CBRE Group Q2 2025 Earnings Report

CBRE Group EPS Results

• Actual EPS: $1.19
• Consensus EPS: $1.05
• Beat/Miss: Beat by +$0.14
• One Year Ago EPS: N/A

CBRE Group Revenue Results

• Actual Revenue: $9.75 billion
• Expected Revenue: $9.50 billion
• Beat/Miss: Beat by +$249.42 million
• YoY Revenue Growth: N/A

CBRE Group Announcement Details

• Quarter: Q2 2025
• Date: 7/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, July 29, 2025
• Conference Call Time: 8:30AM ET

CBRE Group (NYSE:CBRE) is a global commercial real estate services and investment firm headquartered in Dallas, Texas. The company provides a broad range of services to occupiers and investors, including property sales and leasing, facilities and project management, valuations and appraisals, mortgage banking, and investment management. CBRE also offers consulting services focused on sustainability, portfolio optimization and strategic advisory to help clients navigate complex real estate challenges.

Tracing its roots to a Coldwell Banker Commercial business founded in 1906, the firm became known as CB Richard Ellis following the 1998 merger of Coldwell Banker Commercial and Richard Ellis International. In 2011, CBRE significantly expanded its U.S. footprint through the acquisition of Trammell Crow Company, a leading real estate development and investment firm. The company adopted the simplified name CBRE Group, Inc. in 2015 to reflect its evolution into a diversified services organization.

CBRE serves clients in more than 100 countries across the Americas, Europe, the Middle East, Africa and Asia Pacific. Its global platform leverages local market expertise and cross-border connectivity to support multinational corporations, institutional investors, developers and public sector entities. The firm’s integrated approach allows clients to access capital markets, manage risk and enhance operational performance in each region where they operate.

Under the leadership of President and CEO Robert Sulentic, CBRE emphasizes innovation, data analytics and technology to drive efficiency and deliver insights. The company invests in proprietary digital platforms and partnerships to improve transaction transparency, optimize building operations and enhance the tenant experience. Through its combination of scale, service breadth and local knowledge, CBRE aims to shape the built environment and create value for clients worldwide.

CBRE Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Double-digit revenue growth in Q2 across both Resilient (17%) and Transactional (15%) businesses, leading CBRE to raise its full-year core EPS guidance to $6.10–$6.20.
• Positive Sentiment: BOE (Building Operations & Experience) delivered 18% revenue and 21% SOP growth with significant operating leverage and plans to unlock more synergies across its 8 billion sq ft portfolio.
• Positive Sentiment: Project Management saw 13% revenue and 18% SOP growth as the integration with Turner & Townsend drove both cost efficiencies and new client wins across enterprise FM and development.
• Positive Sentiment: Advisory segment achieved 14% revenue growth and 50 bps of margin expansion, with global leasing revenues hitting a Q2 record and U.S. office and industrial leasing up 15%.
• Neutral Sentiment: Despite stronger pipelines and robust cash generation—projecting over $1.5 billion in FCF and ~1.0x net leverage by year-end—capital markets activity remains well below prior peak levels.

Presentation

[Operator]

Greetings, and welcome to the CBRE Group Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Chandni Luthra, Global Head of FP and A and Investor Relations for CBRE Group. Thank you. You may begin.

[Chandni Luthra, EVP & Global Head - FP&A & IR at CBRE Group]

Good morning, everyone, and welcome to CBRE's second quarter twenty twenty five earnings conference call. Earlier today, we posted a presentation deck on our website that you can use to follow along with our prepared remarks and an Excel file that contains additional supplemental materials. Today's presentation contains forward looking statements, including without limitation, statements concerning our business outlook, business plans and capital allocation strategy as well as our earnings and cash flow outlook. These statements involve risks and uncertainties that may cause actual results and trends to differ materially. For a full discussion of the risks and other factors that may impact these statements, please refer to this morning's earnings release and our SEC filings.

