Lower investment sales volume--exacerbated by the credit crunch--equals fewer commissions. That's hurting the major brokerage firms.
The tighter lending standards have made borrowing for commercial real estate purchases either difficult and expensive or downright impossible. In the United States, commercial real estate sales have dropped by around 70 percent.
Most of the deals getting done are either seller financed, or already have assumable mortgage debt. More often, unless they are financially strapped, owners are refusing to sell at the prices that the higher financing costs demand.
The lower volume of sales has crimped property brokers' fees and commissions. After the market close, Jones Lang said its quarterly profits tumbled 69 percent to $24.5 million, or 73 cents a share, from $77.9 million, or $2.23 per share a year earlier.
At CB Richard Ellis Group, second-quarter net income plunged 88 percent to $16.6 million, or 8 cents per share, from $141.1 million, or 59 cents per share.