00:00You just reported your first quarter results. We do know that you had a strong quarter. You
00:05beat revenue. You also boosted your full year outlook. Stock is down about 6%. What's your
00:11takeaway? Well, first of all, Nora, thanks for having me. We did report today. We were very
00:16pleased with our results. We're very pleased with where we're positioned for the remainder of the
00:21year. There is downward pressure on the stock. Sometimes you just can't quite figure out
00:26what's going to impact your stock at any given time. Stock price is a long-term game,
00:31not a short-term game. We feel good about what's happened over the last couple of years with our
00:36stock price. Today is a little disappointing, but that's the way things go. I do know a lot
00:41of people think of your company as a brokerage firm, but you've also evolved into many other
00:45aspects, including services, infrastructure. Talk to me a little bit about how that has
00:50contributed to your company's strength. Brokerage or advisory services, as we call it,
00:56is one of our four segments in our business. Brokerage, advisory services being one, building
01:02management being one, project management being a big one, and then real estate and investment,
01:08which is where we do development and investment management work. Historically, up until the last
01:14two or three years, we've been heavily, heavily skewed toward real estate. We've been known as a real
01:19estate firm, even though far beyond just brokerage. What's happened over the past few years, and
01:26really when we made the Turner and Townsend project management investment, it was accelerated
01:31significantly. We've increasingly become an infrastructure services firm, a mostly critical
01:36infrastructure. So a lot of data centers, but telecom assets, energy assets, transportation assets,
01:45and by the end of last year, about 15% of our earnings came from work we were doing in
01:51the
01:51infrastructure area, and in particular, critical infrastructure. So you go to the first quarter of
01:55this year, we had $3 billion of that kind of revenue last year. In the first quarter of this year,
02:00we had almost a billion dollars. That part of our business is now growing over 50%. We are legitimately
02:06today a real estate services and investment firm and an infrastructure services firm. And I think that's a
02:13really important, profound change in our company. I do want to dig a bit into some of the numbers.
02:19You brought up data centers. I do know that data centers accounted for about 14% of your profit in
02:242025. That's up from 3% back in 2021. Talk to me about that scale. Is there more room for
02:30growth as we
02:30think about data center development? Yeah. Well, it was data centers plus other types of critical
02:35infrastructure, mostly data centers, though. And yeah, everybody knows there's a big boom going on in data
02:42centers driven by artificial intelligence, but not just artificial intelligence. You have all kinds
02:48of things going on in technology that demand the use of data centers. We've moved through a series of
02:54acquisitions. Our company, since I've been in this role, has done over 100 acquisitions. We've done a
03:00number of acquisitions that have positioned us quite well in that market. We have an ability to track
03:06talent, which is really hard, that serves that market. And as a result, we're attracting clients,
03:12we're attracting talent, and we're attracting M&A targets in the data center services area that have
03:20allowed us to move really rapidly in growing that part of our business. And we expect it to
03:24sustain for some time. I want to talk about knee-jerk reactions. You brought up artificial
03:30intelligence. We talked about how the stock has performed today. If you flashback to February,
03:34we did see that CBRE was wrapped up in this broader sell-off of real estate services companies,
03:39in part due to the idea that people see a potential disruption for artificial intelligence on some of
03:44these industries. Is that something that you expect to potentially impact your business in any way? And
03:49where are you keeping your focus right now? Well, you did see that downdraft in the first quarter,
03:55and we're continuing to see some of it. And people are trying to figure out what's going to happen
03:59with artificial intelligence and who's going to be a winner and who's going to be a loser.
04:03We look at the impact in our business. We look at it in four categories. Okay, so the first is
04:10we always
04:11look at strategically as the environment we're operating in morphs and changes and evolves. What are we
04:20going to do with our business to address that? And we've had a strategy in place for some time that
04:23says
04:24we're going to move in the direction of businesses with secular tailwinds. We're having tremendous
04:30success moving in the direction of the secular tailwinds associated with data centers and critical
04:37infrastructure. Almost like anything ever in the history of our company. If you went back in the
04:4190s and early 2000s, we saw some of that movement into the real estate outsourcing business. But this
04:47has been more powerful and more rapid than that. The second thing we look at is the products we have
04:53that
04:53we offer our clients today independent of the new businesses. And right across the board in brokerage
04:59and building management and project management, we've introduced tools that are supported by
05:03artificial intelligence and supported by the massive amount of data we have that we think are going to
05:09make those products and our ability to serve our customers better. We're very, very bullish about
05:13that. The third area we look at is efficiencies that might be introduced. That's where we're going to
05:20cut some costs or efficiencies, but also replace some jobs. And we're very attentive to where that's
05:25going to happen. And so we got opportunities across those three areas. And then where you might
05:32be disintermediated. There probably are places where there could be some disintermediation.