[Chandni Luthra, EVP & Global Head - FP&A & IR at CBRE Group]

We have provided reconciliations of the non GAAP financial measures discussed on our call to the most directly comparable GAAP measures together with explanations of these measures in our presentation deck appendix. Throughout our remarks, when we cite financial performance relative to expectations, we are referring to actual results against the outlook we provided on our first quarter twenty twenty five earnings call in April, unless otherwise noted. Also, as a reminder, our resilient businesses include facilities management, project management, property management, loan servicing, valuations, other portfolio services and recurring investment management fees. Our transactional businesses comprise property sales, leasing, mortgage origination, carried interest and incentive fee in the investment management business and development fee. I am joined on today's call by Bob Celentic, our Chair and CEO and Emma Gianmartino, our Chief Financial Officer.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Thank you, Chaudhary, and good morning everyone. The strong momentum we exhibited to start the year continued in the second quarter. Despite uncertainty in the macro environment, occupier and investor clients largely proceeded with executing their plans. Both our Resilient and Transactional businesses achieved strong double digit revenue growth. Resilient revenues rose 17% surpassing the 15% growth rate for transactional businesses.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Resilient revenue growing faster than transactional revenue during the market recovery attests to the progress we've made with our resilient businesses. We are especially focused on our two new segments, Building Operations and Experience and Project Management and are pleased with the progress they are making. In BOE, we continued to grow revenue at a mid teens rate and delivered significant operating leverage. As the year unfolds, we expect to identify more opportunities to benefit from synergies available across our nearly 8,000,000,000 square foot management portfolio. Project management achieved strong top line and SOP growth.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

This performance reflects the benefits we've been realizing in the six months since we joined our legacy business with Turner and Townsend. Although we saw some impact from large corporate clients slowing their capital spending, this was more than offset by continued strong gains across the rest of the project management business underscoring the resilience Turner and Townsend's legacy business has contributed to the combined platform. Our Advisory segment had an excellent quarter as sales and leasing transaction activity was strong around the world. Global leasing revenue was the highest for any second quarter in company history led by the continued strong recovery of demand for office space. In light of our outperformance in the year's first half and the pipelines across our business, we're raising our core EPS expectations for the year to a range of $6.1 to $6.2 Achieving the midpoint of our guidance would represent better than 20% growth for the year.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

We expect to set a new earnings peak this year just two years after the 2023 trough in the commercial real estate downturn even though capital markets activity remains well below prior peak levels. Now I'll turn the call over to Emma who will discuss the quarter and our outlook in more detail.

[Emma Giamartino, CFO at CBRE Group]

Thank you, Bob. Good morning, everyone. Our second quarter results exceeded our expectations with core EBITDA and core EPS growing 3047% respectively. I'll detail our results for each segment. Note that all segment level growth rates are in local currency and do not reflect the benefit of an approximately 1% FX tailwind during the quarter.

[Emma Giamartino, CFO at CBRE Group]

In Advisory Services, revenue rose 14% and SOP grew 31%, driven by two fifty basis points of margin expansion. Global leasing revenue rose 13% with double digit growth across all major regions. U. S. Leasing was led by a 15% increase in the office sector, driven by larger leases and broad based growth across the country.

[Emma Giamartino, CFO at CBRE Group]

Growth in non gateway markets outpaced gateway markets, pointing to increased momentum in regions outside of the largest cities. U. S. Industrial leasing growth was better than expected with revenue up 15% as third party logistics providers once again drove activity. Like leasing, our capital markets businesses performed well.

[Emma Giamartino, CFO at CBRE Group]

Global Property sales rose 19%, accelerating from the first quarter. In The U. S, Property sales increased 25% with notable strength in data centers, office and retail. Outside The U. S, sales were particularly strong in India and Japan.

