EUR 850.00 For Business Accounts Only

Morningstar | CBRE's increasingly diversified platform has secular tailwinds and is more resistent to a recession.

As general economic uncertainty starts to mount, real estate market participants--tenants, owners, and investors--prefer to wait for more stable outlooks before making significant capital decisions. However, when market sentiment does turn positive, previously pent-up demand for new supply and capital deployment can lead to periods of dramatic growth and investment returns. While the cycle influences results temporarily, we believe CBRE Group, the largest commercial real estate services firm, is set to win a greater share of the overall market through organic growth, strategic hiring, and acquisitions.CBRE has built an industry-leading commercial real estate services platform and brand name with a breadth of expertise across its interconnected service lines and investment management arm. Already ranked number one in leasing, property sales, outsourcing, and valuation, the firm is well positioned to serve local market clients but is also one of just a few firms that can serve as a one-stop shop to increasingly global clients that are further outsourcing and consolidating their noncore commercial real estate needs. As urbanization continues globally, we expect similar expansion in the demand for fragmented commercial real estate markets, fueling growth for trusted and recognizable institutional firms.CBRE has been reinforcing its platform with recent acquisitions, including Norland, Whitestone, and Global Workplace Solutions. The necessity-based property and facilities management business proved relatively resilient through the most recent downturn, as outsourcing has grown. We expect the segment to remain a strong contributor, allowing CBRE to develop its relationships and cross-selling opportunities. However, CBRE's history of acquisitions and market position may have come at a higher price; we estimate CBRE's historical ROIC spread to its cost of capital to be slimmer than rival JLL's. That said, given the ability to win incremental share because of its global reach, broad capabilities, and respected brand, we believe CBRE is in a position to build upon a platform with meaningful long-term value.