One of the world’s largest commercial real estate brokerage firms remained in the black last year with the help of robust advisory work.

Still, Colliers saw its earnings fall in 2023 compared to the year prior as leasing and capital markets activity struggled amid the overall industry meltdown prompted by high interest rates and uncertain real estate values.

Colliers posted adjusted net earnings of $254.3M for 2023, down 24% from a year earlier, the company reported in its latest filing with the Securities and Exchange Commission. Colliers also reported total adjusted net earnings of $95M in the fourth quarter, down 12.8% from the same period in 2022.

Total revenues for 2023 also didn't match what Colliers executives expected at the end of 2022, achieving $4.3B versus an original outlook of $4.6B to $4.8B for the year.

Outsourcing, advisory and investment management services propped up Colliers’ revenues in 2023, despite the ongoing commercial real estate malaise. Some 58% of the firm’s total revenues are recurring in those three categories, with the remainder related to leasing and capital market transaction fees.

Income from outsourcing and advisory rose 10% from the third quarter to the fourth and 11% year-over-year, and investment management revenue increased 6% over the quarter and 28% year-over-year.

The slowdown in leasing and investment sales activity isn’t likely to change for the better until the back half of 2024, Colliers Chief Financial Officer Christian Mayer said during a Thursday earnings call.

“For the first half of the year, we expect capital markets and leasing transaction volumes to be roughly flat to 2023,” Mayer said. “In the second half, we anticipate year-over-year increases in activity, particularly in capital markets, coinciding with their expectations of stabilization in interest rates and an improvement in credit conditions.”

Colliers Real Estate Services CEO Chris McLernon echoed the idea that real estate sales in particular should pick up in the latter half of 2024, with investors looking to buy industrial, student housing, build-to-rent dwellings and trophy office assets in prime central business districts.

“We’re seeing assets come to market with more realistic valuations as well,” McLernon said. “We’re starting to see some optimism and sentiment rising in real estate investment. Clients are shifting from having discussions to making decisions as there’s a clear outlook to interest rates midyear.”

Layoffs were common among brokerages last year, and Colliers incurred $27.7M in restructuring costs in 2023 as it sought to tighten its belt. While company executives declined to talk about overall headcount, McLernon said the firm has “stronger headcount than ever, particularly in our U.S. business, where we’ve had significant recruiting success over the past 18 months.”

While McLernon said Colliers has “extended our cost-control efforts into 2024 to match the duration of the expected transactional revenue downturn,” the benefits of those cuts have largely been realized, he said.