Strong Q2 Results for Jones Lang LaSalle but Rising Interest Rates, Slowing Economy Are Headwinds

Narrow-moat-rated Jones Lang LaSalle posted strong results in the second quarter, but rising interest rates and a slowing economy are major headwinds for the company in the medium term. Global transaction volume proved resilient in the face of rising interest rates and inflationary pressures as it was up 2% for the quarter and 19% year to date. The global transaction volume in the first half of the year was driven by the Americas region with mixed performance in Europe and Asia Pacific. We expect the real estate transactional volume to slow down in the upcoming quarters due to higher interest rates and a slowing macroeconomic environment resulting in a material impact on the company’s brokerage business. Management also pointed out that investors are starting to extend the timeline for closing deals, representing the greatest risk to the second half of the year.