CBRE is a long time competitor in the commercial real estate and investment business, with origins dating back to 1907. Originally named ‘Tucker, Lynch, and Coldwell’, the firm was established by Colbert Coldwell and has since gone through a number of adaptations and expansions. Today, the well known and prestigious firm stands at the forefront of its business, boasting a number of international offices, multitude of assets under management, and a huge variety of services for buyers and investors alike. CBRE has appeared in the fortune 500 consistently since 2008, and seems to have established itself as a mainstay. Based in Los Angeles, CBRE is the largest real estate service company in the world and draws off an immense variety of strengths for its continued success.
While its success is inevitably tied to the strength of the real estate market, CBRE has done a fantastic job of diversifying within their field to give themselves leverage. The business lines offered by CBRE include asset and investment management, development services, valuation and advisory services, capital markets, and global workplace solutions. In context, CBRE is essentially offering corporate firms a one stop shop for all real estate needs. This diversity in ‘product lines’ and services for top level clients stand as two of CBRE’s biggest strengths. In addition, CBRE is the top ranked real estate company in the fortune 500, making it the global leader in its market. CBRE has an incredibly strong brand thanks to the longevity of the firm and consistent, strong rankings. CBRE’s size is also an advantage, including a large worker base of over 35,000 and a diverse number of clients. CBRE has established itself among the global top firms, and this shows through their continuous growth in any metric.
Despite these apparent strengths, CBRE is by no means invincible. There exist a few key vulnerabilities that, should several unfortunate events align, could do serious damage to the firm. The first glaring weakness is the dependence on the US market. According to 2017 reports, a majority of CBRE’s revenue was from the Americas at 55 % (with a large majority of this being in the United States). This means that CBRE’s success is tied in with the real estate and corporate real estate markets in the United States. Before 2008, this would not have been considered a weakness, but at this point investors should be all to wary of the faults in US real estate. On a different note, the strength of CBRE’s global market is not necessarily invulnerable either. The continued success relies on a certain level of local investment to support a strong corporate market, and this could quickly disintegrate in the face of another global recession. It is worth noting that CBRE has done well to mitigate these liabilities by offering more than just transaction services. One final weakness comes in the form of the environment. With additional regulations, CBRE could see business damaged regionally by any number of governments. All of these weaknesses have potential to do serious damage to CBRE, but is should be remembered that a scenario where all three come into play is incredibly unlikely.
The strengths of CBRE seem to outweigh the weaknesses, leaving CBRE in a position to expand. Continued acquisition of smaller firms would cement the CBRE brand in smaller, local markets if done well, and CBRE would avoid having to worry about competition from these companies at the same time. This is a practice CBRE already employs, with yearly acquisitions of these very same smaller companies. Another potential avenue for growth is in the emerging economies of the world. Since CBRE is receiving the majority of its revenues from the Americas, one clear takeaway is the room for expansion in all other markets. Especially in the emerging economies of the world, CBRE could leverage itself to be one of the main companies building these corporate economies. Should CBRE grasp these opportunities, which they will in all likelihood, the firm will be in a fantastic position to continue growing and outpace its threats.
In terms of these threats, CBRE does not face many in the form of direct competitors. Rather, CBRE’s threats come mainly in the realm of macroeconomic cycles and generic real estate weaknesses. If a worldwide recession hit, CBRE could face issues in their developing markets as business everywhere suffered. These emerging markets that are one of CBRE’s greatest strengths could prove to be a huge liability in the face of a real estate market crisis. Additionally, while CBRE are the stand-out corporate real estate firm, the market itself is highly competitive. CBRE has managed to acquire smaller firms consistently to their advantage, but the sheer number of competitors is somewhat daunting. Finally, policy changes, especially in the United States could prove threatening for CBRE. This seems unlikely in the current political atmosphere, but wide sweeping regulations are a threat to any sizable company, especially one so cemented in the United States. Although these threats exist, it should be noted that CBRE appears to be resistant to these threats due to its high number of strengths and opportunities.
Michael O’Malley is a Business Administration/Theatre Double major sophomore at USC. He enjoys long walks on the beach, screaming into the abyss, and dancing with friends. He grew up in Birmingham, Alabama and does know how to read.
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