Earnings Call Transcript - JLL Q1 2025

Operator, Operator

Good morning. My name is Aaron, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Jones Lang LaSalle, Inc. Q1 2025 Earnings Conference Call. With that, I am pleased to turn the call over to Sean Coghlan, Head of Investor Relations. Sean, you may begin.

Sean Coghlan, Head of Investor Relations

Thank you, and good morning. Welcome to the first quarter 2025 earnings conference call for Jones Lang LaSalle, Inc. 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, as well as in our slide presentation and supplemental 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. We also reference resilient and transactional revenues, which we define in the footnotes of our earnings release. Effective with first quarter results, we updated our definition to shift project management from transactional to resilient. Categorization of all other business lines remains unchanged. 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 and in other reports filed with the SEC. The company disclaims any undertaking to publicly update or revise any forward-looking statements. Finally, a reminder that percentage variances are against the prior year period in local currency, unless otherwise noted. I will now turn the call over to Christian Ulbrich, our President and Chief Executive Officer, for opening remarks.

Christian Ulbrich, President and CEO

Thank you. Hello, and welcome to our first quarter 2025 Earnings Call. As we look back at the first quarter, we are pleased with our financial results with double-digit revenue gains across both our resilient and transactional businesses and 28% growth in adjusted EPS. The continued improvement of our leasing and investment sales, debt, and equity advisory businesses was a key driver of higher profit and margin as momentum from the second half of 2024 supported stability in real estate fundamentals. The stated growth of double-digit resilient revenue further amplified these gains, driving a strong start for our newly formed real estate management services segment. Clients are looking to JLL for integrated end-to-end building management solutions, industry expertise, and data-driven insights. Since the end of the quarter, the market backdrop has become more dynamic and is creating a more challenging operating environment for companies. JLL has a long history of navigating market uncertainty over the past five years, while also gaining market share and growing at over three times the rate of global GDP. We remain confident in the strength and resilience of our company and our industry-leading platform. To date, there have been limited direct impacts on our results from the recent policy volatility and uncertainty, although some clients are delaying decision-making as they monitor macro developments. Slower economic growth could have spillover effects for our industry, but it is still too early to predict the future implications for our business. Despite the challenges of the current economic climate, we maintain high conviction in our strategy and the long-term structural drivers for our industry. We remain focused on profitable and sustainable growth and will continue to strategically invest in our people and platform. We have built leading businesses that will remain key contributors to our outperformance through market volatility. I will highlight three of these areas today. First, our real estate management services business has capitalized on the growing trend of outsourcing, as well as the increased focus on building operations and tenant experience across occupier and investor portfolios. We are building differentiated and scalable platforms across our workplace management and project management businesses, and we are now globalizing our property management business with a shift into this segment that went into effect on January 1. We believe many geographies and industries have significant untapped potential for outsourcing penetration and advancements in technology, including in artificial intelligence, which will further transform how we serve clients in the future. Across our people, data, and technology, we are investing to grow the revenue and profit contributions, particularly of our resilient businesses. Second, JLL has been a beneficiary of increasing capital flows to real estate for many decades, creating products and services to meet the needs of our investor clients throughout the asset life cycle. The proliferation of private credit has brought new sources of capital into the market and has become a key driver of our business with notable growth prospects ahead. We are the largest debt intermediary in commercial real estate globally through our debt advisory business, where revenue growth exceeded 45% in the first quarter. In Investment Management, our business has experienced operating credit funds across Europe and North America dating back 15 years. We are seeing strong fundraising demand in both regions today, particularly for our U.S. credit strategy. Our deep expertise in real estate debt is providing us with an unparalleled level of data and insights in the industry, allowing us to better advise clients and gain market share while introducing a degree of resilience to our transactional revenue. Third, tailwinds are emerging that support a broader recovery in the office sector, supported by the expansion of return-to-office mandates, moderation of downsizing rates in office leasing activity, and liquidity improvements for office sales and financing. Corporates around the world are gaining more clarity on future space needs, and with historically low development pipelines in the U.S. and Europe, office fundamentals and trends are likely to continue to strengthen for top-tier buildings. Quality assets are also becoming more scarce, creating spillover demand for the next tier of buildings. We have seen positive improvements in office transactional revenues over the past year, particularly in the U.S., where pressures on the sector have been most pronounced. As clients optimize office holdings, increase acquisition activity in the sector, and reinvest in buildings and spaces, JLL is well positioned to lead the office sector’s rebound. Before handing it over to Karen, I want to get back to the important changes to our senior leadership team announced earlier today. After five years as CFO, I am pleased to share that Karen will be taking on a new role on our Global Executive Board as Chief Executive Officer of our Leasing Advisory business globally, effective July 1. Andy Popping, current CEO of Leasing Advisory, will assume the role of CEO, Leasing Advisory, EMEA and Asia-Pacific, reporting to Karen and based out of Europe. Throughout Karen’s more than 25 years tenure at JLL, she has exemplified strategic vision, excellence in execution, and dedication to our clients as she has taken on numerous leadership roles across our business globally. I am also pleased to announce that Kelly Howe will succeed Karen as JLL’s Chief Financial Officer. Kelly joined JLL as the CFO of Leasing Advisory in January 2024, after more than 23 years of experience in professional services with Boston Consulting Group, most recently as the North America CFO. Kelly will join our Global Executive Board. With that, I will now turn the call over to Karen to provide details on our results for the quarter.

