting longer,” she said. “They're up to about 77 months on average in Q1.”

MacKay said Cushman & Wakefield's industrial leasing had outperformed the company’s own expectations for the last year and a half, though she acknowledged that could soften if demand levels off in the wake of tariffs.

“But what hasn't changed, even in the midst of the tariff discussions, is that businesses still need industrial space to get their products to their customers,” she said. “We're helping them figure that out and executing on their strategies, whether they're the old strategies or they're the modified strategies.”

Cushman & Wakefield's stock spent most of the morning climbing and was up more than 5.5% as of 3 p.m. ET.

The firm’s guidance for the remainder of the year remains fundamentally unchanged from last quarter, executives said. It expects investments in the business will accelerate, though that increased spending will be balanced with a focus on long-term returns and a sharp eye on the economy.

“Given that the range of possible outcomes for the economy has widened, we will remain flexible and watchful of the operating environment and make any necessary adjustments, just as we've done successfully over the past several years,” Chief Financial Officer Neil Johnston said.

In a note to investors after the call, JPMorgan Chase analysts characterized Cushman & Wakefield’s Q1 results as positive but said they would scrutinize its stronger-than-expected margins.

“[Cushman & Wakefield] expects to give back some of the margin performance from 1Q in 2Q due to expense timing,” they wrote. “But despite this, we came away with the sense that margins overall are running a little better.”

JPMorgan has a neutral rating on Cushman & Wakefield's stock and a $14-per-share price target, which was reduced from an estimate of $17 earlier this month.

“Cushman continues to shift from a more defensive stance (cost containment, deleveraging, etc.) to a more offensive approach that prioritizes positioning ahead of a market recovery, which we ultimately support, but may weigh on the pace of margin expansion in the near term,” investment bank and financial services company William Blair said in its analysis.

“That said, even while the company is ramping up reinvestment back into organic growth initiatives, profit this quarter came in nicely above our expectations.”

Cushman & Wakefield continued to attack its leverage last quarter, paying down an extra $25M in debt. That brought its repaid debt total to $230M since MacKay was named CEO two years ago. 

“For the past 18 months, we focused on building the strength to fuel long-term growth, and today we're seeing that strategy come to life,” MacKay said.

The firm completed a repricing of $1B of terminal debt, lowering its interest rate by 25 basis points. That marks the fifth time Cushman & Wakefield has repriced or refinanced debt during MacKay’s tenure. The firm has no funded debt maturities until 2028 and plans to continue chipping away at that this year. 

The addition of former Westbrook Partners executive Miles Treaster as the firm's president of capital markets netted positive results this quarter, MacKay said. Cushman & Wakefield closed out 2024 with its strongest capital markets growth since the beginning of 2022. The segment rose 11% in Q1. 

The firm’s pipeline of large capital markets deals was double its size from a year ago, MacKay said.

“We are at the beginning of a multiyear recovery in commercial real estate,” she said. “Given our improved balance sheet, enhanced execution and large market opportunity, we believe our shares represent a compelling value opportunity for investors.”