Jones Lang LaSalle Incorporated

LL earnings conference call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad once again that is star followed by the number one and if you would like to withdraw your question again press star one thank you I will now turn the call over to Scott Eidberger, head of investor relations. You may begin your conference.

Thank you and good morning. Welcome to the third quarter 2023 earnings conference call for Jones Lang LaSalle Incorporated. Earlier this morning, we issued our earnings release along with a slide presentation and Excel file intended to supplement our prepared remarks. These materials are available on the investor relations section of our website. please visit ir.jll.com. During the call and in our slide presentation in an accompanying Excel file, we reference certain non-GAAP financial measures, which we believe provide useful information for investors. We include reconciliations of non-GAAP financial measures to GAAP in our earnings release and slide presentation. As a reminder, today's call is being webcast live and recorded. A transcript and recording of this conference call will be posted to our website. Any statements made about future results and performance, plans, expectations, and objectives are forward-looking statements. Actual results and performance may differ from those forward-looking statements as a result of factors discussed in our annual report on Form 10-K for the fiscal year December 31, 2022, and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. I will now turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.

Thank you, Scott. Hello, and thank you all for joining our third quarter 2023 earnings call. Before I begin today's call, I would like to take a moment to express how deeply saddened we are by the brutal Hamas attacks on Israel, the subsequent war and the loss of civilian lives. We remain focused on supporting our clients and JLL team members in the area. Turning to the global real estate markets, conditions have softened since we last spoke in early August and the near 100 basis point increase in the 10-year US Treasury bond yield reflects a higher for longer sentiment. Interest rate volatility, tighter lending standards, and elevated price uncertainty continue to put downward pressure on transaction volumes. To put this into perspective, global commercial real estate investments totaled $131 billion in the third quarter, reflecting a year-over-year decline of 48% and a sequential quarter decline of 14%, according to JLL research. The 14% sequential quarterly decline in investment activity compares to a historical increase of 7% between the second and the third quarters. Overall, investment activity in the third quarter remains subdued across asset classes though there were notable differences across sectors with office down the most, while residential hotels and retail have fared comparatively better. The average deal size declined in the quarter, underscoring the challenges of closing large deals. Long-term fundamentals in the residential sector remain solid due to the ability to regularly reset rents and an undersupply in the global housing market. A rebound in international travel has also boosted hotel demand globally. On the leasing side, occupiers continue to have a cautious outlook on the macroeconomic environment, which is delaying decision-making and limiting large transactions. In the global office market, volume was down 6% year over year in the third quarter, according to JLL research. Asia-Pacific leasing demand remains resilient as strong return to office momentum continues, while volumes declined in both Europe and the US. Global office vacancy rates ticked up to 15.9% in the third quarter, compared to 14.5% last year. Demand continues to be focused on premium quality space, with many occupiers looking to downsize in exchange for higher quality space that meets sustainability requirements, offers more amenities, and improves the employee experience. Turning to the industrial sector, leasing activity declined further in the US and Europe as deals took longer to finalize and available space remained limited. Asia-Pacific was more resilient, supported by a wave of new supply and ongoing demand from e-commerce. All three regions maintained positive rental rate growth, albeit at a slower pace. Long-term fundamentals in the industrial sector are strong, supported by nearshoring requirements and demand for automated warehouse space. The retail sector saw solid leasing activity in the third quarter across most markets, benefiting from low unemployment and healthy consumer spending. Net absorption in the US was positive during the third quarter, with smaller retail spaces in particular demand. JLL's third quarter financial results reflect the points I just discussed with the slowdown in capital markets and leasing activity occurring during the quarter. Despite industry-wide headwinds, our resilient business lines collectively delivered mid-single digit fee revenue growth in the quarter, demonstrating the diversification and strength of our platform. As we continue to onboard new client wins in our work dynamics business, we expect the growth rate for our resilient business lines to remain strong. In our JLL technology business, we are focused on increasing margins as we move towards making this segment of our business profitable on a standalone basis, excluding equity earnings. Lastly, LaSalle's incentives and transaction fees were also impacted by muted transaction volumes in the quarter. However, LaSalle continues to benefit from the annuity-like nature of its advisory fee revenue stream, which provides stability when transaction volumes slow. With that, I will now turn the call over to Karen, who will provide more detail on our results for the quarter.