Executive Summary / Key Takeaways

• Strategic Transformation and Resilience: CBRE has fundamentally reshaped its business, emphasizing resilient, contractually based services and high-growth sectors like data centers. This strategic pivot, including major acquisitions and a new segment structure, has significantly enhanced its earnings stability and growth profile, making it substantially more resilient to economic downturns than in prior cycles.
• Record Financial Performance: The company delivered exceptional results in 2025, with Q3 core EPS surging 34% and core EBITDA up 19%. This outperformance, driven by double-digit revenue gains across both resilient and transactional businesses, has led to a raised full-year core EPS outlook of $6.25 to $6.35, representing 24% growth at the midpoint and exceeding prior peak earnings by over 10%.
• Data Center Dominance and Technology Integration: CBRE is capitalizing on secular tailwinds in the data center sector, which contributed nearly $700 million in Q3 2025 revenue (up 40% year-over-year) and approximately 10% of overall EBITDA. Its integrated technology and specialized services, from land acquisition and project management to facilities management, provide a significant competitive advantage.
• Robust Capital Allocation and Liquidity: With strong free cash flow generation (expected to be around $1.8 billion for 2025) and approximately $5.2 billion in liquidity as of Q3 2025, CBRE maintains a flexible capital allocation strategy. This prioritizes strategic M&A and co-investments in its Real Estate Investments segment, complemented by opportunistic share repurchases, reflecting management's view that its shares are undervalued.
• Positive Outlook with Mitigated Risks: Despite ongoing market uncertainties related to U.S. trade policy and interest rate volatility, CBRE's diversified revenue streams, strong pipelines, and strategic cost management position it for sustained growth. The company expects to meaningfully narrow the delta between GAAP and core earnings in 2025 as restructuring costs conclude.

CBRE's Evolving Real Estate Dominance

CBRE Group, Inc., founded in 1906, stands as a global leader in commercial real estate services and investment, distinguished by its comprehensive breadth and depth across asset types, client segments, service offerings, and geographies. This extensive scale supports a strategy focused on integrated solutions, talent acquisition, capital investments, and a critical information advantage. The company's strategic evolution has increasingly centered on driving growth in secularly favored and cyclically resilient areas, a pivot that has fundamentally reshaped its operational and financial profile.

In the competitive landscape, CBRE operates alongside major global players such as Jones Lang LaSalle Incorporated (JLL), Cushman & Wakefield (CWK), and Colliers International Group Inc. (CIGI). CBRE's market positioning is characterized by its superior operational scale and global reach, often allowing it to serve as a go-to provider for large, complex projects. Its integrated service offerings, particularly in global workplace solutions and project management, provide a more comprehensive approach compared to JLL's more technology-focused or CWK's regionally concentrated strategies. While some rivals like JLL and Colliers may exhibit greater technological agility in niche digital segments, CBRE's robust brand, extensive network effects, and cost leadership in integrated services form a formidable competitive moat. This allows CBRE to differentiate its offerings and capture market share, particularly in international and large-scale engagements, leading to stronger revenue streams and enhanced pricing power.

CBRE's technological differentiation is embedded across its service lines, enhancing operational efficiency, client solutions, and market intelligence rather than relying on a single proprietary technology. For instance, its managed brokerage platform, supported by advanced technology tools, helps identify market coverage gaps and optimize client interfaces, contributing to market share gains in leasing. In the Project Management segment, the integration of Turner & Townsend's technical systems underpins professional services, leading to greater efficiencies in project execution. Within the Building Operations & Experience (BOE) segment, the formation of a digital infrastructure services line of business specifically targets the complex operational needs of data centers, leveraging specialized technical services. These technological applications contribute directly to CBRE's competitive moat by improving service delivery, reducing operational costs, and providing superior data-driven insights, thereby strengthening its market positioning and financial performance.

A History of Strategic Evolution and Growth

CBRE's journey to its current market leadership is marked by a series of strategic acquisitions and reorganizations designed to bolster its resilient business lines and capitalize on high-growth sectors. A pivotal period began around 2015, characterized by strategic debt issuances to fuel expansion, including $600 million in 4.88 senior notes. This was followed by further debt activities, such as the $500 million 2.50 senior notes in March 2021 and a $1 billion issuance of 5.95 senior notes in June 2023. A new 5-year senior unsecured Credit Agreement in July 2023 refinanced prior debt, optimizing the company's capital structure.

Key acquisitions have been instrumental in this transformation. Direct Line Global, acquired in 2024, significantly fortified CBRE's technical services capabilities in data centers and has meaningfully outperformed underwriting expectations. The J&J acquisition expanded the company's footprint into government work, particularly in the healthcare and defense sectors.