[Emma Giamartino, CFO at CBRE Group]

Mortgage origination fees increased by more than 40% with strong volume from the GSEs, debt funds and CMBS lenders. Turning to our BOE segment, we saw 18% top line growth and 21% SOP growth. Our enterprise businesses performance was supported by a balanced mix of new client wins and expansions in the technology, healthcare and industrial sectors and continued strong growth with hyperscale data centers. Our Local business once again delivered double digit revenue growth, led by ongoing success in The U. K.

[Emma Giamartino, CFO at CBRE Group]

And The U. S. In Property Management, we secured another major portfolio mandate from a large institutional investor. In the Project Management segment, we achieved 13% revenue growth and 18% SOP growth. The Turner and Townsend CBRE project management integration is progressing well.

[Emma Giamartino, CFO at CBRE Group]

Turner and Townsend's legacy business delivered mid teens revenue increases across most regions with notable growth in its largest geography, The UK. The legacy CBRE project management business saw low double digit revenue growth led by the financial services and energy sectors. This is notable given a slowdown in capital projects from some clients who are most impacted by the uncertain economic environment. In Real Estate Investments, segment operating profit was up, in line with expectations for the quarter, although against a light comparison with the prior year. In Investment Management, we saw growth in recurring revenue and recurring SOP, and AUM ended the quarter at $155,000,000,000 an increase of $6,000,000,000 from the end of Q1, mainly driven by favorable currency movement.

[Emma Giamartino, CFO at CBRE Group]

Although certain investors remain cautious on making capital commitments, we anticipate capital raising will continue its upward trajectory building on the positive momentum of the past two years. In Development, operating profit was in line with our expectations as we anticipate most of our asset sales to occur in the fourth quarter, including a few data center development sites. The estimated profits embedded in our in process and pipeline portfolio remain consistent with last quarter at approximately $900,000,000 Now I'll turn to our balance sheet and capital allocation. On a trailing twelve month basis, we generated $1,300,000,000 of free cash flow, in line with expectations. We continue to expect over $1,500,000,000 of free cash flow for the full year, with full year free cash flow conversion towards the high end of our long term target range of 75% to 85%.

[Emma Giamartino, CFO at CBRE Group]

During the quarter, we completed a $1,100,000,000 bond offering and expanded our revolving credit facility, increasing our liquidity to $4,700,000,000 We repurchased a modest amount of shares as we continue to balance M and A opportunities with buybacks, in line with our long term capital allocation strategy. Net leverage stood at just under 1.5 turns at quarter end, and we continue to expect to end the year with about one turn of net leverage absent any large M and A. As Bob mentioned, we are increasing our full year core EPS guidance to a range of $6.1 to $6.2 This forecast is based on constant currency and would increase by at least $0.10 based on today's forward FX curve. Our increased earnings outlook is driven by outperformance in advisory and BOE and is underpinned by the assumption that the economy remains resilient with limited risk of a recession later this year. With that, I'll turn the call back to the operator for questions.

[Operator]

Thank you. At this time, we'll be conducting a question and answer session. You. Our first question comes from the line of Anthony Paolone with JPMorgan. Please proceed with your question.

[Anthony Paolone, Executive Director at J.P. Morgan]

Great. Thanks. Good morning. My first question relates to the leasing business and more particularly in office. If we go back to I think the last couple of quarters of last year and the first quarter of this year, office had kind of been up, I think, closer to maybe 30 perhaps or at least in The U.

[Anthony Paolone, Executive Director at J.P. Morgan]

S. And I think that was up about 15% in the quarter. And so just trying to understand if the comps get a lot harder as we go into the back half of the year or if any demand you think was maybe pulled forward, or what needs to happen to see office continue to show a strong leasing recovery?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Tony, the comps do get tougher. The leasing business is going quite well now for office buildings. It's expanding the momentum is expanding from Park Avenue type locations in the gateway cities to a broader swath of the gateway cities and now in a very big way in the second tier markets and smaller markets below that. And we're seeing several things contribute to that. One is there's just no doubt that there's some element of a return to the mean with COVID so far in the rearview mirror.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Secondly, we know from the work we do with our corporate clients here in The U. S. And around the world that they really are serious about using office space to get their employees connected more productive, more excited about the companies they work for. And that's been a big plus for us in that business. So you have all those things going on.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

We expect office building leasing to continue to be strong. One of the things that's going to create some challenges is lack of supply in certain areas. But the compares do get tougher as 2025 rolls on.

