Commercial real estate could improve through 2024: JLL CEO
The Fed's interest rates — currently being held at a higher for longer position — are weighing heavily on the real estate market, particularly the commercial real estate sector. Global real estate provider Jones Lang LaSalle Inc. (JLL) reported mixed third-quarter earnings, displaying resiliency over this softening in demand for commercial real estate.
JLL Global CEO Christian Ulbrich joins Yahoo Finance's Rachelle Akuffo to discuss the real estate firm's earnings and its outlook on commercial real estate
"We tend to focus very much on the high-end, kind of the grade A buildings in the large metropolitan areas," Ulbrich states. "On that end, I would say we are probably around trough, maybe a little bit more of vacancy, but not that much, and we see that market probably improving over the course of 2024."
Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.
Video Transcript
RACHELLE AKUFFO: And as you noted in your earnings call, you have some more resilient business lines at least trying to offset some of the losses and the softness that we're seeing. Talk about your plans there to expand your growth and the sort of investments you're making as you're diversifying some of these business lines.
CHRISTIAN ULBRICH: Yeah. I mean, what I would like to see is, you know, we are not making the market. We have to be actively working with that market and be agile in our reactions. And so we are overall very pleased with our performance in the third quarter. And as you rightly say, a large piece of our business are very resilient business lines. We have a very high market share in the outsourcing business, corporate real estate outsourcing business. And that did extremely well the whole year already and also in the last quarter. And we have the ambition to grow that business even more and become slightly less dependent on transactional revenues.
RACHELLE AKUFFO: And when you look within CRE, obviously, a lot of people focus on office vacancies and the office space. But it is a diverse set here. But do you think that the worst of what we've seen with office vacancies are behind us at this point?
CHRISTIAN ULBRICH: That is really hard to predict, because you have to look at the whole market. We tend to focus very much on the high end, kind of the great A buildings and the large metropolitan areas. On that end, I would say we are probably at around trough that may be a little bit of more vacancy but not that much. And we see that market probably improving over the course of 2024.
But there is a lot of office product out there, which what we would call commodity offices, where there will be more difficulty ahead for those type of properties. and in some cases, they are literally obsolete.
RACHELLE AKUFFO: And so then as you look at how work has changed, especially post-pandemic, a lot of the structural changes there. What are some of the ways that you're investing in the technology or really preparing for the future of work as it doesn't seem to be going back to business as usual, there are some nuances that seem to be here to stay?
CHRISTIAN ULBRICH: Absolutely. I think we have to see the future of work as always being a hybrid between working from the office most times of the week, but also working from anywhere. And so we have to support our clients as much as possible to realize that, to create an environment where it's absolutely seamless where some people are in the office, and some people may dial in a conference call from home or whatsoever.
And so there's a lot of technology out there, which supports that. And to integrate that type of technology into the space of our clients is one of our large priorities. We have been investing heavily into that for many, many years. And we are taking now the benefit for that.
