The fourth quarter of last year was a telling quarter for the commercial real estate brokerage industry. While major brokerage firms reported record revenues and healthy net income last year, results dropped off sharply in the fourth quarter reflecting a weakening commercial real estate environment. The latest quarter results are also a sign of what is to come this year.
CB Richard Ellis Group Inc. reported full year 2007 revenue rose 49.7% to $6 billion. The company reported net income of $390.5 million compared to net income of $318.6 million in 2006. However, fourth quarter revenue was just 30.4% compared to the year earlier and net income was less in the fourth quarter of 2007 compared to a year earlier.
Jones Lang LaSalle Inc. reported record net income of $256 million for the year, an increase of 46% over 2006. Revenue for the full year 2007 was $2.7 billion, an increase of 32% from the prior year. Fourth quarter net income increased just 30% from a year earlier and revenue only 22% from 2006.
Both firms are world powerhouses, but it is clear from where the slowdown is coming. For Jones Lang LaSalle, revenue in the Americas region for the full year 2007 was $765 million, an increase of 23% over the prior year, but fourth quarter revenue increased just 11%.
For CB Richard Ellis, sales in the Americas increased by 7% for the full year but decreased by 14% for the fourth quarter. As for leasing, for the full year leasing activity increased 3% but fourth quarter was flat.
Executives from the two companies added color to the numbers and provided their outlooks for the coming year in their quarterly conference calls following the release of the results this month.