In the latest sign of the growth of data centers to support artificial intelligence, CBRE is buying a provider of advanced technical support related to digital and power systems for $1.2 billion as the world's largest commercial real estate services firm looks to boost its bottom line.
Dallas-based CBRE closed on the purchase of Paso Robles, California-based Pearce Services Tuesday from New Mountain Capital, a New York-based investment firm. The all-cash deal includes an additional $115 million subject to Pearce Services meeting undisclosed performance thresholds in 2027.
Pearce Services ensures machines and equipment run smoothly and efficiently for its blue-chip clients in North America that span industries, and its most high-profile business is tied to data centers.
The biggest percentage — about 34% — of Pearce's expected revenue for this year comes from critical power and cooling systems, followed by renewable energy generation and storage at 30%, and wireless and fiber networks at 29%. The remaining 7% of Pearce's expected 2025 revenue comes from electric vehicle charging networks.
"Our economy is more physical than people think of it," Jamie Hodari, CEO of CBRE's Building Operations & Experience business segment, told CoStar News. For example, he said, look at the amount of money companies like Google and Meta are spending on "data centers, infrastructure and offices and how fundamental those are to the success of those businesses."
Independent operations
Hodari told CoStar News that Pearce Services is expected to keep its operations "relatively independent" for the foreseeable future.
"The most visible piece of critical infrastructure right now is data centers and that's going to be an important part of Pearce's future," Hodari said. "A lot of big asset owners, from Blackstone to Related, have made it clear that critical infrastructure is a major theme for them."
The acquisition of Pearce Services was a year in the making, officials told CoStar News. Pearce Services was founded in 1998 and has more than 4,000 workers in North America and India, including highly trained technicians, teams of design engineers and quality assurance specialists.
Pearce CEO Michelle Edler told CoStar News the firm got its start in telecommunications in the late 1990s before turning to renewable energy in 2020 and then expanding last year into critical infrastructure backing data centers and other facilities.
"When we met with CBRE, it seemed like such a great natural fit to leverage their scale and their presence in that space," Edler said. "They're already providing operational maintenance to those critical infrastructure facilities. CBRE is just a huge accelerant in that journey for us."
Prior to the acquisition, Pearce had been a supplier to CBRE for at least the past five to 10 years, said Edler, who is expected to continue in her leadership role under the CBRE umbrella and report to Hodari.
M&A activity
Officials said the deal is expected to be "immediately accretive to CBRE's core earnings-per-share" with Pearce Services to operate as part of CBRE's Building Operations & Experience business segment.
Hodari took on the role as CEO of the Building Operations & Experience segment as well as chief commercial officer in January after the coworking business he helped create, Industrious, was fully acquired by Dallas-based CBRE, as reported by CoStar News.
CBRE Chair and CEO Bob Sulentic said in a statement the Pearce acquisition "complements our large and growing presence in digital and power infrastructure" that includes services and investments in data centers, wireless and fiber networks as well as power and energy assets.
In all, CBRE has deployed more than $9.5 billion of capital through mergers and acquisitions, as well as equity investments, during Sulentic's tenure as CEO since the end of 2012.
Pearce is expected to generate more than $660 million of revenue in 2026. Its revenue has grown at "a low double-digit compound annual rate since 2022."
With the Pearce acquisition, CBRE expects to generate more than $350 million of core earnings before interest, taxes, depreciation and amortization from its digital and power infrastructure services business in 2026. That does not include any profits from potential data center development land sales.
And CBRE's Hodari said the Pearce deal hints at what's to come for CBRE's M&A activity.
"We are dead set on continuing to enhance our technical capabilities and our experiential capabilities and we want to continue taking every avenue we can to accomplish that," Hodari said.
For the record
J.P. Morgan Securities and Wells Fargo were the financial advisers. Sullivan & Cromwell LLP was the legal adviser to CBRE. Ropes & Gray LLP acted as legal adviser to Pearce and New Mountain Capital.