Karen Brennan, Chief Financial Officer

Thank you, Christian. I have enjoyed working closely with our investor community over the past five years and look forward to continuing to work with you all in my new capacity as CEO of Leasing Advisory. Now to our results. Our first quarter reflects the continuation of positive business momentum, as well as the impact of our ongoing investments to unify our data, technology, and people, enhancing the outcomes we deliver to clients. Additionally, our focus on operating efficiency produced meaningful margin expansion and earnings growth. I will now review our operating performance by segment. Beginning with real estate management services, revenue growth for the quarter was led by workplace management, as incremental pass-through costs augmented high single-digit management fee growth that stemmed from both new client wins and mandate expansions. On a two-year stack basis, Workplace Management revenue increased nearly 30% in the quarter, which reflects the value of our differentiated platform and services. Within project management, new client wins and an increase in existing client activity, most notably in the U.S. and Asia Pacific, drove near double-digit growth in management fees and was supplemented by higher pass-through costs. The investments in our technology platform, including artificial intelligence and project management workflow tools, as well as incremental human capital investments made in the latter part of 2024 to support future business growth, notably within project management, weighed on the segment's adjusted EBITDA performance. Looking ahead, we continue to expect workplace management growth to moderate from the elevated levels of the past year as we lap large contract wins and mandate expansions. In addition, certain clients have delayed decisions as they monitor policy and macro developments. Still, we remain confident in the long-term trajectory of the workplace management business as our sales pipeline is strong, and contract renewal rates are healthy and stable. For project management, the strong growth in leasing over the past several quarters is supportive of continued client activity. However, slowing corporate CapEx and the recent shift in the macro environment may temper near-term growth rates. Within Property Management, we expect revenue trends over the past few quarters to continue in the near term as we work to bring together our team, realize synergies, and evolve our positioning, which will come with some transitory incremental costs. We continue to target healthy annual margin expansion for this segment, although it is not likely to be linear as we balance long-term growth and profitability alongside near-term business performance, mix, and investments. Next, in Leasing Advisory, broad-based revenue growth across asset classes was led by an 18% increase in office and accelerated momentum within industrial, which was up 14%. The office revenue growth outpaced the 9% market increase, while industrial compared favorably to the 10% market decline according to JLL Research. Most geographies achieved double-digit leasing revenue growth, notably the U.S., Canada, Greater China, and Germany. U.S. office leasing increased for the fifth consecutive quarter, exceeding first quarter 2019 levels, driven in part by growth in the number of large leasing transactions. Large transactions in the U.S., where JLL historically has had a greater market share, remain approximately 30% below pre-pandemic averages according to JLL Research. Higher leasing advisory, adjusted EBITDA, and margin for the quarter were primarily driven by leasing revenue growth as well as continued improvement in platform leverage. Looking ahead, the general stability of the OECD Business Confidence Index for much of 2024 and through March provides reason for cautious optimism for 2025. As Christian mentioned, client demand for high-quality and sustainable assets, which are becoming increasingly scarce, remains a consistent trend. Within office, tenant requirements are generally steady with sectors such as professional services, finance, and legal driving demand in many markets. As we have seen in the recent past, this could evolve quickly as clients consider the macro outlook. The dynamic policy backdrop has led to uncertainty for select industrial clients as they assess the impacts of supply chain and production on the economy. Shifting to our Capital Market Services segment, increased investor desire to transact and more liquidity entering the market supported the continuation of favorable trends from the fourth quarter and fueled revenue growth in the current quarter of over 45% in debt advisory and 15% in investment sales. Globally, the residential sector contributed the most significant increase to revenue, followed by hotels and industrial. Within the office sector, significant growth in the U.S. was mostly offset by declines in several countries. On a geographic basis, revenue growth was led by the U.S., with debt advisory up 49% and a 46% increase in