Tariffs Cast Uncertainty Over Brokerages' Strong Q1 Earnings

Major commercial real estate brokerages posted solid first-quarter growth, but lingering concerns over U.S. trade policies are tempering optimism for the rest of 2025.

Jordan B.
May 12, 2025

Together with

Good morning. Commercial real estate's top brokerages posted strong Q1 results, but trade tariffs threaten momentum. Plus, private-label CMBS issuance hit $37.55B in Q1 2025.

Today’s issue is sponsored by PACE Loan Group—a smarter way to finance your next project.

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EARNINGS REPORT

Tariffs Cloud Brokerages' Strong Q1 Recovery

Major commercial real estate brokerages posted solid first-quarter growth, but lingering concerns over U.S. trade policies are tempering optimism for the rest of 2025.

Wins across the board: Colliers, CBRE, Newmark, Cushman & Wakefield, and JLL all exceeded expectations. Colliers led with 14% revenue growth, CBRE saw a 30% jump in net income, and JLL's office leasing surpassed 2019 levels for the fifth straight quarter.

Tariffs slow down deals: Despite strong earnings, Colliers CEO Jay Hennick noted optimism faded as tariffs delayed financing and deal closures. Newmark's CFO echoed this, saying guidance would have been raised if not for trade concerns. CBRE and Cushman & Wakefield also held back on boosting forecasts.

Breathing life: JLL’s U.S. office leasing exceeded 2019 levels, marking its fifth straight quarter of growth. Global leasing was up 18% year-over-year. Executives noted industrial assets are more vulnerable to trade disruptions.

Supply crunch: Piper Sandler's Alexander Goldfarb highlighted tight supply across sectors as a stabilizing force. He noted undersupply and a healthy banking sector are keeping demand strong, even with economic volatility.

➥ THE TAKEAWAY

Looking ahead: Recent trade negotiation changes raise hopes for resolution, with Treasury Secretary Scott Bessent leading discussions. Analysts believe that if the 10-year U.S. Treasury yield remains under 5%—currently at 4.4%—transaction volume could surge in the second half of 2025.

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*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

✍️ Editor’s Picks

CMBS surge: Private-label CMBS issuance hit $37.55B in Q1 2025, a 21.7% increase from Q4 2024, and more than double the volume from Q1 2024.
Event roadmap: Map out your year with the ultimate guide to the top CRE conferences, networking forums, and investment summits. (sponsored)
Let’s make a deal: U.S. and China agreed to cut reciprocal tariffs by 115% for 90 days, spiking Dow futures by 850 points and signaling a major easing of trade tensions.
Deal of the day: Invesco closed a $1.2B commercial real estate CLO, the largest in three years, backed by a mix of multifamily and industrial loans primarily in the southern U.S.
Economic fatigue: The NY Fed reported that Americans' financial outlook worsened in April, with expectations of slower income growth, higher unemployment, and rising inflation for rent, gas, and college costs.
STEM-U: Walmart heirs Steuart and Tom Walton are opening a STEM-focused university on the former Walmart HQ site in Bentonville, aiming to train students for high-demand fields like automation, logistics, and biotech.

🏘️ MULTIFAMILY

Double burden: In cities like Denver, Seattle, and San Francisco, families are spending almost as much on daycare as they are on rent—sometimes more.
Lease extension: Related Urban is seeking to extend its ground lease to 99 years for a mixed-income project in Miami-Dade, potentially generating $97.4M for the county and adding 316 units under the Live Local Act.
Site for sale: The cleared lot of the Sunset Plaza Apartments, destroyed in the January LA wildfires, is now listed for nearly $20M, offering a shovel-ready site for luxury multifamily redevelopment.
Big Bay Area deal: PCCP acquired a 1,770-unit multifamily portfolio from Veritas and Ivanhoé Cambridge for $540.5M, marking the largest Bay Area multifamily deal of 2025.

🏭 Industrial

Industrial report: E-commerce growth boosted industrial real estate demand in 2024, pushing U.S. warehouse space to 345.5M SF under construction, despite rising tariffs and development costs.
SLC hub: Walmart purchased a 1M SF distribution center in Salt Lake City after leasing it for three years, strengthening its Fulfillment Services network.

🏬 RETAIL

Out with the old: Old Navy signed a 55,000-SF lease at Herald Towers in Manhattan, marking the largest retail deal in the city for 2025 and setting up its next-generation flagship.
Micro stores: Peloton plans to expand its 300-square-foot micro-store concept, first tested successfully in Nashville, to reestablish a cost-effective retail presence.

🏢 OFFICE

Earnings report: JLL's leasing revenue rose 13%, driven by strong office demand and a 16% jump in capital markets services.
Sublease: Zscaler signed a $69.5M sublease for 301K SF from Airbnb in Santa Clara, set to begin in September 2026, fully occupying two Sobrato-owned buildings.
Back to work: BlackRock is reportedly requiring its 1,000 senior managers to work from the office five days a week, scaling back hybrid work allowances for top leadership.
Back in the black: WeWork achieved EBITDA profitability for two consecutive quarters after exiting bankruptcy, with plans to expand into trophy office towers while refreshing key locations.

🏨 HOSPITALITY

Rising costs: Hotel operating costs outpaced revenue in 2024, squeezing margins and pressuring financial stability into 2025.
Earnings report: IHG Hotels & Resorts opened 86 hotels in Q1 2025, including its first net-zero carbon hotel, with CEO Elie Maalouf signaling easing economic volatility and confidence in meeting profit targets.