Rising interest rates are beginning to disrupt commercial real estate transactions after a strong third quarter for CBRE, with the company’s chairman and CEO noting that transactions are being re-evaluated or delayed as uncertainty weighs on the market as corporate real estate spending slows.
Rising cap rates are causing some deals already under contract to be repriced, while other deals are no longer happening and some expected real estate sales are turning into refinancing deals rather than deals. CBRE executives also noted a slowdown in financial market activity in September and expect this weakness to continue into next year.
“Our view is that part of what’s going on here is not just the interest rate situation and what the interest rates are, but also the uncertainty” around interest rates, CBRE Chairman and CEO Bob Sulentic said Thursday during the company’s third-quarter 2026 earnings conference call.
“We think this could work out in the second half of next year,” Sulentic added. “Of course, none of us know what’s going to happen. As a result, in investment sales, mortgage origination, investment development and management, we are seeing an impact.”
This changing environment comes as CBRE reports a rebound in its transactions in the third quarter, with global real estate sales revenue up 28%, including a 37% jump in the United States, driven by industrial and retail transactions. Industrial rental revenue also climbed 16%, a record result for the third quarter.
In total, CBRE’s quarterly revenue increased 13% to $11.5 billion in the third quarter, while net profit attributable to the company increased 22% to $443 million.
This was not only helped by property transactions during the period, but also reflected CBRE’s push into data center infrastructure, with revenue up 80%, driven by demand for data centers from large technology companies and industry. Acquisition of Pearce Services for $1.2 billion last November.
And CBRE’s bet on data center infrastructure is growing. This week, the company added Onnec Group, another data center infrastructure company, to its growing list of companies it is acquiring.
CBRE expects critical infrastructure services to generate nearly $4.5 billion in revenue in 2027, while its broader infrastructure services business is expected to approach $7 billion, representing growth of more than 40% from 2026.
CBRE expects to maintain its earnings outlook for the year with core earnings per share in the range of $7.80 to $7.90, representing growth of 23% at the midpoint of the range, the company said.
CFO Emma Giamartino added that CBRE is seeing a “competing dynamic” in its business.
“We expect continued growth in our infrastructure business,” Giamartino added. “This will be offset somewhat by lower growth in our real estate capital markets-focused businesses. As a result, we continue to forecast core earnings per share growth of 15% in 2027.”
Corporate real estate spending has also slowed, CBRE executives told investors and analysts on the quarterly earnings conference call. This includes some large technology clients who have diverted their spending from traditional real estate to infrastructure, critical infrastructure and data centers.
CBRE is not the only commercial real estate company to notice this investment shift. In June, CoStar News explained how traditional real estate investments have been impacted while billions of funds are diverted to support data centers.
CBRE is also exploring future M&A deals, with Giamartino telling investors that the recently announced deal with Onnec Group is a good example of the companies they are looking to buy in the U.S. and around the world. Giamartino said CBRE has a “strong pipeline” of deals that could close in the fourth quarter or over the next year.
For CBRE, the company continues to shift towards activities less impacted by real estate cycles.
“What we really need is for rates to stabilize,” Sulentic said. “Volatility and uncertainty are what lead to a pause, hold or even postponement of deals until 2027.”
In the company’s project management division, the company reported double-digit revenue growth in infrastructure services. But the division’s overall growth rate was “tempered by weak corporate investment spending in real estate,” executives said in the quarterly presentation.
The slowdown in corporate capital spending on real estate is due to a number of factors, Sulentic told analysts.
“There’s all sorts of things going on,” he said. “There’s some uncertainty in the economy, which is causing companies to be a little more conservative, and you have large technology clients who have moved away from traditional real estate investments toward critical infrastructure and data centers. It’s a mix of things.”
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