The uncertainty surrounding tariffs has started to ripple through the commercial real estate sector, reaching even one of the largest players in the industry, CBRE. In its most recent earnings release, CBRE acknowledged that tariffs were casting a shadow over its outlook, making the future “less clear” and causing its project pipelines to shrink compared to previous periods. Bob Sulentic, the company’s chairman and CEO, addressed these concerns, noting that the unpredictability of the duties was beginning to weigh on their business prospects.
Despite these headwinds, CBRE’s first quarter was far from weak. The company reported a 12% year-over-year increase in revenue, which hit $8.9 billion, with net revenue up 15%. Earnings per share surged by 32%, and net income climbed 29%. However, Sulentic emphasized that the real impact of tariffs and their associated uncertainty became more apparent in the second quarter, as detailed during the company’s earnings call.
CBRE managed to raise nearly $5 billion in the first quarter, a figure that surpassed their expectations. Sulentic admitted that the company was surprised by this influx of capital and ended the quarter with considerable enthusiasm.
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Yet, he observed that some global capital sources investing in CBRE’s funds and managed accounts had started to pull back. By the end of the first quarter, expectations had soared above initial forecasts, but as the quarter closed, they returned to levels more in line with the start of the year.
The uncertainty was also evident in project management. Sulentic explained that some corporate clients, wary of the potential fallout from tariffs and the heightened risk of a recession, had begun to slow down their larger initiatives. The company’s outlook shifted from once highly enthusiastic to a more cautious stance, as signs of volatility emerged in the market.
Within CBRE’s business segments, industrial real estate was expected to perform as anticipated, while the office sector proved surprisingly resilient despite the tariff environment. A shortage of new Class A and A+ office space has created a “scarcity circumstance” in major gateway cities and even in prominent second- and third-tier markets.
Sulentic pointed out that companies were recognizing the continued importance of office space, with some driving a return to pre-pandemic norms and others seeing this shift occur naturally.
CBRE was not alone in its concerns. Earlier in the month, Blackstone echoed similar sentiments about the impact of tariffs on investment. CEO Stephen Schwarzman remarked that it was still too early to fully gauge the consequences of tariffs, given the complexity and scale of ongoing multilateral negotiations with over a hundred countries. He stressed that patience and resilience would be crucial as the industry navigated this challenging environment.
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