The year 2024 was particularly transformative, with CBRE initiating a major efficiency program within its Global Workplace Solutions (GWS) segment. This highly successful initiative aligned costs with revenue, leading to significant margin expansion. In November 2024, the board authorized an additional $5 billion to its existing $4 billion share repurchase program, extending it through December 2029, signaling strong confidence in the company's valuation. The company also established a commercial paper program in December 2024, providing access to up to $3.50 billion in short-term borrowings. A significant growth area during this time was the data center sector, with its contribution to core EBITDA growing from 3% three years prior to almost 10% in 2024, and total data center profit increasing over 2.5 times. Turner & Townsend, a future partner, saw its data center revenue increase 50% annually in the three years leading up to 2024.

The strategic reorganization continued into 2025, with the company reconfiguring its operations into four reportable segments: Advisory Services, Building Operations & Experience (BOE), Project Management, and Real Estate Investments (REI). This reorganization was a catalyst for consolidating building management businesses into BOE and combining CBRE's project management business with its Turner & Townsend subsidiary in early January 2025, resulting in a 70% controlling interest. This move aimed to create a large, uniquely positioned program and project management business with resilient revenue growth avenues in infrastructure, energy, and data centers. On January 16, 2025, CBRE acquired the remaining 60% ownership in Industrious, a flexible workplace solutions provider, integrating it into the BOE segment to enhance its office occupier and landlord offerings. Further financial activities in 2025 included the issuance of $600 million in 4.80 senior notes and $500 million in 5.50 senior notes in May, and the redemption of $600 million in 4.88 senior notes. In June 2025, new 5-year and 364-day revolving credit agreements were established, and amendments were made to the 2023 Credit Agreement.

Robust Financial Performance and Operational Excellence

CBRE's strategic repositioning has translated into robust financial performance, demonstrating strong operational execution and a growing resilience to market fluctuations. The company's third-quarter 2025 results were particularly strong, with core EPS surging 34% and core EBITDA increasing 19%. This performance was underpinned by double-digit revenue gains across both its resilient and transactional businesses, highlighting the balanced strength of its diversified model. Similarly, the second quarter of 2025 saw core EBITDA and core EPS grow 30% and 47%, respectively. In the first quarter of 2025, core EBITDA increased 27%, and core EPS grew 10%, or 39% excluding a significant one-time tax benefit in the prior year. These results underscore the effectiveness of CBRE's strategy to enhance its resilient revenue streams, which contributed nearly 60% of total Segment Operating Profit (SOP) in 2024.

The company's latest trailing twelve-month (TTM) financials reflect this strength, with annual revenue of $35.77 billion and net income of $968 million. Profitability metrics include a TTM EBITDA margin of 6.17% and an operating profit margin of 4.39%.

Segment-specific performance further illustrates these trends:

• Advisory Services: This segment, a cornerstone of CBRE's business, delivered a 16% revenue increase in Q3 2025, driven by strong leasing and sales activity. Global leasing revenue rose 17%, marking its highest level for any third quarter, with U.S. office leasing growing by double digits and industrial leasing up 27%. Data center leasing revenue more than doubled year-over-year. Property sales revenue increased 28%, and mortgage origination saw high-teens growth. SOP for the segment grew 23%, demonstrating strong operating leverage with incremental margins exceeding 25% for the quarter.
• Building Operations & Experience (BOE): The BOE segment's revenue grew 11% in Q3 2025. Growth in the enterprise business was fueled by demand from data center hyperscalers and new client wins in technology, life sciences, and healthcare sectors. The local business achieved a mid-teens revenue increase, with the Americas region experiencing a 30% surge due to strong market share gains. SOP for BOE increased 15%, driven by continued cost efficiencies across the segment. Management notes that BOE pipelines are "very strong," with elevated sales volume expected to translate into revenue growth towards the second half of next year.
• Project Management: Revenue in the Project Management segment increased 19% in Q3 2025, with broad-based double-digit growth across the U.K., the Middle East, and North America. Notably, legacy Turner & Townsend revenue in North America has more than doubled since 2022, showcasing the benefits of its integration into the broader CBRE platform. SOP for this segment grew 16%. The integration of CBRE's project management business with Turner & Townsend's operating model is largely complete, with financial, human resources, and technology platform integrations expected to yield further cost synergies next year. The long-term margin for the Project Management segment is targeted to trend towards the mid-to-high teens.
• Real Estate Investments (REI): The REI segment's operating profit was up 8% in Q3 2025. The Investment Management business successfully raised $2.4 billion of new capital during the quarter, with Assets Under Management (AUM) reaching approximately $156 billion, an increase of $500 million (or $1.3 billion absent currency headwinds). Development operating profit met expectations, with strategic land acquisitions positioning the company to capitalize on demand for large data center development sites. The development portfolio holds an estimated $900 million of embedded profits expected to be monetized over the next five years.

