Executive Summary / Key Takeaways

• Colliers International Group Inc. (NASDAQ:CIGI) is executing a successful long-term strategy to transform into a diversified professional services and investment management firm, with recurring revenues now contributing over 70% of earnings, enhancing stability.
• The company delivered strong Q2 2025 results, with consolidated revenues up 17% year-over-year and adjusted EBITDA increasing 15%, driven by robust performance across its Real Estate Services, Engineering, and Investment Management segments.
• The Engineering division is an emerging powerhouse, with Q2 2025 net revenue jumping 70% and internal growth of 8%, supported by strategic acquisitions and a strong backlog, positioning it for significant future expansion.
• Colliers' Investment Management segment, rebranded as Harrison Street Asset Management, is poised for accelerated growth with a 2025 fundraising target of $5 billion to $8 billion, and management believes its current valuation is "materially below where it should be," hinting at potential future optionality.
• Despite macroeconomic uncertainties, including global trade tensions and interest rate volatility, Colliers maintains a positive full-year 2025 outlook, projecting high single-digit to low teens revenue, adjusted EBITDA, and adjusted EPS growth, supported by healthy pipelines and expected market improvements in the second half.

Colliers International: A Diversified Powerhouse in a Dynamic Market

Colliers International Group Inc. (NASDAQ:CIGI) has strategically evolved from its 1972 founding as a commercial real estate services provider into a global diversified professional services and investment management firm. This transformation, particularly over the last decade, has been deliberate, focusing on building three distinct yet complementary growth engines: Real Estate Services, Engineering, and Investment Management. This diversified model has significantly de-risked the business, with recurring revenues now accounting for over 70% of its earnings, providing enhanced balance and predictability.

In the competitive landscape, Colliers stands as a formidable global player, often ranked among the top three worldwide. While larger competitors like CBRE Group (CBRE) and Jones Lang LaSalle (JLL) may boast greater scale in certain segments, Colliers differentiates itself through an enterprising culture, a unique partnership philosophy, and a client-centric approach. This allows it to compete effectively in niche markets and foster deep, long-term relationships, particularly in regions where localized expertise is highly valued. Colliers' global network and integrated service offerings provide a competitive advantage, enabling efficient cross-border deals and contributing to stronger customer loyalty.

Colliers' technological differentiation lies not in a single proprietary hardware or software, but in its sophisticated use of data, analytics, and integrated platforms to enhance service delivery and operational efficiency across its diverse segments. The company leverages proprietary data and relationships to deliver strong performance and innovative opportunities within its Investment Management division. In Real Estate Services, technology and tools are employed to boost producer productivity. Furthermore, Colliers demonstrates its analytical prowess through reports like the "Global Tech Markets: Top Talent Locations 2025," which analyzes over 200 global markets based on talent acquisition, venture capital funding, and labor index strength. This deep market insight directly informs its strategic positioning and client advisory services, providing a tangible benefit in a rapidly evolving market.

Real Estate Services: Navigating Cyclicality with Strategic Growth

Colliers' Real Estate Services segment, a global leader, continues to demonstrate resilience and strategic adaptability. In the second quarter of 2025, the segment's revenue grew 4% year-over-year. Recurring outsourcing revenues, a cornerstone of its stability, rose 6% across property management, valuation, and loan servicing. Capital markets activity showed a notable rebound, increasing 16% in Q2 2025, an acceleration from the 10% growth in Q1 2025, exceeding expectations. This surge was particularly strong in the U.S. and Western Europe, with debt finance activity benefiting from higher U.S. multifamily originations.

However, the segment faced headwinds in leasing, which declined 5% globally in Q2 2025. This was primarily due to weaker industrial volumes, impacted by "tariff-related and other macroeconomic uncertainty," particularly in heavily tariff-impacted markets like Canada, Australia, and Western Europe. Despite this, management noted a more positive trajectory in July, including industrial leasing activity. Industrial leasing constitutes a significant portion of its revenue, representing 40-45% of total leasing revenue. The segment's net margin in Q2 2025 was 11.9%, slightly down due to revenue mix and ongoing investments in recruiting.

Looking ahead, Colliers anticipates a "healthy uptick" in leasing activity in the second half of 2025, projecting mid-single-digit growth for the full year. Capital markets momentum is expected to continue, with potential for "some margin enhancement on a year-over-year basis in Q3 and in Q4 and hopefully, on a full year basis as well." Colliers is aggressively recruiting talent, particularly in the U.S., targeting a 4-5% annual net growth rate in producers, focusing on core asset classes, multi-market brokers, and high-growth markets like Japan and India. This strategic investment in talent is expected to yield incremental margins of approximately 20% on new leasing and capital markets revenue.

Engineering: An Accelerating Growth Engine

The Engineering segment is rapidly emerging as a powerful growth engine for Colliers. In Q2 2025, net revenue for this segment jumped an impressive 70%, fueled by strategic acquisitions and robust 8% internal growth. The net margin for Engineering also saw a substantial increase to 13.7%, driven by both acquisitions and enhanced productivity. Management has expressed high confidence in this segment, with CEO Jay Hennick stating it "could dwarf the rest of our real estate services business."

Colliers' aggressive acquisition strategy in Engineering has been pivotal. The company completed four tuck-under acquisitions in Engineering since the beginning of Q2 2025, including LRL Associates Ltd. in Canada in September 2025, and Cambium Inc. in Ontario in June 2025. These build upon earlier acquisitions like Englobe in Q3 2024, which established a substantial platform in Canada, and Terra Consulting in Q1 2025, expanding U.S. infrastructure capabilities. The segment maintains a robust backlog exceeding 12 months of revenue, supported by new infrastructure projects and larger private sector engagements.

