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Budget Cuts in CRE Foretell More Layoffs Ahead

As decreases in property sales and leasing bite into their profitability, many commercial real estate brokerages are gearing up for a financial downturn. While a fluttering of optimism was felt during recent earnings calls from major industry players—analysts were repeatedly assured that once interest rates normalize and investors regain their confidence to resume making deals, activity will pick up in the second half of the year—the message that brokerages must keep their expenses to a minimum for a prolonged slowdown was heard loud and clear.

Many of the largest commercial corporations claim they would dramatically cut spending this year (even though none of them reported a loss in the fourth quarter). JLL plans to save $140 million annually, with around $125 million of that amount coming this year. The $400 million cost-cutting strategy that CBRE revealed last fall is now being carried out; the company reported trimming spending by roughly $80 million in the most recent quarter and plans to do the same with another $300 million this year. Cushman & Wakefield plans to make permanent cuts to save $90 million this year. While some stayed mum on how they plan to achieve this level of cost management, the budget-slashing for all of these firms is expected to be achieved through layoffs.

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