investment sales, which compared favorably to the 42% growth in market volumes according to JLL Research. Our investment sales across EMEA and Asia-Pacific lagged regional market volumes, in part due to notable outperformance a year ago. The increase in Capital Market Services adjusted EBITDA and margin was predominantly driven by higher transactional revenues and continued improvement in platform leverage. The incremental margin in the quarter included additional expenses for platform investments. Looking ahead, our global investment sales, debt, and equity advisory pipeline remains strong, and the timing and pace of deal closings will be influenced by the evolution of the interest rate and economic outlook. The increased uncertainty that Christian described is affecting investor underwriting, although it is too early to assess the extent to which transaction activity may be impacted. The strength of our differentiated data-driven global platform positions us to continue to gain market share. Turning to Investment Management, advisory fees declined largely on lower assets under management, primarily reflecting dispositions of assets on behalf of certain clients in the fourth quarter. Absent foreign currency exchange movements, assets under management declined 6% from a year earlier, largely due to net asset dispositions with net valuation changes over the trailing 12 months being negligible. The changes in adjusted EBITDA and margin in the quarter were primarily driven by lower overall revenue, foreign currency transaction losses in the current quarter, and timing of certain expenses. We are encouraged by signs of recovery in the capital raising environment. In the first quarter, we raised $1.9 billion compared with $500 million a year ago and $2.9 billion for the full year 2024, with a notable uptick in demand for credit strategies, particularly in the U.S. So, the flow-through to revenue will take several quarters to manifest. Moving to Software and Technology Solutions, wins from new and existing clients drove continued growth in software revenue that was partially offset by lower technology solutions bookings over the past year. The benefit from year-over-year change in carried interest related to equity losses within our investment portfolio was partially offset by growth in revenue-related expenses and drove the adjusted EBITDA improvement. We continue to invest in our software and technology solutions platform to drive growth while remaining focused on obtaining sustained profitability within the segment. Turning to cash flow, the negative free cash flow reflected typical seasonal business trends, notably the payment of annual incentive compensation. The incremental outflow in the quarter was largely due to the timing of NAV reimbursables activity as well as greater commission payments, reflecting higher transactional revenue in the fourth quarter of 2024 compared with the fourth quarter of 2023. These factors were partially offset by greater cash provided by earnings. While cash conversion ratios can vary notably from year to year for a variety of factors, enhancing our working capital efficiency remains a top priority as we focus on improving our 10-year average cash conversion ratio of 80%. Shifting to our balance sheet and capital allocation, liquidity totaled $3.3 billion at the end of the first quarter, including $2.9 billion of undrawn credit facility capacity. In addition, we had $1.6 billion of untapped capacity on our commercial paper program. As of March 31, reported net leverage was 1.4x, down from 1.9x a year earlier due to both a reduction in net debt and higher adjusted EBITDA over the trailing 12 months. As a reminder, our leverage is seasonal, with the first quarter typically being the highest. We continue to manage to a full-year average leverage ratio of around 1x the midpoint of our 0x to 2x target range. Capital deployment priorities are focused first on organic growth as we invest in our people and platform to further differentiate our services and drive productivity across business lines. We continue to pursue select acquisitions that augment organic initiatives, improve our capabilities, and span multiple business lines, particularly within our resilient businesses. We repurchased $20 million of shares in the first quarter. Returning capital to shareholders is a high priority and we will look to share repurchases in the absence of acquisitions while considering our target leverage. Regarding our 2025 full-year financial outlook, we are encouraged by our strong pipeline alongside business trends to date. However, it is still too early to fully discern the impact of the recent and fluid tariff policy shift on the broader economy as well as our industry and business. Thus, we are maintaining our full-year adjusted EBITDA target range of $1.25 billion to $1.45 billion. Our business is much more resilient today than in prior cycles, which combined with our ongoing focus on operating efficiency and our strong balance sheet, positions us for long-term profitable growth.

