Colliers International Group NASDAQ: CIGI reported second-quarter revenue growth across its Commercial Real Estate, Engineering and Investment Management platforms, as improving transaction activity and recent acquisitions supported results.
Global Chairman and CEO Jay Hennick said the company recorded double-digit revenue growth across all three platforms and continued to shift its earnings mix toward recurring revenue. He said approximately 70% of Colliers’ earnings now come from resilient, recurring revenue streams.
“Together, the recovery in Commercial Real Estate, the growth of Engineering, and the expansion of our Harrison Street business are changing the quality and composition of our earnings,” Hennick said.
Second-Quarter Financial Results
Chief Financial Officer and CEO of Commercial Real Estate Christian Mayer said consolidated revenue totaled $1.6 billion in the quarter, up 16%, while net revenue rose 16% to $1.4 billion. Adjusted EBITDA increased 14% to $205 million.
Adjusted earnings per share rose 6% to $1.83, with Mayer noting that the increase was tempered by higher interest expense. He said the results met the company’s expectations and that momentum entering the second half of the year supported its confidence in its full-year outlook.
- Commercial Real Estate segment net revenue increased 12%.
- Engineering net revenue increased 27%, including a partial-quarter contribution from Ayesa and 5% internal growth.
- Investment Management net revenue increased 15%, driven by a recent acquisition and internal growth from new capital.
Colliers reaffirmed its full-year 2026 outlook. Mayer said transaction pipelines, engineering backlogs and fundraising pipelines were higher than a year earlier, although geopolitical risks and macroeconomic volatility remain elevated.
Commercial Real Estate Activity Improves
Within Commercial Real Estate, Capital Markets revenue increased 23%, led by the Americas and Asia-Pacific, while leasing revenue also rose 23%. Industrial property sales activity increased notably across geographies, and U.S. industrial leasing was a key contributor to growth.
Mayer said industrial demand in the U.S. was strong during the quarter, although the comparison also benefited from uncertainty that affected the prior-year period. He said momentum remains positive heading into the third quarter, though comparisons will become more difficult.
For the third quarter, Colliers expects leasing revenue to rise in the mid-single-digit percentage range and Capital Markets revenue to increase by roughly 15% from the prior year, Mayer said.
The Commercial Real Estate segment’s net margin was 11.9%, slightly higher than the previous year. Mayer said the company has been gaining market share and has increased recruiting of producers, particularly relative to publicly traded peers in the U.S. He noted that hiring has created a modest margin drag in recent quarters as new personnel ramp up.
In outsourcing and advisory services, Hennick said project-management activity in Europe and Asia was the principal area of weakness, reflecting project timing. He said property management, valuation and loan servicing all increased in the second quarter, and the company expects project-management activity in those markets to improve in the fourth quarter.
Engineering Expansion and Ayesa Integration
Engineering revenue growth was supported by acquisitions, including the late-quarter acquisition of Ayesa. The Engineering segment reported a 14.5% net margin, slightly above the prior year, and had a 12-month backlog as of June 30.
Mayer said the company expects engineering internal growth of about 5% to continue through the remainder of the year. He also said quarterly margins can vary because of seasonal conditions in Canada and northern U.S. markets, where winter can affect revenue and utilization.
Ayesa’s contribution is expected to affect the margin profile in the second half, according to Mayer. He said Ayesa has less weather-related seasonality and generally generates 24% to 26% of annual revenue and EBITDA in any quarter.
Hennick said Ayesa expands Colliers’ engineering capabilities in Europe, Latin America, the Middle East and Australia. He highlighted Ayesa’s expertise in desalination, marine engineering and water-related work as capabilities that could be extended to other Colliers markets.
Management also discussed cross-selling among the company’s platforms. Hennick said Colliers can combine commercial real estate relationships, engineering services and investment-management capital in areas such as data centers. Harrison Street has invested more than $6 billion in digital infrastructure and data centers during the past six years, he said.
Investment Management Fundraising and Capital Returns
Assets under management at Harrison Street reached $110 billion, and revenue rose 17%, according to Hennick. The Investment Management segment reported a 36.5% net margin as Colliers continues to invest in building its global Harrison Street Asset Management platform.
Mayer said these platform-building costs will continue to affect margins during the second half of 2026. The company expects Investment Management margins to stabilize in the low-40% range in 2027.
During the quarter, asset realizations returned $1.9 billion of capital to limited partners, bringing year-to-date distributions to $3 billion. The company raised $2.2 billion in new capital commitments in the second quarter and just under $3 billion during the first half.
Colliers maintained its 2026 fundraising target of $6 billion to $9 billion and expects fundraising to accelerate in the second half. Mayer said some newly raised capital becomes fee-bearing immediately, while capital committed to other fund types becomes fee-bearing only after deployment.
Leverage, Buybacks and Acquisitions
The Ayesa acquisition was completed late in the quarter, and Colliers ended the period with leverage of 2.8 times. Mayer said the company expects seasonal cash flows to reduce leverage to about 2.3 times by year-end.
Management said it may consider share repurchases in the second half given what it described as an undervaluation of its shares. However, Hennick said the company would continue to prioritize exceptional acquisitions that can generate long-term returns.
Mayer said Colliers’ longer-term leverage target is between 1.5 and two times, with flexibility for major acquisitions. He added that a potential buyback would not be expected to materially increase leverage.
About Colliers International Group (NASDAQ:CIGI)
Colliers International Group Inc is a global commercial real estate services and investment management firm offering a full suite of solutions to occupiers, owners and investors. The company's real estate services encompass brokerage and agency leasing, capital markets advisory, property and facility management, valuation and advisory, project and development services, workplace and corporate real estate solutions, and market research. Through these offerings, Colliers supports clients across the entire real estate life cycle, from site selection to asset disposition.
The firm operates through two principal segments: real estate services and investment management.
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