The Zacks Real Estate Operations industry continues to encounter headwinds stemming from geopolitical instability, macroeconomic uncertainties and shifts in policy. Additionally, clients remain focused on cost management and are delaying their decision-making with respect to property purchases and leases, particularly within certain asset classes.

Despite these challenges, the increasing reliance on outsourced real estate services and other emerging trends is expected to create growth opportunities for the industry players. Additionally, strategic investments in technology are helping companies strengthen their competitive edge. Companies like CBRE Group, Inc. (CBRE Quick QuoteCBRE - Free Report) , Jones Lang LaSalle (JLL Quick QuoteJLL - Free Report) and Newmark Group, Inc. (NMRK Quick QuoteNMRK - Free Report) are set to benefit from these favorable trends.

About the Industry

The Zacks Real Estate Operations industry comprises companies that provide leasing, property management, investment management, valuation, development services, facility management, project management, transaction and consulting services, among others. However, real estate investment trusts, or REITs, are excluded from this group. Economic trends and government policies impact the real estate market (both global and regional), which determines the industry’s performance. Economic activity, employment growth, office-based employment, interest-rate levels, costs and availability of credit, tax and regulatory policies and the geopolitical environment are the major factors shaping the real estate market’s fate. Also, pandemic-induced public health challenges and geopolitical issues have affected property sales and the leasing lines of businesses.

What's Shaping the Real Estate Operations Industry's Future?

Geopolitical Instability Set to Impact the Industry: Geopolitical instability and macroeconomic uncertainties are expected to remain key factors impacting the industry's performance in the upcoming period. Conflicts across several regions have disrupted global trade flows, strained supply chains, and contributed to persistent inflationary pressures. These developments have also influenced the United States to change its economic policies. Within the United States, changes in governmental policies heightened the degree of uncertainty and as a result, 2025 emerged as a year of considerable disruption. Companies operating in the United States with global supply chains and diverse workforces are likely to face increasingly complex challenges involving trade compliance, immigration policy and cross-border relations. Moreover, clients are likely to continue to adopt a cautious approach amid macroeconomic uncertainty. As a result, investors’ desire for greater price discovery will continue to cause a delay in the closing timeline for transactions.

Demand Across Certain Real Estate Categories Hurt: The pandemic brought substantial changes in how several categories of commercial real estate are used. Although companies are encouraging employees to return to the office, the transition is gradual and is deterring tenants from making long-term commitments. Thus, pre-pandemic office occupancy levels are expected to remain out of reach in the near to intermediate future. Ongoing market volatility and geopolitical uncertainties have prompted customers to tighten cost controls and postpone their decision-making with respect to leasing. Consequently, demand for industrial real estate remains subdued, and this trend is expected to continue in the near term. Moreover, the convenience of online shopping continues to attract customers. As a result, this is likely to reduce market share for physical retail stores and impact retail REITs.

Outsourcing in the Real Estate Market to Gain Further Momentum: Occupiers of real estate, comprising corporations, public sector entities, healthcare organizations, and those in finance, industrial sectors, life sciences, and technology, are more frequently opting to outsource their real estate needs. They are placing their confidence in third-party real estate experts to achieve improved execution and efficiency. Organizations are progressively seeking strategic guidance to reimagine their workplaces and practices to enhance their culture, attract talent and boost performance. These developments are creating opportunities for participants in the real estate operations industry. Key players in the industry are taking advantage of this shift, leading to the acquisition of new clients and the expansion of existing ones. Moreover, within this industry, companies continue to prioritize investments in technology as it enhances efficiency, provides superior client services and contributes to market share expansion.

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Real Estate Operations industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #170, which places it in the bottom 30% of 243 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of the downward earnings per share outlook for the constituent companies in aggregate. Looking at the aggregate earnings per share estimate revisions, it appears that of late, analysts are losing confidence in this group’s growth potential. Since November 2024, the industry’s earnings per share estimates for 2025 and 2026 have moved down 2.4% and 5.7%, respectively.

However, before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Outperforms the Sector, Underperforms the S&P 500

The Zacks Real Estate Operations industry has outperformed the broader Zacks Finance sector over the past year. However, it underperformed the S&P 500 composite.

The industry has advanced 13.2% during this period compared with the S&P 500’s return of 16.3% and the broader Finance sector’s growth of 10.2%.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings, which is a commonly used multiple for valuing Real Estate Operations stocks, we see that the industry is currently trading at 15.71X compared with the S&P 500’s forward 12-month price-to-earnings (P/E) of 23.20X. The industry is trading below the Finance sector’s forward 12-month P/E of 17.02X. This is shown in the chart below.

Forward 12-Month Price-To-Earnings Ratio

Over the last five years, the industry has traded as high as 22.07X and as low as 10.33X, with a median of 15.77X.

3 Real Estate - Operation Stocks to Consider

Newmark Group, Inc.: Headquartered in New York City, Newmark is a leading commercial real estate services company with a growing global footprint. The company advises and provides services to large institutional investors, global corporations and other owners and occupiers of commercial real estate.

Through continued investments in talent and technology, Newmark is well-positioned to deliver stable performance and capture future growth opportunities. The company stands to benefit from its presence in the large and highly fragmented market, increasing institutional investor demand for commercial real estate and the ongoing shift toward outsourcing of commercial real estate services.

Newmark Group currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its 2025 earnings per share (EPS) is pegged at $1.59, suggesting an increase of 23.3% year over year. Its shares have increased 41.7% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jones Lang LaSalle Incorporated: Headquartered in Chicago, Jones Lang LaSalle offers commercial real estate and investment management services. The company’s diverse range of products and service offerings, along with its strategic investments, gives it a strong footing.

Also, its superior client services and strategic investment in technology and innovation are expected to boost market share and win relationships. JLL remains focused on maintaining balance sheet strength with sufficient liquidity to ensure operational flexibility.

Jones Lang LaSalle has a Zacks Rank of #2 at present. The Zacks Consensus Estimate for 2025 EPS stands at $17.12, indicating an increase of 22.2% year over year. The company’s shares have gained 30.7% in the past six months.

CBRE Group: Headquartered in Dallas, TX, CBRE Group is a commercial real estate services and investment firm. The company provides a comprehensive suite of services to tenants, owners, lenders and investors across office, retail, industrial, multi-family, and other commercial real estate sectors, operating in all major metropolitan markets worldwide.

In recent years, the company has strategically shifted toward a more balanced and resilient business model, leveraging its diversified service offerings to drive sustainable growth. The company’s outsourcing business continues to perform strongly, supported by a robust pipeline that positions it well for future expansion opportunities.

CBRE Group currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2025 EPS is pegged at $6.28, suggesting 23.1% growth year over year. CBRE shares have increased 17.8% over the past six months.