[Anthony Paolone, Executive Director at J.P. Morgan]

Okay. Thanks. And then just my second question is, Rob, you mentioned I think in your prepared comments just potential synergies that you're working on in BOE. And just curious if you can give us any additional context on order of magnitude and what that can mean for say 2026, I'm guessing by the time it takes effect?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

We're not ready to quantify that yet. We have we actually haven't quantified it yet in house because we're still working on it. But what's going on there, Tony, and the the whole motivation or not the whole motivation, but a significant motivation for bringing all those building management businesses together, enterprise facility management, local facility management, property management is that there there are big common elements to managing almost all types of business and all types of service offerings for these various clients. Building engineering, procurement of various types, information used to run the buildings that would lead to efficiency. And we are aggressively working on that now in that business to try to extract those synergies and we declared that we expect them to be significant, but we haven't quantified them yet. We're excited about the way it's going so far.

[Anthony Paolone, Executive Director at J.P. Morgan]

Okay. Thank you.

[Operator]

Thank you. Our next question comes from the line of Julien Boen with Goldman Sachs. Please proceed with your question.

[Julien Blouin, VP - Real Estate Investment Research at Goldman Sachs]

Great. Thank you for taking my question. I guess on the integration of Turner and Townsend with the legacy project management business, can you give us a sense of the benefits you've seen to date? And how long could it take before we start to see real improvements on the legacy CBRE project management business? Or conversely, you seeing any challenges in achieving those expected integration benefits?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Julian, I'll start with the last part of your question and then go back to the first. We're not seeing any challenges we didn't expect. When you bring two businesses like that together, it it is challenging. And it's in those challenges that create opportunities. So just just as an example, between project managers, program managers, and cost consultants in that business today, we have 15,000 professionals.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

There were some inefficiency in the use of CBRE professionals who were assigned to specific clients or doing tenant rep type work in our advisory business and weren't fully utilized all the time, while Turner and Townsend was essentially sold out in parts of their business around the world. We can move those professionals into areas of need now in a way that we couldn't move them before. One of the things you have to do to do that though is you have to have systems in place. We were operating the legacy CBRE business in a very different way than the biggest program managers and engineering firms around the world operate their businesses. Turner and Townsend was operating in that way with time sheets, with technical systems that underpin those people with, training, etcetera, that we didn't have.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

They're moving those professionals onto those systems now getting greater efficiencies. And that's one of the reasons you're seeing some margin advantage there. Secondly, we have seen significant very specific incidents where our ability to bring Turner and Townsend into legacy CBRE clients has resulted in large new business for the company both bringing them into our enterprise facilities management clients and also the Trammell Crow development clients. So we're seeing both cost and revenue synergies and we expect that to continue those synergies to build over the next couple of years and have a very, very different more compelling business. I've said this before, nothing like what we had before, nothing like what anybody in our segment had before.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

And we're starting to see that benefit now, but there'll be a lot more unfold over the next couple of years.

[Julien Blouin, VP - Real Estate Investment Research at Goldman Sachs]

Thank you, Bob. That's really helpful. You mentioned in your opening remarks that the raise is driven by the year to date results and also the activity pipelines that you're seeing so far into the third quarter. I guess maybe digging into those sort of activity pipelines, what specifically are you seeing that sort of encourages you as we head into the back half of the year?