Christian Ulbrich, President and CEO

Thank you, Karen. The risks have become more pronounced; our strengths during this time of uncertainty are underpinned by our strategic investments in our people and our platform. As a strong and agile organization, we continue to adapt to rapidly changing market dynamics. The growth of our resilient businesses offers greater diversification of revenue and stability through economic cycles. We entered this period with an elevated transaction pipeline at a relatively early point in a cyclical recovery. Importantly, our global team is united by our shared culture of client centricity focused on continually providing superior outcomes for our clients. Before I close, I would like to once again thank my colleagues for their resilience, client focus, and dedication. You are the driving force behind our achievements. Operator, please explain the Q&A process.

Operator, Operator

Christian, thank you. Our first question for today comes from the line of Peter Abramowitz with Jefferies. Your line is live.

Peter Abramowitz, Analyst

Yes. Thank you very much for taking the questions. Just wondering if you could comment maybe specifically about kind of how do you underwrite the longer-term kind of political risk with this administration? I think one of the things that is a possibility out there is that these kind of 90-day extensions on tariffs could just become the new sort of normal operating environment. So, if that’s something where we don’t necessarily get a clear kind of answer for a long time, how should we think about kind of the structural growth outlook for the transactional businesses longer-term?

Christian Ulbrich, President and CEO

Listen, one of the key points which people would agree on is that the current environment has increased uncertainty and decreased visibility. And if your scenario is the case going forward that we will have an ongoing extension of these 90 days and things going back and forth, then we all have to get used to operating in that environment, hopefully, equally successfully as we were operating in a clearer environment with better visibility. At the end of the day, business needs GDP growth; that’s an outcome of well-performing businesses. For our operations, we are correlating that with GDP growth at about three times the GDP is what we can drive as growth rates. We look forward to a bit of better visibility, and we hope that also aligns with the interests of our clients.

Peter Abramowitz, Analyst

Got it. That’s helpful. And then on the real estate outsourcing side, I guess just kind of high-level, when we hit macro uncertainty, is that something that you think is kind of unaffected and companies are really still going to look to outsource their real estate solutions, if they were before all this uncertainty was introduced, or does that tend to at least give them a little pause and think about how they are allocating cash flows?

Christian Ulbrich, President and CEO

So, I mean the reason for outsourcing your real estate needs is numerous; it could be driven by your interest in cutting costs. This is an environment where people will look at their operating costs, and we will see that there may be an opportunity within the remit, which would drive them to talk to people like us in order to get those benefits. The other reason is very often driven by expansion. And again, this environment could mean that stronger companies will acquire less strong companies. There will be opportunities for the very best companies of each sector. A lot of those very successful companies are our clients. We expect that will then lead to more business for us. In the short-term, the lack of visibility will mean that companies will be slower on decision-making, which can have, in the short term, some impact on our business. So, the picture is slightly mixed. It’s way too early to tell whether that has a negative impact on our outsourcing business or whether it will be almost unimpacted by it. For the time being, we don’t see any impact. But as I have said, it’s very early. So let’s wait and see how that plays out over the next couple of quarters.

