Commercial real estate (CRE) isn’t simply about buildings and deals; it’s a complex ecosystem driven by companies managing everything from property operations to investment strategies. Unlike residential real estate, CRE demands active management, presenting significant opportunities for both businesses and investors. This article delves into the CRE service sector, highlighting two companies, Jones Lang LaSalle (JLL) and CBRE Group (CBRE), positioned for substantial growth in 2025, according to leading analysts.
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ResearchAndMarkets.com estimates the global real estate market reached $3.89 trillion in 2024, projecting a 9.3% compound annual growth rate through 2030. This robust growth underscores the potential of CRE services as a lucrative investment sector.
Goldman Sachs analyst Julien Blouin observes a resurgence in CRE service companies in 2024, recovering from the 2023 capital markets downturn. He anticipates 2025 will bring continued improvement, with thawing CRE debt markets, narrowing credit spreads, increased financing availability, and healthy US GDP growth contributing to a medium-term recovery in CRE transactions. Blouin identifies key investment themes, favoring companies with expanding market share in capital markets, resilient high-growth models, and a history of prudent allocation and reinvestment. He specifically highlights JLL and CBRE as “Buy” rated stocks with double-digit upside potential.
Jones Lang LaSalle (JLL): Leveraging Scale and Technology for Growth
A global leader with roots dating back to 18th-century London, JLL specializes in commercial real estate and investment management. The company facilitates the acquisition, construction, utilization, and management of diverse commercial properties, including industrial, hospitality, residential, and retail spaces. JLL’s extensive portfolio encompassed 4.8 billion square feet of managed properties and generated $20.3 billion in revenue in 2024. This includes 16,500 agency leasing transactions (303 million square feet), 16,500 tenant representation transactions (539 million square feet), and management services for 3 billion square feet of property. JLL caters to a diverse clientele, from institutional investors and corporations to high-net-worth individuals.
JLL demonstrated strong financial performance in recent quarters, with Q3 2024 revenue reaching $5.9 billion, a 15% year-over-year increase and exceeding expectations by $280 million. Non-GAAP earnings per share reached $3.50, significantly surpassing the previous year’s $2.19 and exceeding forecasts by $0.76. JLL’s stock has outperformed the S&P 500 in 2024, with a 42% gain compared to the index’s 27%.
Blouin emphasizes JLL’s scale and productivity, noting its significant capital markets exposure and market share gains driven by mergers and acquisitions, strategic hiring, and organic growth. He highlights JLL’s technological investments, particularly the JLL Technologies/Spark platforms, as key drivers of broker productivity and organic market share gains. Blouin projects 15.4% growth in JLL’s capital markets in 2025, exceeding consensus estimates by 300 basis points. He assigns a $352 price target, implying a 31% upside. The consensus analyst rating for JLL is a Strong Buy, with an average price target of $329.6, suggesting a 22.5% upside potential.
CBRE Group (CBRE): Capitalizing on Market Leadership and Diversification
The world’s largest commercial real estate services and investment firm, CBRE, boasts a market capitalization of $41.5 billion and manages over $148 billion in assets. With a global workforce exceeding 130,000 across 500 offices in 100 countries, CBRE provides comprehensive services in commercial property leasing, sales, management, and valuation. The company holds the top position among US commercial property developers, with a history extending back to 1906.
CBRE serves a broad range of industries, from healthcare and manufacturing to the public sector and finance, managing diverse property types including office, retail, industrial, logistics, multifamily housing, and specialized facilities like data centers and healthcare properties.
CBRE’s stock has significantly outperformed the market in 2024, with a year-to-date gain of 46%. Q3 2024 revenue reached $9.04 billion, a 15% year-over-year increase and $240 million above estimates. Non-GAAP EPS of $1.20 exceeded expectations by $0.14.
Blouin underscores CBRE’s strengths, citing its continued leasing market share gains, strong positioning for a capital markets recovery (leading investment sales market share and #2 CRE mortgage originator), the growth and profitability of its resilient businesses, and its excellent capital allocation track record. He anticipates continued recovery in leasing, transaction, and loan origination volumes, leading to a gradual improvement in transactional revenues. He projects 12% year-over-year growth in leasing revenues, 16% in investment sales, and 15% in origination advisory revenues for 2025. Blouin assigns a Buy rating and a $176 price target, suggesting a 29.5% upside. The consensus analyst rating for CBRE is a Moderate Buy, with an average price target of $143, indicating a 5% upside potential.
Conclusion: A Promising Outlook for CRE Investment
Both JLL and CBRE are well-positioned to capitalize on the anticipated growth in the CRE sector. Their scale, diversification, and strategic investments in technology position them as leaders in this dynamic market. While both companies offer compelling investment opportunities, JLL, with its higher projected upside, may present a more attractive option for investors seeking significant returns.
