JLL Earnings: Valuation Declines and Lower Transaction Volume Hurt Profitability

Narrow-moat-rated Jones Lang LaSalle’s second-quarter results were disappointing, as valuation declines in JLL Technologies’ investment portfolio and significant declines in global transaction volume affected profitability. The company reported that global investment sales were down 53% during the second quarter, with the Americas down 59%; Europe, Middle East, and Africa down 57%; and Asia-Pacific down 11%. Global office leasing volumes were also down 14% in the second quarter compared with the second quarter of 2022. In the industrial sector, gross leasing volumes in U.S. and EMEA were down significantly year over year and also below the five-year historical average. Industrial net absorption in the Asia-Pacific region remained strong and was considerably above the five-year historical average. We think that the pressure on the brokerage business will continue in the near term given our macroeconomic outlook and rising interest rates.