CBRE maintains a robust liquidity position, with approximately $5.2 billion in total liquidity at the end of Q3 2025, comprising $1.7 billion in cash and the capacity to borrow $3.5 billion under revolving credit facilities and its commercial paper program. Net leverage stood at 1.2 turns at quarter-end, with expectations to delever further by year-end. The company's capital allocation strategy prioritizes strategic M&A and co-investments in its REI business, balanced by opportunistic share repurchases. In the first half of 2025, CBRE repurchased $663 million worth of shares, with $5.2 billion of capacity remaining under its program as of June 30, 2025. Management consistently views its shares as undervalued, justifying these buybacks.

Outlook and Strategic Initiatives: Powering Future Growth

CBRE's forward-looking strategy is designed to capitalize on its strengthened operational foundation and market position. The company has raised its full-year core EPS outlook to $6.25 to $6.35, up from $6.10 to $6.20, reflecting strong year-to-date results and business momentum. The midpoint of this revised guidance represents a 24% growth rate and would exceed CBRE's prior peak EPS by more than 10%. This achievement is particularly notable given that overall transaction activity remains more muted than in previous cyclical recoveries. The company anticipates that strong transaction activity and successful monetization of development sites will drive results towards the higher end of its EPS range.

The outlook for 2025 is underpinned by continued strength in CBRE's diversified segments. Advisory Services is expected to achieve low to mid-teens SOP growth, supported by solid leasing revenue and a steady recovery in capital markets, which will also drive margin expansion. The BOE segment is projected to deliver above-trend mid-teens revenue growth and high-teens SOP growth, benefiting from local market expansion in the U.S. and the full-year contribution from Industrious, alongside ongoing cost efficiency initiatives from 2024. For Project Management, strong but slightly below-trend SOP growth in the low to mid-teens is anticipated due to the complexities of integrating the Turner & Townsend businesses. The REI segment is expected to improve on its 2024 SOP, with Investment Management's operating profit likely flat due to a non-recurring incentive fee in 2024, but poised for strong growth in 2026 and beyond as significant capital raising efforts continue. Development profits in 2025 are expected to be more than 50% from data center site monetizations, leveraging the company's strategic investments in this secularly favored sector.

CBRE's development business is strategically positioned, with plans to break ground on over 50 projects in 2025, nearly doubling the number from 2024. This aggressive pipeline, initiated during periods when other investors were on the sidelines, is expected to yield substantial embedded profits as projects harvest into a market with potentially reduced new supply and recovering rental rates. The company also anticipates a meaningful narrowing of the delta between its GAAP and core earnings in 2025, as one-time restructuring costs largely conclude.

Risks and Mitigations

Despite a positive outlook, CBRE acknowledges several risks. Concerns over rapidly changing U.S. trade policy and higher tariffs could impact investor and occupier sentiment, potentially affecting real estate transaction activity. While these have not materially affected activity to date, some corporate clients have slowed larger programs due to uncertainty. Interest rate volatility also poses a risk, with capital markets activity potentially slowing significantly if rates rise above 5%. However, the ongoing need for refinancing in the mortgage origination business provides a foundational level of activity.

CBRE's enhanced resilience, with resilient businesses contributing 60% of its SOP, significantly mitigates the impact of a potential recession. Management estimates that a recession similar to the Global Financial Crisis would result in earnings declines less than half of the 85% peak-to-trough drop experienced then. The company's variable cost structure, where commissions and bonuses flex with revenue, further supports this resilience. Risks related to construction costs, potentially exacerbated by tariffs, are mitigated by a significant portion of the development portfolio being near completion or protected by Guaranteed Maximum Price (GMP) contracts, with budget contingencies providing additional buffers. Foreign currency exchange rate fluctuations remain a factor, potentially impacting revenue, earnings, and AUM. Additionally, the estimated $212 million liability for Telford fire safety remediation remains a subjective and complex area.

Conclusion

CBRE Group, Inc. has undergone a profound strategic transformation, evolving into a more resilient, diversified, and technologically adept leader in the global commercial real estate services and investment landscape. By strategically focusing on high-growth sectors like data centers and expanding its contractually based service lines, the company has built a robust foundation that is demonstrably less susceptible to economic downturns. This strategic reshaping, coupled with disciplined capital allocation and a strong balance sheet, has propelled CBRE to record earnings, with a compelling outlook for sustained growth.

The company's ability to leverage its extensive global network, integrated service offerings, and embedded technological capabilities provides a distinct competitive advantage against its peers. As CBRE continues to execute on its development pipeline, capitalize on data center opportunities, and realize synergies from recent integrations, it is well-positioned to deliver consistent double-digit earnings growth. For investors, CBRE presents a compelling investment thesis: a market leader with a proven track record of strategic adaptation, poised to unlock significant value through its diversified business model and leadership in evolving real estate markets.