Peter Abramowitz, Analyst

Alright. Thank you for taking my questions.

Operator, Operator

Thank you. Our next question comes from the line of Anthony Paolone with JPMorgan. Your line is live.

Anthony Paolone, Analyst

Great. Thank you and first congrats to both Karen and Kelly. My first question, I want to go back to real estate management services. It seems like there are a few different things going on there. So, I guess maybe on the revenue side, I understand the tougher comps coming in, some of the sound like maybe some pauses in making some decisions. But I guess as we start to think about later this year and maybe even beyond, what do you think the growth rate of that business should be? And also how do we think about margins?

Karen Brennan, Chief Financial Officer

Hi Tony. Thank you. So, to address the revenue side, if we think about the Real Estate Management Services segment overall now, previously, we have communicated that we expected to grow in the high-single digit, low-double-digit range kind of for that combination of different services in the segment. As we have added property management into that segment, we don’t expect a material deviation from that over the medium and long term. We do expect a little downward pressure on that expectation in the current year, as we work to further evolve and globalize our property management business. On the margin side, I do want to just call out – first, I will start with a reminder of what happened in the current quarter when I look out to the second quarter and the full year. So, there are a few things going on in the first quarter that impact both the profit and the margin. Two of those relate to continued investments for growth, both in our platform and people, as we are investing to continue to win new mandates and grow the top line. The first is that we are making investments in our technology platform, which includes both client-facing tools, utilizing AI, as well as internal workflow tools for our teams. Second, we ramped up hiring at the end of last year in a couple of countries, particularly in anticipation of growth in 2025, especially in our project management business. Finally, I would say the third point is that as we are absorbing the property management business into the segment, there are some transition costs associated with that activity. If we look to the second quarter, we expect some of the same factors to be at play as in the first quarter. And also want to remind everyone that last year, second quarter, we called out that we had a notable incentive compensation accrual benefit, which will be lapping alongside the factors that I just referenced. If we look ahead to the second half of the year, we are expecting to have a stronger profit and margin profile there when looking at year-over-year comparables for those individual quarters in the third and fourth quarters. So, on a full-year basis, we do still expect profit growth and margin expansion compared to full-year 2024.

Anthony Paolone, Analyst

Okay. Good. That’s kind of where I was going. Okay. Thank you for that. And then just my second question was for LaSalle; it seems like you are still raising capital, but you mentioned the dispositions. For the full year, do you anticipate just putting aside marks, maybe like AUM net up, down, sideways? How should we think about that?

Karen Brennan, Chief Financial Officer

Yes. So, first, just to contextualize what’s going on in the first quarter for LaSalle for this year; that’s really the culmination of over two years of a stalled and depressed capital raising and investment environment, where we had muted transaction fees, lower AUM with dispositions exceeding new investments and virtually no incentive fees. I want to call out that particularly for the first quarter, we had sold some larger deals at the end of last year, where we were harvesting returns for our clients, generating some incentive fees for us, but we have not yet redeployed capital into new acquisitions to increase the AUM where we believe the valuation pressures are largely through. We are seeing some slight uptick in certain products as it relates to valuation pressure on advisory fees; we think we are through that. We expect to continue to have new investments over the course of the year because we do have a meaningful amount of dry powder in addition to the new capital we are raising right now. It’s just a matter of the length of time it takes to invest that capital and have that flow through to advisory fees. But the momentum is building now and picked up again. If you look at our capital raising for the first quarter of 2025 relative to 2024, it was $1.9 billion versus $500 million a year ago; historically, we are right in $6 billion, $7 billion, $8 billion annually. So, we hope to continue that trend moving forward.

Operator, Operator

Thank you. Our next question is from the line of Stephen Sheldon with William Blair. Your line is live.

Pat McIlwee, Analyst

Hi team. You have Pat McIlwee on today. Thank you for taking my questions and great results this quarter. My first question is in the leasing business; you noted some accelerating momentum in industrial and office leasing that has now exceeded 2019 levels. So, I wanted to ask how much more runway do you think there is for this type of growth in those end markets? And how much of that is macro dependent?