[Emma Giamartino, CFO at CBRE Group]

Julien, so you're right. About half of the increase in our guide is coming from the outperformance that we saw in Q2 across BOE and advisory. And then the other half is primarily related to leasing. So we are seeing continued strength in leasing, greater than what we were seeing ninety days ago and that's both on the office front and the industrial front. So if you look at our guidance for leasing, it implies that in the back half of the year against those tougher comps that Bob talked about, we're at a mid to high single digit growth rate in leasing in the back half of the year, which is above what we were looking at ninety days ago.

[Julien Blouin, VP - Real Estate Investment Research at Goldman Sachs]

Got it. Thank you. That's helpful.

[Operator]

Thank you. Our next question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Yes, thanks. Good morning. Maybe just touch on the capital markets sales activity. That business came in, I think far stronger than we had expected. And I'm just curious given where rates are, the Fed's been a bit more steadfast and holding rates to short end.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Just kind of what are your expectations for that? You didn't really change the language, I guess, the outlook of a steady but muted recovery.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Well, we expect the sales activity and the refinancing activity to both continue strong in the back half of the year. We're not expecting interest rates to move in a way that alter that materially. If they were to rise considerably obviously that would slow things down. We're not expecting that. We're not expecting big drops in interest rates either.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

So our outlook for the year, contemplates what we believe within brackets the interest rates will do. But a lot of what you're seeing is that the spread between bid and ask has gotten very narrow or gone away. There is a lot of capital out there. We have it and other people have it that wants to buy real estate. And there is a huge amount of sell side interest on the part of owners of real estate that haven't been able to sell it for the last few years.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

And as Emma said, we ended the quarter with a strong result, we also ended the quarter with strong pipelines going into the back half of the year. And I think I'm going to turn it over to Emma and let her comment on how July has started to unfold. The other thing is there are a lot of refinancings that need to be done. And so that's happened that's helping the mortgage origination side of our business. Amy, you want you might want to comment on July.

[Emma Giamartino, CFO at CBRE Group]

Yes. So Steve in July, in The U. S. Our sales activity has been very strong. And so we are seeing a bit of a pickup.

[Emma Giamartino, CFO at CBRE Group]

I think one thing to note about the second half of the year is we are expecting continued strength and likely more strength in U. S. Sales in the back half of the year, but that we are seeing some slowdown in sales in Europe. And so that is offsetting it slightly.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Great. Thanks. And then maybe just on, I guess, capital deployment. Maybe just talk about the share buyback. The pace did slow.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

I know it was a very heavy pace in the first quarter. I guess maybe what's embedded in guidance for the back half of the year? And I guess how price sensitive are you kind of on the buyback? Or is it at this point a bit more programmatic assuming that M and A does not take place?

[Emma Giamartino, CFO at CBRE Group]

Yes. So Steve, I'll step back and reiterate our overall capital allocation strategy, which I know you know well. We are we always prioritize M and A and we fill in with buybacks if we're not deploying the same amount of capital that we generate in free cash flow in a year. So if you look at our numbers, we have like you said, we've deployed a lot through buybacks. Turning to M and A, we don't we can't disclose a tremendous amount, but we're as always, we're looking at a number of deals. We're focused on our resilient and psychically favored lines of business.

[Emma Giamartino, CFO at CBRE Group]

We're focused on very well operated businesses that can bring new capabilities to CBRE and that once that target is within our platform, we drive greater value across CBRE or they drive greater value across CBRE than they would on a standalone basis. So that pipeline is strong and that's where we're focused. In terms of your question on where there is what capital allocation is in our guide, there's nothing in there. There's neither M and A nor buybacks. And so if we pick up on either, that would change the outlook for the year.

[Emma Giamartino, CFO at CBRE Group]

Given that I'm talking about M and A, I do want to comment on what we're not looking at. There are a number of rumors out there that we're looking at M and A in advisory capital markets. As you know, we've said consistently, this is not an area where we're looking to do M and A and we're not currently pursuing anything in the advisory capital market space.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Great. Thank you.

[Operator]

Thank you. Our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.

[Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley]

Hey, just two quick ones for me. Just going back to the BOE, the presentation mentioned some of the benefits from the combined platform. Appreciate we're not in a position to quantify, but just sort of thinking through high level, is this something that is a 2025 sort of benefit that normalizes in the out years? Or are we still sort of in potential mid to early innings of sort of harvesting those benefits? Just trying to get a sense of what's the runway here?

[Emma Giamartino, CFO at CBRE Group]

Well, I'll take that. So what you're seeing in our guide and you saw significant margin improvement in BOE in the first half and that is a result of the primarily of the cost work that we did in the 2024. We are working on some additional opportunities for operating leverage now. I don't expect that to show up materially in 2025, but it could. But within our guidance is really no additional operating leverage in BOE in the back half of the year.

[Emma Giamartino, CFO at CBRE Group]

So everything that we work we're working on now, I would expect to show up in 2026.

[Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley]

Helpful. And then just a follow-up on just on the property sales, would be great if you guys could just walk us through just sort of what happened post Liberation Day up until sort of the recovery and the strong July that you talked about? Like did things pause? Did they not? And as you're thinking about sort of tariff negotiations through the back half of the year, presumably there's not really baking in any more headwinds I suppose.

[Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley]

But just what happened and how you're thinking about it would be great.

[Emma Giamartino, CFO at CBRE Group]

On the sales front in The U. S, we had a very strong April and that was as a result of deals continuing to get done that were in the works pre Liberation Day. We did see a slight slowdown in May and June. And then in July, like I said, it's picked up pretty materially and is at this point July is tracking above April.

[Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley]

Great. Thanks so much.

[Operator]

Thank you. Our next question comes from the line of Stephen Sheldon with William Blair. Please proceed with your question.

[Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C]

Hey, thanks. Just one quick one for me. Can you just talk some about your expectations for project management revenue growth in the second half of the year? I think there were some reporting factors that made that look more like high single digit growth this quarter versus low teens on an underlying basis. So would we be right to think that growth there is likely to remain at least in the double digits in the second half on both a reported and adjusted basis?

[Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C]

Just any detail on the outlook for project management growth?

[Emma Giamartino, CFO at CBRE Group]

Yes. Stephen, on a net revenue basis for the full year, we're looking at, low double digit revenue growth. And there is some noise between Q2 and Q3. So in Q2 twenty twenty four, there is net revenue that was mischaracterized in PJM. It should have been in FM.

[Emma Giamartino, CFO at CBRE Group]

So that net revenue growth at Q2 this year in project management is looking low. That's going to reverse in Q3 and the net revenue growth in project management is going look slightly above trend, but it all will normalize for the full year.

[Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C]

Great. Thank you.

[Operator]

Thank you. Our next question comes from the line of Alex Kramm with UBS. Please proceed with your question.

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

Yes. Hey, good morning, everyone. Just wanted to come back to leasing for a second. Some good color on the office side. Can you also unpack what you're seeing on the industrial side a little bit?

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

It sounded like things have been getting better. I think there was a concern earlier this year. Do you feel like that's normalized now? Or what are you seeing out there given that there's probably still some uncertainties in that market?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Yes. There is some uncertainty Alex, but the year is going to be better than we thought it was going to be. Obviously, first half was better. We don't expect the same kind of growth in the second half that we saw in the first half because the comps are tougher. But we do see we do now believe that the second half is going to be better and that for the full year, whereas we had at the outset thought it would be kind of flat for leasing, we now think Industrial Leasing for the year will be up roughly double digits.

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

Okay. Very good. And then maybe this is a little bit too specific and early, but obviously New York City is a very important market for you guys and everyone. Seems like more uncertainty in real estate, given some of the mayoral election uncertainty, I guess, if that's the right way to put it. Anything you can comment on in terms of the discussion you've been having with various constituents?

