Newmark Reports Higher Revenue, Particularly From Investment Sales
By Mark Hallum August 2, 2024 12:00 pm
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Revenue is up at Newmark (NMRK) as its services have dominated over 30 percent of the national market share of commercial real estate brokerage work in the first half of 2024, the company announced in its quarterly earnings call Aug. 2.
Total revenue was up 8.1 percent annually in the second quarter of 2024, to $633.4 million, and year-to-date Newmark said that it has recorded revenue of about $1.1 billion, a 6.6 percent increase over the first half of 2023.
Revenue from investment sales was up 18 percent for the quarter. Newmark saw a 46 percent fee growth in mortgage brokerage and debt placement, while leasing and other brokerage services raked in $208.6 million in the second quarter and $367.4 million year-to-date.
With interest rates stabilizing, the brokerage is finding itself closer to the point where it is willing to invest in properties in the near future depending on the liquidity of the market, Newmark CEO Barry Gosin said.
“Retail is one of those [property types],” Gosin said during the call. “It had a softer year this year in terms of leasing retail leasing and industrial, but the underlying fundamentals are all strong. The consumer is still strong, so I think that bodes well for the opportunities looking forward over the next couple of years.”
Newmark’s office leasing business is slower than the firm would like, executives acknowledged. But there are signs of improvement. Across the entire market, for instance, and not only in the neighborhoods benefitting from flight to quality, deals are being made with longer lease terms than in recent years.
Landlords with less premium offerings are also recapitalizing and renovating buildings to compete for tenants.
“The only issue in terms of office space in the cities are the businesses where people are more soft on [employees] working from home,” Gosin said during the call. “The office industry has been more complicated because of the nature of hybrid work. A lot of the information is anecdotal, but it’s our belief that people will come to [the office] the farther away we get from COVID.”
He said another factor bringing people back to the office is “the excitement of young people coming to cities to work… and build their careers.”
But inflation complicates things, according to Gosin. The price of building and recapitalizing existing office inventory will be subject to a higher replacement value for the foreseeable future.
“It’s never going to get cheaper to build office buildings, so that inflation with population growth and low interest rates will be the optimum conditions to have,” Gosin said. “It would then be too expensive to build an office, the existing inventory would get built up and would be more valuable at higher rates.”
Newmark’s total corporate debt as of June 30 was $745.2 million compared to $547.3 million on Dec. 31, 2023.
“We’re in a really good position to benefit from all aspects of the market improvement, stabilization and runway increase,” Gosin said.
Mark Hallum can be reached at mhallum@commercialobserver.com.
