As far as commercial real estate services firms are concerned, dealmaking is back.
After years of trying to predict when the industry would improve, the five biggest of those companies — CBRE, JLL, Cushman & Wakefield, Colliers and Newmark — raised their financial outlooks for 2025 after posting some of their best earnings in years. Added commissions from property sales and leasing fueled a second quarter that also benefited from increased financing as well as property management fees.
It was the first time all five companies, each with a major brokerage, have increased their expectations in the same quarter since the pandemic upended the commercial real estate industry in 2020. That improvement is also showing up in smaller firms, property executives say.
"All signs point to this recovery extending through the end of 2025 and gaining further traction into 2026,” said Adam Showalter, a managing director at services firm Stream Realty Partners. "We’re seeing clear signs of sustained recovery" in the Dallas-based firm's 15 core office markets.
To be clear, executives noted that uncertainty — specifically, higher tariffs and slowing job growth — could trigger an economic slowdown that could put a damper on deals. But so far, while tariffs have been disruptive, they haven't had a major effect on deal activity, several CEOs said.
“We believe the worst of the tariff-driven volatility is behind us,” said Hessam Nadji, CEO of investment brokerage Marcus & Millichap in posting quarterly results. “The broader economy continues to show resilience.”
Newfound confidence
Bob Sulentic, chief executive of CBRE, the world's largest property services firm, told investors and analysts the firm's global leasing revenue was the highest for any second quarter, led by demand for office space. He added his firm expects a new earnings peak in 2025, two years after the "2023 trough in the commercial real estate downturn."
Cushman & Wakefield CEO Michelle MacKay said, "Our pipelines are strong, and that gives us confidence heading into the second half of the year."
The confidence follows years of uncertainty coming out of the pandemic and the later interest rate increases the U.S. central bank imposed to try to tame inflation. Just as brokerages started predicting a recovery at the end of 2024, shifting trade policies in the first months of this year largely nixed those expectations.
Now, however, real estate owners and tenants appear to be back in dealmaking mode, from technology firms leasing space in San Francisco to industrial landlords resuming construction of warehouses and manufacturing sites across the United States.
“People are simply tired of waiting it out, especially with this level of market volatility from economic and political uncertainty,” Dan Spiegel, managing director for real estate brokerage Coldwell Banker Commercial, told CoStar News.
He added that buyers and sellers are making concessions that are moving more deals to the finish line.
Peter Abramowitz, an analyst for Jefferies who tracks CBRE, said in a note to investors that the commercial real estate services sector is "in the early innings of a strong capital markets recovery." Henry Chin, global head of research at CBRE, posted on the social media platform LinkedIn that "the U.S. commercial real estate market is continuing its recovery and demonstrating strong resilience in both leasing and investment activity."
Christian Ulbrich, CEO of JLL, told analysts and investors on a conference call that businesses to some extent have screened out economic and geopolitical distractions to focus on their real estate needs: "There is a growing understanding amongst business leaders that the amount of disruption and noise, which is offered by the world and by political leadership globally, will not necessarily get significantly better in the near future."
Demand across property types
Kyle Tangney, senior managing director for real estate investment firm Greysteel, said his firm has also logged year-over-year increases in buying activity.
"We’re seeing more groups back in the market for multifamily assets in the Mid-Atlantic region, many of whom had been on the sidelines for the past two years," Tangney said in an email. "Bidding activity on well-operated properties is up 10% to 30% compared to last year."
Office leasing brokerage Telos Group is seeing an uptick in dealmaking after years of sluggishness. The firm’s assignments include some of Chicago's biggest properties, including Willis Tower, the Old Post Office and the Aon Center.
“We’ve absolutely seen a rise in activity, especially over the past six months, as far as deals getting completed,” said Brian Whiting, the firm’s founder and president, in an interview. “They’re still concentrated in a very small number of buildings, but the number of buildings coming back into the competitive set is increasing as more buildings are recapitalized.”
Return-to-office mandates by major employers such as banking and financial services provider JPMorgan Chase, tech giant Amazon and the federal government have spurred more long-term decision-making around real estate, Whiting said.
“We’ve seen a lot more tenants in the market," Whiting said. With those companies' CEOs “and the president of the United States ordering people back to the office, other companies feel like they have cover to call workers back to the office.”
Headwinds remain
In addition to real estate services firms, a number of the nation's largest landlords and real estate investment trusts have been increasingly optimistic since the start of the year. A majority of that demand, however, has turned out to be concentrated within specific slices of the market, said Phil Mobley, CoStar's national director of market analytics.
"The sector has settled into a battle for market share," he said. "There are some tailwinds from the return-to-office shift, but so far, most of the benefits are accruing to a narrow segment of the market."
The national office vacancy rate has climbed past a record high of 14%, where it has been stuck for the better part of two years as it struggles to regain occupancy and regenerate some of its pre-pandemic levels of momentum.
Meanwhile, office investment sales have lagged as persistent high interest rates have forced many buyers to stay on the sidelines.
"We think the recovery phase is further along in leasing than in sales,” added Abramowitz, the Jefferies analyst.
That said, several green shoots are emerging across the national market's landscape.
Piedmont Realty Trust, one of the largest office real estate investment trusts in the United States, reported its highest quarterly level of new leasing activity since 2018 as tenants commit to larger — and more expensive — deals. Hudson Pacific Properties, too, is set to close its strongest year for office leasing since the pandemic's 2020 outbreak.
"Our leasing pipeline is strong, and I'm optimistic of where we're headed," Douglas Emmett CEO Jordan Kaplan told analysts of the REIT's progress toward rebuilding its portfolio occupancy. "We're signing a lot, and most of our numbers are heading in the right direction."