For 2025, Engineering revenues are projected to be up about 30%, with approximately one-fifth of that growth attributable to internal sources. Margins are expected to "increase nicely" due to higher-margin acquisitions and ongoing efficiency improvements, with organic growth projected in the mid- to high single-digit range for the second half of the year. The segment also benefits from significant cross-selling opportunities, both internally within the engineering platform and externally with Real Estate Services, by providing preliminary environmental testing or project management for development.

Investment Management: Rebranding for Unlocked Value

Colliers' Investment Management division, recently rebranded as Harrison Street Asset Management, is undergoing a strategic transformation aimed at accelerating growth and potentially unlocking significant shareholder value. The rebranding, completed in July 2025, reflects the strength and global recognition of the Harrison Street brand, accompanied by an expanded leadership team and the launch of Harrison Street Private Wealth to target high-net-worth individuals.

In Q2 2025, net revenues for the segment declined 7%, as anticipated, due to catch-up fees recognized in the prior year. However, the net margin improved to 42% from 40%, a result of disciplined cost control and lower incentive compensation. Fundraising momentum is building, with $1 billion in new capital commitments raised in Q2 2025 and an additional $0.5 billion since quarter-end, bringing year-to-date fundraising to $2.7 billion. The launch of Harrison Street Fund X in May 2025 was a primary driver. Assets Under Management (AUM) stood at $103.3 billion at June 30, 2025, up 7% year-over-year, and exceeded $108 billion pro forma for the acquisition of RoundShield Partners.

The acquisition of RoundShield Partners, a European credit platform with $5.4 billion in AUM, significantly enhances Harrison Street's credit, student housing, and hospitality capabilities, offering exciting opportunities to scale operations across the region. Colliers is well on track to achieve its full-year 2025 fundraising target of $5 billion to $8 billion, driven by new vintages and approximately 20 products in the market. While significant investment spending in Harrison Street, particularly in the private wealth channel and distribution, is expected to "keep pressure on...the margins a bit for the next year or 2," the long-term objective is for margins to improve to the "45% and even approaching 50% range as the business scales and we've had more success on fundraising."

Management believes the segment's overall valuation is "materially below where it should be," and the accelerated operational integration plans are setting the stage for future optionality, including a potential spin-off or sale, though no decisions have been made. This strategic streamlining of back-office, regulatory, and fundraising efforts aims to capitalize on synergies and create a more unified platform. Colliers also has approximately $8 billion of capital available to put to work, signaling ample capacity for further strategic deployment.

Financial Health and Outlook

Colliers' consolidated financial performance in Q2 2025 reflects the strength of its diversified strategy, with revenues up 17% year-over-year to $1.3 billion and adjusted EBITDA increasing 15% to $180 million.

The company maintains strong free cash flow, with a trailing 12-month conversion rate of 98% of adjusted net earnings, supported by its working capital-light business model. The leverage ratio stood at 2.3x as of June 30, 2025, slightly higher than anticipated due to the pace of acquisitions and U.S. dollar appreciation, but is expected to decline to just under 2x by year-end 2025, assuming no additional major acquisitions.

For the full year 2025, Colliers raised its consolidated outlook, projecting high single-digit to low teens percentage revenue growth, and low teens adjusted EBITDA and adjusted EPS growth. This updated guidance is equally driven by the partial-year effect of completed acquisitions, such as RoundShield's expected $35 million in annual management fee revenue, and increasing expectations for organic growth across core operations. Management anticipates a "modest improvement in market conditions through the second half of the year," despite acknowledging a 2-3% headwind to growth from prevailing foreign exchange rates.

Risks and Competitive Positioning

While Colliers' diversified model provides resilience, the company remains exposed to macroeconomic uncertainties, global trade tensions, and interest rate volatility. These factors have already impacted industrial leasing volumes and created "uncertainty and unclear" market conditions, delaying client decisions in Real Estate Services. However, the Engineering division has "seen no significant effect on our backlogs to date" from these external pressures.

In the broader competitive landscape, Colliers faces rivals like CBRE, JLL, Cushman & Wakefield (CWK), and Newmark Group (NMRK). While Colliers may not match the sheer scale of CBRE or the technological investment of JLL in all areas, its strength lies in its integrated service offerings, client-centric approach, and a partnership model that attracts and retains top talent. Colliers is actively "taking share, and we're taking share mostly from the secondary players in the industry that are having trouble with their global operations." In fundraising, Colliers notes that "everybody is having fundraising challenges unless, of course, they have an an insurance arm," a competitive advantage that larger players sometimes possess. Colliers' strategic focus on mid-market alternative assets and infrastructure, coupled with its expanding global reach, positions it uniquely against these larger, often more generalized competitors.

Conclusion

Colliers International Group Inc. is a compelling investment story, underpinned by a successful transformation into a diversified professional services and investment management powerhouse. The company's strategic focus on high-quality recurring revenue streams, aggressive yet disciplined acquisition strategy, and commitment to operational excellence across its three growth engines are clearly yielding results. The exceptional performance of the Engineering segment, the cyclical recovery in Real Estate Services, and the strategic rebranding and growth initiatives within Investment Management (Harrison Street Asset Management) all point to a robust future.

Despite ongoing macroeconomic uncertainties, Colliers' raised 2025 outlook, strong free cash flow generation, and disciplined capital allocation underscore its resilience and growth potential. The potential for the Investment Management segment to unlock significant value, coupled with the long-term growth trajectory of Engineering and the cyclical rebound in Real Estate Services, positions Colliers favorably. Investors should recognize Colliers' ability to leverage its unique partnership model, global network, and analytical capabilities to drive sustained value creation in a dynamic global market.