Has leasing activity normalized post-pandemic, or is there still room for above-cycle growth due to pent-up demand?

Management believes there has been a return to the norm, and potentially more, as companies increasingly focus on how office space can drive productivity and employee engagement. They cited strong leasing success with law firms as an example. “I think there has been a return to the norm. I think COVID is so far in the rearview mirror now or that people -- you see it in office buildings, you see it in restaurants, you see it and everything. There is a real return to the norm.”

Where are the biggest opportunities for CBRE to drive the expected 25% annual data center revenue growth over the next five years?

The biggest opportunities are in Project Management, particularly with Turner & Townsend, and in Building Operations and Experience. Over half of the data center revenue comes from downstream work like managing, refitting, and project work, in addition to initial build-out. “where we're really seeing it, the opportunity and the current activity is in 2 places. It's in our project management and program management business with Turner & Townsend... And then the second place we're seeing is building operations and experience.”

Does AI pose a risk of unbundling services within Property and Facilities Management, potentially shrinking the scope of outsourcing projects?

AI is expected to enhance existing services (facilities management, project management, transactions) by improving efficiency, predictive maintenance, and insights. Management does not see an unbundling risk, citing the significant labor involved and CBRE's platform advantage over clients doing it themselves. “We don't think that any of those things that we do are positioned to be, I guess, when you say disintermediated or separated pulled away from us because our clients would do it instead of having us do it.”

CBRE

CBRE (CBRE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Real Estate· Jul 29, 2026

Source: earnings call transcript

Executive summary

CBRE Q2 FY26 — Strong Growth Across Segments, Raised EPS Guidance

CBRE delivered a robust Q2 FY26, with strong revenue and core EPS growth driven by significant performance in its infrastructure and data center services, as well as a recovering leasing market. This led to an upward revision of full-year 2026 core EPS guidance and a confident outlook for 2027. While capital raising in investment management saw some caution and data center expansion faces headwinds, the company's diversified strategy and focus on high-growth areas continue to yield strong results.

Highlights

Core EPS increased 30% on a 16% revenue increase in Q2 FY26.
All segments (Advisory, Building Operations and Experience, Project Management, and Real Estate Investments) grew SOP by more than 25%.
Infrastructure Services revenue reached nearly $1.2 billion, increasing over 45%, with Data Center Services revenue surpassing $700 million, up nearly 30%.
Full-year 2026 Core EPS guidance was raised to $7.80-$7.90, representing 23% growth at the midpoint.
Global leasing revenue grew 24%, with U.S. office leasing revenue achieving its highest Q2 performance.

Concerns

Investment Management new capital raised ($1.6 billion) was lower than expectations, with some investors remaining cautious.
Project Management SOP operating leverage is expected to moderate in the second half of the year due to timing of costs.
Data center growth faces challenges from NIMBYism, water and power issues, supply chain constraints, and labor shortages.

Guidance & targets

Category	Target	Timeline	Confidence
Data Center Services Revenue Growth	about 25% annually high materiality	next 5 years	High
Full-year Core EPS	$7.80 to $7.90 high materiality	FY26	High
Q3 Core EPS Growth	more than 20% medium materiality	Q3 · FY26	High
Q4 Core EPS	comparable to last year medium materiality	Q4 · FY26	Medium
Full-year Free Cash Flow Conversion	near the high end of 75% to 85% medium materiality	FY26	High
Full-year Core EPS Growth	at least a 15% increase high materiality	FY27	High
BOE and Project Management SOP Growth	low double-digit medium materiality	FY27	High
REI SOP	roughly flat medium materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Company-wide Strong Q2 performance with double-digit growth in both resilient and transactional businesses, exceeding expectations. Core EBITDA: up 34%Core EPS: up 30%	16% increase	16%	—	—
Advisory Services Exceeded expectations, driven by accelerated growth in leasing and continued strength in sales across most major property types and regions. Global leasing revenue growth: 24%U.S. leasing growth: 24% (Office up 29%, Industrial up 17%)EMEA leasing growth: 27%APAC leasing growth: 19%Global property sales revenue growth: 20%U.S. sales growth: 24%EMEA sales growth: 8%APAC sales growth: 6%Mortgage origination revenue growth: 8%	rose 18%	18%	—	grew 29%
Building Operations and Experience (BOE) Growth led by critical infrastructure services and data center solutions, benefiting from hyperscaler demand. Local Facilities Management also showed strong growth. Critical Infrastructure Services revenue growth: 68%Data Center Solutions business growth: nearly 30%Local Facilities Management revenue growth: high-teens (Americas up almost 35%)Enterprise Facility Management revenue growth: led by technology, media and telecom sectors	strong double-digit revenue growth	—	—	grew 25%
Project Management Underpinned by solid infrastructure activity, particularly in transportation and utility projects. Strong growth across North America and Asia, driven by hyperscaler and technology clients. Infrastructure activity growth: 30%Real estate-related services growth: 13%North America real estate growth: >20%Asia real estate growth: strong double-digit	grew 19%	19%	—	grew 28%
Real Estate Investments (REI) Operating profit exceeded prior year, in line with expectations, without data center land sales. Investment Management operating profit was up modestly. Embedded gains in development portfolio: $900 millionAUM: $155 billionNew capital raised: $1.6 billion	—	—	—	exceeded the prior year