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

Any sort of pause you're seeing already? Any or anything we should be concerned about you're thinking about here?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

We're not seeing anything in our pipelines that would suggest that the politics in the city are going to slow things down. You know, that is an enormous business community. Companies there, financials and others are techs actually coming back into the city more. There's a lot of strength there. But more importantly, there's a lot of focus on office space by users.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

And using office space, as I said earlier, to help with recruiting and retention and culture in their companies. And this has become a very front and center thing for companies kind of unlike I've ever seen it even pre COVID in terms of the interest in using office space in those ways. So we're what we're seeing is the spread of office leasing opportunities beyond the most desirable locations and most desirable buildings to a broader part of the city.

[Alex Kramm, MD & Senior Equity Research Analyst at UBS Group]

All right. Very good. Thank you.

[Operator]

Thank you. Our next question comes from the line of Jade Rahmani with KBW. Please proceed with your question.

[Jade Rahmani, Managing Director at Keefe, Bruyette & Woods (KBW)]

Thank you very much. In terms of potential areas of value creation, looking at where CBRE trades and of course it's a real estate conglomerate, so there's different businesses could trade at different multiples. Are you focused on growing infrastructure services and asset management or investment management since some comps in that space trade quite a bit higher than CBRE? Are those the two areas of focus?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Jade, we have forever we've said we're this broad based real estate services and investment firm and we focused on that. And over the years, we've around the periphery of our business moved into infrastructure related things. I would tell you now we have quite a bit of that in our business. So obviously Turner and Townsend does a lot of it. For instance, they're doing the project management on a atomic or nuclear energy plant.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

They're doing a bunch of big airports. They're doing a bunch of big data centers. They're doing a bunch of energy projects. So that's infrastructure. We have a growing $10,000,000,000 AUM infrastructure fund in or infrastructure investment management business.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Trammell Crow Company is doing a considerable amount of data center land work right now. We have a data center management business and we do now work inside data centers on a project basis that's dramatically outperforming and we handle work in 700 or 800 data centers. We have considerable infrastructure work that we do across our brokerage business now. And yes, we are focused on some areas of new investment multiple areas of new investment to grow our infrastructure exposure. And we're it's going well and we're excited about it.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

And I think it'll be an added nice dimension to CBRE's total addressable market in the near term and even more significant in the longer term.

[Jade Rahmani, Managing Director at Keefe, Bruyette & Woods (KBW)]

Do you have a target share of earnings or dollar amount of capital you're looking to allocate to infrastructure?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

We haven't said anything about that yet Jade.

[Jade Rahmani, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. And then just lastly if I could squeeze one in. On free cash flow for the quarter, did it track with your expectations? I know first of all the second half is typically stronger, but secondly there was some timing effects from the mortgage origination business. So adjusting for that, did the free cash flow performance track with your expectations?

[Emma Giamartino, CFO at CBRE Group]

So it's Jade, and I do want to address the mortgage origination comment. If you look at all of the lines that fall in there, think you might be missing the warehouse lines. The impact from the GSEs to our free cash flow is about equal to what it was last quarter, roughly in line. And the big impact is really timing between Q1 and Q2. So Q1 was slightly above our expectations and Q2 slightly below.

[Emma Giamartino, CFO at CBRE Group]

You need to look at them together. And across Q1 and Q2, our trailing twelve months free flow conversion was right about 85% at the high end of our target range. So we expect that to continue for the full year.

[Jade Rahmani, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. Thank you very much for the clarification.

[Operator]

Thank you. Our next question comes from the line of Seth Berge with Citi. Please proceed with your question.

[Seth Bergey, Senior Analyst at Citi]

Hi, thanks for taking my question. I just wanted to go back to your comments on expectations for the capital markets activity. And maybe if you could just talk a little bit about client behavior. It sounds like it's expected to improve, but are clients waiting for interest rate cuts? Or is it more, where we have more clarity on tariffs?