05:37Where do you see that? A little bit on building management. There'll be more and more technology
05:42associated with operating buildings. But given the size and complexity of the portfolios we serve,
05:48we think we're relatively well insulated. More importantly, we think that's small compared
05:54to the market facing opportunities we're seeing on the growth side. So we think we're going to be
05:59pretty significant net winners due to artificial intelligence. And I think if you look at our
06:04recent results, at least the empirical evidence to date would suggest that's the case.
06:09I want to do a bit of a pivot as to what's really been in all the headlines as of
06:13late. And that's
06:14been the conflicts in the Middle East. I do know that CBRE is heavily invested, has exposure to the
06:20Middle East. Is there any concern at all that investors in the Middle East won't come back
06:25and may potentially stay domestic, stay local? We talked about that today. We have a sizable
06:31investment management business. We have about $155 billion of assets under management. We
06:38access considerable capital from the Middle East. We've downgraded our capital raising goals for the
06:45year by only less than 10% as a result of what's going on. Because what we're already seeing is
06:52the capital sources in the Middle East regrouping and putting new plans in place to invest in the
06:57United States and other parts of the world. So that's going to have a little impact on our business,
07:02not much. What do you expect that to be? Less than 10%. Okay. Yeah, less. And by the way,
07:08we haven't really downgraded our expectations for earnings in that business, just some of the
07:12capital raising in that part of the business. If you look at the rest of our business, there's
07:16no part of the rest of our business where we earn as much as 5% of our profits. So
07:21it's not a real
07:22concern. Of course, what is a concern to all of us, real estate, critical infrastructure,
07:27data centers aside is, if what goes on there results in prices for energy going up to the
07:33point where we might have a recession, then of course, we all got to pay attention to that.
07:37Well, coming back to the US, I also want to talk about the tax environment. We know big cities like
07:41New York City have really been in focus. Are you at all seeing any particular business shift toward
07:46lower tax, faster growing markets like the Sunbelt in particular with your business?
07:51You know, our business, as you probably would expect in Texas and Florida, is quite strong
07:57in both those markets. We've seen a lot. Texas, we've seen tremendous growth. We've seen also
08:03considerable growth in Florida. And I think some of that is tax driven. But our biggest profit market
08:09in the world is the one we're sitting in here today, New York City. And we had a spectacular first
08:14quarter in New York City. So you're not expecting any particular pullback or potential bearishness when
08:19people think about the New York City tax environment. We aren't we. I'll tell you one
08:24thing we talk about all the time is is we have also a very big business in London and a
08:28very big
08:29business in Tokyo. And over the last couple of decades, there's been the coming and going about
08:35always is London dead is New York dead? Is it dying? Is Tokyo dying? All three of those markets are
08:41so big and so diverse and such a magnet for people and companies and so forth. They're all doing
08:48extremely well now. And we're bullish about the long term prospects for New York and the others
08:53as well. Well, speaking about the long term outlook, as we wrap, I want to understand what
08:58are you optimistic about over the next 12, maybe 18 months and what potentially keeps you up at night?
09:04Yeah, I'm I'm generally optimistic about our business on a in a broad based sense. If if you and I'm
09:11answering the your question in the context of our business, there's other parts of my life where
09:16I think I got grandchildren and children and friends and all that. But as it relates to our
09:21business, when you look across our business, we're seeing good strength across everything we do. I
09:26think part of that, I'm going to give ourselves a little credit for having built strong leadership
09:30team and made some smart investments in the right kinds of things that are allowing us to take market
09:35share and grow and again, move in areas of secular tailwinds. But I think the environment has been
09:41more supportive than people want to give it credit for. We're seeing a lot of good activity
09:46in real estate, a lot of good activity in real estate services and a tremendous amount of activity
09:51in critical services, critical infrastructure services around the world that create opportunity
09:56for us. And I'm excited about that. I've been either a CFO or a CEO for over 20 years, which
10:03means I've
10:03done quarterly reporting of earnings for that many years. And I've said this a few times recently,
10:08in all those years, literally in all those years, I've never been so bullish about the growth prospects
10:15for my company as I am today.
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