Karen Brennan, Chief Financial Officer

Yes, thanks for the question. I will talk a little bit about first office and then industrial. To contextualize what’s happening in the market broadly, we have been talking about good momentum in office, and that continued in the first quarter. Over the past 12 months, the U.S. office leasing market has returned to 90% of pre-pandemic levels nationally, so that recovery is continuing. We were really pleased in that context that our first quarter office revenue was higher than the first quarter of 2019 levels. So, we are really encouraged by what our teams have been able to accomplish and how we have been growing market share over that time. Another important metric we look at is the number of large lease transactions that continued to improve in the quarter, although they are still well below pre-pandemic levels. For large transactions in the U.S., historically, JLL has had a greater share of the market, remaining approximately 30% below pre-pandemic averages according to JLL Research. Higher leasing advisory, adjusted EBITDA, and margin for the quarter were primarily driven by leasing revenue growth as well as continued improvement in platform leverage. Looking ahead, the stability of the OECD Business Confidence Index for much of 2024 and through March provides a reason for cautious optimism for 2025. As Christian mentioned, client demand for high-quality and sustainable assets, which are becoming increasingly scarce, remains a consistent trend. Within office, tenant requirements are generally steady with sectors such as professional services, finance, and legal driving demand in many markets. As we have seen in the recent past, this could evolve quickly as clients consider the macro outlook.

Pat McIlwee, Analyst

Okay. Thanks for all the color there, Karen. My second question, your research group has put some interesting content out on the data center end market. I know you have expanded your capabilities there on the project and property management side. But my question is, are you participating meaningfully there from a capital markets and/or leasing perspective? If so, is there any way you can frame that for us?

Karen Brennan, Chief Financial Officer

Sure. Yes, we are certainly participating in the data center space kind of across the life cycle of what investors and occupiers need from us. I would say there is a lot of discussion around it, and it is a rapidly growing area of our business, but there is limited stock for data centers trading today. It is generally a smaller part of our business overall as a percentage of fee revenue, but it is small, but rapidly growing, and it’s something we will continue to focus on and build out our teams as we see the market opportunity develop.

Operator, Operator

Thanks for your questions. Our next question comes from the line of Julien Blouin with Goldman Sachs. Your line is live.

Julien Blouin, Analyst

Thank you for taking my question and congrats on the quarter. Karen, you talked a little bit about your continuing interest in M&A. I guess when we think about that, are you looking more at surgical tuck-in acquisitions just on the resilience side, or would you be open to looking at larger CRE services platforms that might also include some transactional businesses? And how do we frame that interest in M&A within the current context of a more uncertain macro?

Christian Ulbrich, President and CEO

I will take that question. Listen, first and foremost, we analyze any potential M&A opportunity based on whether it creates value for our shareholders, whether they are small or large. Strategically, we are very focused on growing our resilience and also the resilience of our P&L. Any kind of business that helps there is favored over and above anything else. Specifically on broader CRE services, it’s very hard to make that work because you win and lose at the same time with those types of acquisitions, and that is probably not our focus. Regarding the overall environment we are in, we entered this environment with a super strong balance sheet. We are well-prepared to take advantage of any opportunities that may arise from the environment, and we see this as more of an opportunity for us to drive shareholder value than the opposite.

Julien Blouin, Analyst

Thank you, Christian. And maybe for my second question, Karen, you were earlier speaking about the slow decision-making from industrial lessors of space. Does the same apply on the transaction side? Are you seeing a meaningful pullback in decision-making on the investment sales side? Also, how data-dependent do you find your customers on the capital market side? Are they closely tracking sort of the hard macro data? If they see a sign of deterioration, will that be their cue for pulling back?

