Jones Lang LaSalle's Q3 2025: Contradictions Emerge on Property Management Growth, Capital Markets Outlook, and CRE Valuation Trends

Business Commentary:

• Revenue and Profit Growth:
• JLL reported a 10% increase in revenue for Q3 2025, with adjusted EBITDA rising 16% and adjusted EPS up 29%.

• The growth was driven by a re-acceleration in transactional businesses, particularly in investment, sales, and debt advisory services, as the macroeconomic outlook stabilized.

• Real Estate Management Services Performance:

• The Real Estate Management Services segment experienced its seventh consecutive quarter of double-digit revenue growth, despite a decline in property management due to intentional contract churn.

• The growth was primarily driven by strong performance in workplace management and project management, with expectations of stable growth in property management post-contract restructuring.

  

• Capital Markets Services Performance:

• The capital markets segment showed significant growth in debt advisory and investment sales, with increases of 47% and 22% respectively.

• The growth was supported by healthy debt markets, improved bidder dynamics, and strong fundraising activity.

• Investment Management and Assets Under Management:

• Investment management revenue was largely unchanged due to offsetting impacts from large client asset dispositions and strong growth in U.S. core open-end funds.

• Assets under management increased sequentially, supported by new equity capital raising and valuation increases, reflecting strong demand for credit and core strategies.

• Software and Technology Solutions Segment:

• The software revenue grew double digits, although tempered by reduced technology solutions spend from large clients.
• The segment is focused on achieving sustained profitability for direct revenue-generating technology businesses, with integration into core business lines expected to drive top and bottom line synergies.
  

Contradiction Point 1

Property Management Growth and Churn

It involves differing expectations for property management growth and the intentional churn, which directly affects revenue and operational strategies.

What caused the slower growth in property management and REM segments? What's driving churn in property management and how do you see broader facilities management growth? - Anthony Pelloni (JP Morgan)

2025Q3: We are focusing on margin improvement in property management, particularly in Asia Pacific. Contract churn is intentional and expected to continue through mid-next year. - Christian Ulbrich(CEO)

What are the growth expectations and margin trends for Real Estate Management Services? - Anthony Paolone (JPMorgan)

2025Q1: Property and facility management in the first quarter grew 5% globally and 9% in the Americas, excluding this project Cyclone Business in that quarter. And as we said, we expect this growth rate to be high single digits to low double digits for the year. - Karen Brennan(CFO)

Contradiction Point 2

Capital Markets Growth Outlook

It involves differing outlooks for the growth of the Capital Markets segment, which is a critical part of the company's revenue stream.

What trends are emerging in Q4, and how do you assess the 2026 pipeline? - Stephen Sheldon (William Blair)

2025Q3: Capital markets show positive momentum with steady transaction growth, led by debt and equity advisory. The outlook remains solid, with disciplined deal closures expected. - Christian Ulbrich(CEO)

Can you discuss current Capital Markets pipelines compared to last year? - Stephen Sheldon (William Blair)

2025Q2: Capital Markets continues to perform quite well in an environment that is a little choppy from time to time. The pipeline is strong and consistent across all asset classes. - Christian Ulbrich(CEO)

Contradiction Point 3

Valuation Trends in Commercial Real Estate

It involves the assessment of valuation trends in the commercial real estate market, which impacts investment decisions and market outlook.

Have we reached a bottom in CRE valuations with modest increases? - Stephen Sheldon (William Blair)

2025Q3: Yes, valuations have bottomed out, with a slight increase now. - Christian Ulbrich(CEO)

Going forward, do you anticipate increased market volatility due to the sharp shift in interest rates? - Pat McIlwee (William Blair)

2025Q1: The public real estate equity markets have been up and down, but mostly down over the past 12 months. And we saw a little bit of a slow recovery in this quarter, but still down year-over-year. - Karen Brennan(CFO)