Emma Giamartino
Global Group President, Chief Financial Officer and Chief Investment Officer at CBRE Group
Thank you, Bob. Before I go through this quarter's results, I want to touch on what we've seen in the market since we last spoke in May, what it means for our business and why we remain confident in our outlook. Over the past three months, and as I'm sure you're all following closely, rates on the 10-year treasury rose as high as 3.5% before settling down to 2.8%. The uncertainty over how central banks might respond to inflation creates uneasiness in the market, more so in the public market, but also in the private commercial real estate market. Against that backdrop and what it means for CBRE, it's best to think about our business in two parts.
The first part includes business lines that grow consistently throughout an economic cycle and have low sensitivity to market uncertainty. This includes our outsourcing business, GWS and as well as valuation, property management, loan servicing and significant components of our Investment Management and Development businesses. Our GWS business can directly benefit from economic uncertainty as occupiers outsource their real estate management to CBRE to reduce their costs. These businesses have become significantly more important to CBRE's overall financial performance. The second part of CBRE's business is more transactional in nature, capital markets, leasing and parts of our development and investment management businesses.
These are sensitive to market uncertainty in the short term. But short term is not the right time frame to measure the resiliency of this part of our business. slide six illustrates my point. COVID-19 created enormous market uncertainty during 2020, much more so than we're seeing today. And as a result, the transactional parts of our business saw total net revenue declined by 26% for the 12 months through the first quarter of 2021 versus the prior 12-month period. What's important and what I think is underappreciated is that these transactions didn't disappear, they paused. When market uncertainty lifted, these transactions came back, resulting in a powerful recovery.
The net revenue growth of these businesses outpaced the S&P 500 over the period starting pre-COVID through the recovery of the following year. When our management team thinks about market uneasiness and what it means for CBRE, we focus on things we can control, first, costs; and second, capital deployment. One of the biggest drivers of CBRE's financial resiliency that we believe is underappreciated is the overall flexibility of our cost structure, which slide seven summarizes. Just over 40% of our cost structure is passed through to clients. These costs are tied one-to-one with revenue, which is why we exclude them when discussing net revenue.
Another 44% is attributable to cost of revenue. These costs are variable. For example, during COVID in 2020, we saw net revenue in our advisory segment declined by 16.5%, while our cost of revenue decreased 16.7%. The remaining cost is opex. Of this, about 1/3 can be reduced at a rate faster than revenue declines. These costs include travel, business promotion and compensation tied to financial performance. The remaining 2/3 of opex is more difficult to move in the very short term, but reductions are certainly possible over a one- to two-year time frame. In summary, nearly 90% of CBRE's total cost are either directly tied to revenue or a highly flexible in nature.
CBRE has had a track record of moving aggressively, with targeted cost reductions when market conditions soften. We have invested in leadership, processes and systems to enable these reductions, and we now consider it a core competency. Today, we are already taking steps to limit new hires, eliminate nonclient-related travel and entertainment and reduce other discretionary expenditures. And we are prepared to go further if we decide more reductions are needed. While achieving these cost efficiencies we will continue to make very targeted organic investments into areas where we expect a high return. We will also be investing our balance sheet.
On slide eight, you'll see that CBRE repurchased $1 billion of shares through the second quarter. Since the end of the second quarter, we have purchased another $77 million. We believe this represents the highest and best use of capital for our shareholders in the current environment. We would not be able to purchase a company near the quality of CBRE at the valuation we currently see for our shares. As a result, while we continue to build an M&A pipeline, share repurchases are likely to represent the most significant use of our capital for the balance of the year. We will be able to make these investments while maintaining CBRE's strong balance sheet, which ended Q2 with 0.2 times net leverage and $4.2 billion of liquidity.
Before tying all of this together with our qualitative outlook for the full year, let's first discuss second quarter performance for our three business segments and what we're seeing in each segment's business pipeline. slide 10 summarizes results in our Advisory segment, which were driven by a 17% increase in property sales revenue and a 40% increase in leasing revenue. Performance is strongest in the Americas,due to improved market fundamentals, with sales and leasing increasing 26% and 56%, respectively. Outside of the Americas, sales revenue was flat and leasing rose by 5%, as FX reduced growth by 10 percentage points for each. Both U.S. leasing and sales grew in every month of the second quarter, though we did see some deceleration in June.
