Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain the 100 basis points year-over-year margin improvement, which was expected to be flat three months ago? A: Neil Johnston, CFO, explained that the margin improvement was primarily due to stronger than expected top-line performance in leasing and services, along with some expense timing benefits. Approximately 30% of the beat was due to these timing benefits, which are expected to reverse in the second quarter.
Q: How would you characterize the environment in April, particularly regarding tariffs and their impact on leasing and capital markets? A: Michelle MacKay, CEO, noted that tariff uncertainty has not materially impacted their sector. They continue to see strong demand for high-quality office and industrial spaces. Client decision-making remains active, with 90-95% of clients proceeding with decisions on their existing timelines.
Q: What might happen to the office leasing business if a recession occurs, and how does it compare to historical patterns? A: Michelle MacKay, CEO, stated that demand for office leasing remains strong, with long-term leases being signed. Lease terms have increased to an average of 77 months in Q1. While they model some sensitivity around potential softening, they do not anticipate significant impacts.
Q: Can you discuss the recruiting and retention efforts, and how the system compares to six months or a year ago? A: Michelle MacKay, CEO, emphasized their consistent investment in talent, regardless of market conditions. Over the last 18 months, they have strengthened their team, hiring additional capital markets and leasing teams, with a focus on organic growth.
Q: How are you thinking about the industrial leasing sector amid potential trade wars, and what trends are you seeing post-Liberation Day? A: Michelle MacKay, CEO, mentioned that they have been outperforming in industrial leasing for the past 18 months. Despite some normalization of demand, businesses still require industrial space, and they continue to execute on client strategies, whether old or modified.
Q: Is there a frictional level in interest rates that could impact the capital markets business? A: Michelle MacKay, CEO, noted that they focus on all-in borrowing costs, including credit spreads. Many large investors have alternative borrowing methods, and clients are closing deals and financing if they find them compelling, even paying in full cash when necessary.
Q: Can you provide more commentary on the EMEA region, particularly regarding macro conditions and business performance? A: Neil Johnston, CFO, explained that EMEA is the weakest economy among their segments, but they are seeing some positive signs, such as growth in UK capital markets. The region is at the bottom of the cycle, with a slow recovery expected.
Q: How do you plan to balance growth investments with debt repayment, and has this strategy changed since February? A: Michelle MacKay, CEO, stated that their capital allocation strategy remains focused on growth and deleveraging. They continue to invest in talent and business growth while also reducing leverage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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