Contact Us

The Lag In Office Leasing Won't Punish CBRE This Year, Execs Say

Companies are shying away from relatively large office leases, apparently contenting themselves with smaller deals, CBRE Chief Financial Officer Leah Stearns said during the company's most recent earnings call on Tuesday. 


"We are seeing greater resilience among U.S. leasing transactions generating less than $1M of revenue, which were down just 25%, versus a decline of over 60% for those over $1M," Stearns said.

She predicts continued adverse pressure on office leasing this year, especially when compared with other property types and office space in other parts of the world.

"During 2021, we expect continued growth in industrial and multifamily transactions as well as a modest rebound in retail leasing to offset continued pressure in the office market," Stearns said. "Within office, we anticipate quicker leasing improvement outside of the Americas."

For CBRE, however, the lag in office leasing won't be punishing. The company expects strong growth in other parts of its business to more than offset lower demand for office space, especially as hybrid work models result in smaller corporate footprints, Stearns said.

"Leasing is a key line of business for us that has been under pressure," CBRE President and CEO Bob Sulentic said. "However, other lines of business, such as GSE financing, investment management and facilities management, have all continued to grow." 

Regarding the company's recent $200M investment in Industrious, Sulentic said that the company overlaps with what CBRE has been trying to do with its flexible office space offering, Hana, which chalked up a $40M loss for CBRE over the last year.

"It was the perfect flex space operator for us to invest in," Sulentic said. "They have an asset-light model that means that they provide flex space as a service — as a service to landlord, as a service to tenants. They are not taking long-term leases and then turning around and doing short-term leases with occupiers.

"They are very, very riveted on client service," he noted. "We were super proud of Hana’s client service and they beat us. They topped us. They were the one-off operator in the marketplace that had better client service.”

Related Topics: CBRE, Bob Sulentic, Leah Stearns