Preliminary results for July show U.S. leasing and sales revenue, together, essentially flat, with a strong level of activity seen in July 2021. Our commercial mortgage origination revenue slipped 1% during the quarter. The government-sponsored enterprises, which are an important part of this business, continue to lose market share in the second quarter against strong competition from private lenders. The GSEs act as a moderating force in the multifamily lending market, and it's reasonable to expect our debt business to underperform property sales when the market is strong. The flip side is that our debt business should outperform property sales if the market is soft for the balance of the year.
This is similar to the dynamic we saw in 2020. Our Advisory SOP margin and net revenue declined by one and a half percentage points versus the record second quarter margin of last year. Approximately 1/3 of this decline can be attributed to lower OMSRs, $35 million this quarter, versus $42 million in Q2 last year. The remainder of the margin decline is mostly attributable to more brokers hitting higher commission payout thresholds, driven by the strong revenue growth. Our pipelines give us visibility into our transactional businesses over the next few months. The sales pipeline is up slightly versus last year's record Q3, though transactions are taking longer to close and debt markets have become less accommodating due to market uncertainty.
Our updated guidance anticipates a lower level of sales activity in the back half of the year compared against second half 2021 record levels. Our leasing pipeline is essentially flat with the very strong pipeline we had at this time last year. We continue to see healthy activity across property types, with office being an outperformer. Office is growing from pent-up demand against the relatively low base of activity and higher-than-normal lease expirations. And we're expecting more leases to expire over the next 18 months than in any 18-month period over the last five years. Turning to slide 11, within our GWS business. Total net revenue growth of 27% and SOP growth of 28% was aided by continued strong performance from Turner & Townsend.
Excluding the contribution from Turner & Townsend, GWS net revenue increased by 8% or 12% in local currency, and SOP rose by 5% or 10% in local currency. Turner & Townsend performance reflects continued growth from their prior year results, in line with our expectations. Both facilities management and project management net revenue grew by double digits in local currency during the quarter. Growth was broad-based by client type and supported by a mix of new wins and expansions. GWS achieved a record high $1 billion of deal closing in the quarter. As a result of these wins, the pipeline fell sequentially, but is expected to end in 2022 with a meaningfully larger pipeline than year-end 2021.
CBRE's competitive differentiation with the occupier outsourcing market has never been stronger. slide 12 summarizes results in our REI segment, which performed very well in Q2. Development was a big catalyst, with SOP growth of $96 million versus last year's Q2, as we monetized several large assets and land parcels. We've benefited from investor preference for the types of properties we build, high-quality, build-to-core, typically well-leased assets in markets with good supply-demand fundamentals. Investment Management contributed $58 million of SOP, up $13 million over last year's Q2. AUM hit another record, up slightly versus Q1 despite over $4 billion of FX headwinds.
Looking forward for investment management with more than 90% of our AUM in core or core plus strategies, we expect healthy performance to continue despite market uncertainty. Looking forward for our development business, over 3/4 of our in-process activity is industrial, multifamily or life sciences products, and we expect continued outperformance over time amid of flight to quality trend. Cap rate expansion is a headwind. Market-wide, cap rates have moved out by about 50 to 75 basis points on average. Against this backdrop, development activity may be delayed during periods of uncertainty, but we will monetize our developments, which are highly sought after in their respective markets and are favorably financed, giving CBRE and our capital partners the flexibility to time the market for sales.
Our in-process portfolio, totaling $19.3 billion, provides visibility into future development profits. As we've noted before, we expect 1% to 2% of our end process portfolio to convert to SOP over a 12-month period. A modest recession could cause SOP to fall to the low end of that range, and a softer market creates opportunities to secure land sites that drive future profits. slide 13 summarizes our outlook. Within Advisory, we expect investment sales and, to a lesser degree, leasing to decline in the back half of the year against the very strong 2021. We continue to expect leasing and property sales growth for full year 2022, supported by the strong first half.
In GWS, our record wins in Q2 should help to drive over 20% SOP growth for the back half of the year, supported by 10% organic growth in local currency and Turner & Townsend continued strong contributions. In REI, we've already realized around 3/4 of the SOP we expect for the full year, including over 80% of our expected development SOP. So even in a more challenging macro environment, full year development profit will well exceed our initial expectations. In summary, and as Bob noted earlier, we now expect CBRE to achieve total core EPS growth in the high teens for the full year. Our core EPS guidance takes into account both the impact of FX and the lower share count. Absent the impact of FX, both realized year-to-date and expected, our core EPS growth expectations would be 4% to 5% higher.
With that, operator, we'll open the line for questions.
