JLL Earnings: Outsourcing and Leasing Perform Well While Capital Markets Remain in Recovery

Narrow-moat-rated JLL reported a decent set of numbers in the second quarter, as the leasing and outsourcing businesses performed well while the capital markets business remained in the recovery phase. We are slightly increasing our fair value estimate for JLL to $216 per share from $210 after incorporating these second-quarter results. The company reported that global investment sales were down 1%, with the Americas down 5%; Europe, Middle East, and Africa up 2%; and Asia-Pacific up 2% in the second quarter compared with the low base from the previous year. While risks on the macro-economic side remain, the sentiment is more positive for the capital markets business supported by an expectation for easing monetary policy. It was encouraging to see that global office leasing volumes were up 10% in the second quarter compared with the second quarter of 2023, but they are still 10%-15% below prepandemic levels. In the industrial sector, global gross leasing volumes remained subdued driven by about a 40% year-over-year decline in North America. A recovery in North American industrial leasing volumes can be a material upside for the industry in 2025.