[Seth Bergey, Senior Analyst at Citi]

Just a little bit about how your conversations with clients are trending there.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Well, clients would like interest rate cuts. I don't think they're waiting for them. I think what we're seeing is lots of financing activity and significantly escalated sales activity. We expect that to continue for the rest of the year. And these things that stimulate or put downward pressure on that will stimulate or put downward pressure on it the way they

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

So interest rates going up will be negative and interest rates coming down will be positive and major uncertainty in the markets or a sense that we might be headed to a recession or the tariffs are a bigger problem than we thought would slow that down. But right now, the best way I'd say it is buyers and sellers are kind of powering through that and feeling that things are going to go relatively well. Obviously here in The United States, there's a lot of enthusiasm about what's going on in the economy and the real estate markets. And as Emma said a little more choppiness in Europe. But I think expectations at the moment are positive and more positive than they were ninety days ago when we talked.

[Seth Bergey, Senior Analyst at Citi]

Great. Thanks. And then I guess just with the raised outlook, are there any changes to your hiring plans?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

No changes to our hiring plans beyond what you would expect for a growing business where we and a business that uses technology to help itself. So we're not a company that makes the claims that we're gonna turn things upside down But there are a number of places we're legitimately using technology to be more efficient. So my guess is that what you will see from us over time is that we'll be able to grow by and add less employees to support that growth than we have historically. And we've certainly got areas of our business that we're targeting for those kind of gains.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

But in general, we expect this to be a growing business and we expect to add talent to support that growth.

[Operator]

Thank you. Our next question comes from the line of Peter Abramowitz with Jefferies. Please proceed with your question.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

Yes, thank you. I think you called out in the press release that capital markets activity, your outlook is strong even though capital markets activity is sort of well below the prior peak. I guess just the conversations you have internally and your sense of I guess what do you think it would take to kind of get back even close to that peak? How long do you think that could take to transpire?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Well, let me talk about that. So I think capital markets was down 14% from the pre COVID peak and then even much more from the crazy big year we had in 2022, which was just an outlier bounce back from COVID. So we don't use that to benchmark anything. My sense is that for so first of all, we don't have a model that tells us when it's going to get back to peak. But my sense is what's going to cause it to move back toward peak.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

First of all, just staying on the path we're on now, it's growing and we expect it to grow next year. But if some if the interest rates came down or interest rates being where they are and lack of new product being where it is causes rental rates to grow up, you or the perception that rental rates will go up, you're going to see some trading that you're not seeing yet. I think a more stable or view that the economy in Europe is more stable than it's viewed to be now would be helpful in terms of trading volumes. But there's not one big thing that we're waiting for that's going to take us back to where we were at the peak.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

Sure. That's helpful. Thank you. And then to go back to the question I think earlier about New York City specifically. I don't think you disclosed it anywhere, but do you know specifically can you quantify what your exposure to the New York City market is whether it's I guess revenue or some other metric?

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

I think our earnings in New York when you add it all up are probably 5% or 6% of our company's overall earnings.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

Got it. That's helpful. Thanks for the time.

[Operator]

Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Shlentik for any final comments.

[Robert Sulentic, President, CEO, Chairman & Director at CBRE Group]

Thanks for joining us everyone and we'll talk to you at the end of the third quarter.

[Operator]

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Chandni Luthra, EVP & Global Head - FP&A & IR
• Robert Sulentic, President, CEO, Chairman & Director
• Emma Giamartino, CFO

Analysts

• Anthony Paolone, Executive Director at J.P. Morgan
• Julien Blouin, VP - Real Estate Investment Research at Goldman Sachs
• Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI
• Ronald Kamdem, MD & Head - US REITs and CRE Research at Morgan Stanley
• Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C
• Alex Kramm, MD & Senior Equity Research Analyst at UBS Group
• Jade Rahmani, Managing Director at Keefe, Bruyette & Woods (KBW)
• Seth Bergey, Senior Analyst at Citi
• Peter Abramowitz, SVP - Equity Research at Jefferies