CBRE operating KPIs by quarter

CBRE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Change vs prior quarter
Employees Project Management	15K It's got 15,000 project management, program management and cost consultancy professionals. Source: earnings call transcript	15K So just as an example, between project managers, program managers and cost consultants in that business today, we have 15,000 professionals. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

peer services business Acquisition of a peer services business to enhance Critical Infrastructure Services and Data Center Solutions growth.

Acquired last November (Q4 FY25), contributing to growth in Critical Infrastructure Services and Data Center Solutions.

Risks & headwinds

Data Center Growth Challenges sustained opportunity

enormous demand vs. challenges everywhere

Mitigation:Data centers will move to areas that allow growth; supply chains will adjust.

Project Management SOP Operating Leverage Moderation back half of the year

moderate

Mitigation:Due to timing of costs.

Investment Management Capital Raising Caution Q2 FY26

$1.6 billion raised, 'lower expectations'

Debt Market Volatility going forward

lots of uncertainty around debt and the cost of debt

Mitigation:Bid-ask spread has narrowed; people still want to sell/invest.

What to watch in Q3 FY26

Project Management Operating Leverage

H2 FY26

Current notable operating leverage

Target Moderation

Why it matters

Indicates potential for slower profit growth in a key segment.

SOP grew 28% and with notable operating leverage, which we expect to moderate in the back half of the year given the timing of costs.

Find out whether CBRE delivers this. Inve re-checks your case every morning.

Q&A highlights

What's included in guidance for buybacks and other capital allocation activities in the second half of the year, given strong cash flow production?

M&A remains the priority, with buybacks used to deploy free cash flow if M&A opportunities don't materialize. No significant incremental capital allocation is included in the H2 guidance, and buybacks are expected to taper off as the goal is not to deploy more than generated free cash flow.

“Our goal is not to deploy more than we generate free cash flow and buybacks. So you have it's safe to assume that the buybacks will taper off.”

asked by Anthony Paolone · answered by Emma Giamartino

2 min read 6 chapters

Detailed narrative

Strong Q2 Performance and Raised Outlook

CBRE reported a robust second quarter, with core EPS increasing 30% and revenue up 16%. This marks the fifth consecutive quarter of at least 18% core EPS growth. The company raised its full-year 2026 core EPS guidance to $7.80-$7.90, representing 23% growth at the midpoint, and expressed confidence in delivering at least a 15% increase in core EPS in 2027, assuming a stable macroeconomic environment.

Infrastructure and Data Center Services Driving Growth

Infrastructure Services revenue reached nearly $1.2 billion in Q2, growing over 45%, with Data Center Services revenue exceeding $700 million, up almost 30%. This growth is fueled by significant AI investment and hyperscaler demand. Management anticipates data center services revenue to grow approximately 25% annually for the next five years, then over 15% as the build cycle matures, with over half of current revenue from downstream operational work.

Leasing Market Normalization and Strength

Global leasing revenue increased 24%, with U.S. office leasing achieving its highest Q2 revenue, driven by large deals in gateway markets and strong activity in the legal and financial services sectors. Industrial leasing also saw robust growth in key U.S. cities.

Management believes the leasing market has returned to a 'norm' post-pandemic, with companies increasingly focused on using office space to enhance productivity and employee engagement, suggesting potential for continued strong performance.

Project Management Segment Excels

The Project Management segment's revenue grew 19%, underpinned by a 30% increase in infrastructure activity and 13% growth in real estate-related services. This strength is attributed to large infrastructure and energy projects, particularly in the U.S., and expanded corporate work facilitated by Turner & Townsend. The segment's SOP grew 28%, though operating leverage is expected to moderate in the second half due to cost timing.

Capital Allocation and Shareholder Returns

CBRE bought back over $450 million in shares during Q2, bringing the year-to-date total to nearly $1 billion, underscoring management's conviction in the stock's undervaluation. The company's capital allocation strategy prioritizes M&A, with share buybacks serving to deploy free cash flow not utilized for acquisitions.

Trailing 12-month free cash flow totaled nearly $1.7 billion, with full-year conversion expected near the high end of the 75%-85% range.

Challenges in Data Center Expansion

Despite enormous demand, the data center business faces several challenges, including NIMBYism, water and power availability issues, supply chain constraints, and labor shortages. While these pressures exist, management remains confident in a substantial and sustained opportunity for both data center creation and the even larger long-term opportunity in downstream operational work, expecting the industry to adapt by moving to more accommodating areas and adjusting supply chains.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.