Karen Brennan, Chief Financial Officer

Yes. Let me first start by going to the data that we track around the deals we are marketing globally and the bidding activity around them, because that’s pretty instructive in terms of what we are seeing and how the market is developing in the current context. We referenced our bidding intensity index, which is holding steady broadly speaking. If we unpack the data underneath it, there are different components that are interesting and important to watch. Overall, we track the number of bids, which is holding steady. We track the bid-ask spread for the winning bid, which is also stable. We also look at the variability of bids overall received for each deal, and that variability is expanding. We are seeing that different buyers are taking different approaches to their underwriting assumptions considering the macro environment. There are many different areas affecting this, such as growth expectations, how much they can grow NOI, interest costs, etc. We are watching it carefully. There is healthy activity, but there are not meaningful movements in those underlying metrics outside of the variability in the bids, which suggests a mix of confidence levels.

Operator, Operator

Our next question is from Jade Rahmani with KBW. Your line is live.

Jade Rahmani, Analyst

Thank you very much. Beyond the bidding intensity index, are there any indications signaling a pullback or pause? And are there any geographic trends that stand out at this point? Wondering if you are seeing any weakness in APAC or anything that stands out to you?

Christian Ulbrich, President and CEO

When that whole debate was getting a bit heated around tariffs, we saw some hesitations among people closing transactions. Looking at the data from the first quarter and what we see in April, people have adapted quickly. Declining interest rates are obviously helping here. Regarding the geographic situation, we have seen real strength in the U.S., particularly strong in the first quarter. We are still very early in the cycle of recovery and need to keep context. Within APAC, we see a strong environment in Japan, Korea, and Australia. A recent trend we are seeing with regards to capital raising is that we see some Asian investors redirecting capital that was originally intended for the U.S. back to Europe, especially the UK, where investors see strong fundamentals.

Jade Rahmani, Analyst

Beyond the current uncertainty, the back half of 2024 had some extremely strong growth rates in revenue, particularly in leasing and capital markets. Is it reasonable to expect more like single-digit growth rates in those businesses in the back half considering the tough comps?

Karen Brennan, Chief Financial Officer

There are two things at play that we will be watching. One is certainly, as you called out, we had a really strong second half of the year. So, we will be lapping tougher comps. Then we will really need to understand what happens in the market and how things develop over the course of the year. I think it’s too soon to call exactly what will happen, but I would say overall, moderation of rates seems likely, but that depends heavily on how the macro evolves. We have reiterated our adjusted EBITDA target range for the year, which should help in thinking about how we see the year develop.

Operator, Operator

Thank you very much.

Unidentified Analyst, Analyst

Hi. Thanks for taking my question. I just wanted to go back to kind of what you are seeing in the office market. Within the U.S., are you seeing any differences between geographies, West Coast versus East Coast, or tenant size requirements?

Karen Brennan, Chief Financial Officer

Yes, we are seeing some differences. The West Coast is performing quite strongly overall. The gateway cities have been a bit mixed in terms of strength; New York continues to power through while Washington D.C. is facing more struggles. In secondary and tertiary markets, they have largely worked through some excess supply for the best buildings, and we are seeing differences across markets, but there are enough key markets that are generating strong momentum.

Unidentified Analyst, Analyst

Great. And then as you think about the macro uncertainty, has there been any change in hiring plans?

Karen Brennan, Chief Financial Officer

From a hiring perspective, we look at our many different business lines and geographies. Our growth expectations for those different business lines and geographies will vary, and we adjust our hiring plans accordingly. Certainly, when we have reasons to say let’s watch and wait and see and we listen to our clients, we will be a bit more cautious than we would be in clearer circumstances. I do want to call out that we did not take out any meaningful producer numbers during the last couple of years when the transaction markets were more depressed. We are starting from a position of strength where we have producers in place to capture growth and advise clients through challenging times. We will continue to strategically add in areas where we identify growth ahead, but we feel we are in a good position overall.

Operator, Operator

Thank you for your questions. And ladies and gentlemen, that will conclude our Q&A portion for today’s call. I would like to turn it back over to Christian for any closing comments.

Christian Ulbrich, President and CEO

Thank you, operator. With no further questions, we will close today’s call. On behalf of the entire JLL team, we thank you all for participating in the call today. We look forward to speaking with you again following the second quarter.