CB Richard Ellis Group Inc., the world's largest commercial real estate brokerage, reported a return to the black in the second quarter as revenue rose in nearly all its business lines around the world.
Although much of the local commercial property market remains depressed, improving global conditions allowed the Los Angeles company to report a profit of $54.8 million, or 17 cents a share, compared with a net loss of $6.6 million, or 2 cents, in the second quarter of 2009.
The company posted adjusted earnings of 18 cents a share after deducting select charges, well ahead of Wall Street analysts' prediction of 9 cents.
Revenue increased 23% to $1.2 billion.
Chief Executive Brett White said the real estate business was showing signs of improvement.
"We are mindful about the pace of economic recovery," he said, "but the rebound in commercial real estate activity is progressing."
Last year, after two quarters in the red as the international economic meltdown brought the real estate business to its knees, CB Richard Ellis turned a profit in the second half of 2009, fueled by internal cuts and a rebound in Asia. It reported another loss in the first quarter of this year, but said the business of selling and leasing buildings such as offices, warehouses and shopping centers was picking up.
Momentum continued in the second quarter as revenue rose at a double-digit rate in all of the company's major business lines except development services. (With vacancy rates high in most markets, little development has been taking place.)
"In the U.S., we saw a very strong pickup in property sales and leasing, reflecting recovering market conditions," White said.
Europe produced robust growth, he said, the result of a recovery of the property sales markets in Britain, Germany and France.
Most commercial real estate markets in the U.S. have been weak for about two years as property values and rents fell. About 52.5 million square feet of office space is vacant in Los Angeles, Orange, Riverside and San Bernardino counties, almost 20% of the total in those areas.
Bargain-hunting investors are combing the market for deals, but sales activity is still far off the pace of the boom of the mid-2000s.
Some companies are feeling financially safe enough to rent or buy more commercial space, creating some forward movement in real estate, said analyst Craig Silvers, president of Bricks & Mortar Capital.
"There was stagnation, which caused pent-up demand," Silvers said. "Now companies realize the world hasn't come to end and can start carefully adding space."
Silvers, who owns CB Richard Ellis stock, also credited the company's second-quarter gains to previous cuts in overhead. During the downturn the company cut more than $600 million in expenses, in part by eliminating more than 1,000 positions.
CB Richard Ellis shares fell 16 cents, or 1%, to $15.41 but rose more than 3% in after-hours trading.