Q3 2022 Cushman & Wakefield PLC Earnings Call

[music].

Welcome to Cushman, and Wakefield third quarter 2022 earnings conference call.

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Speakers remarks, there will be a question answer session.

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The number one followed by the number four on your telephone keypad.

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It's now my pleasure to introduce Mike sooner.

Best Relations for Cushman and Wakefield Mr. Sooner you may begin the call.

Thank you and welcome again to Cushman.

Third quarter 2022 earnings conference call.

Earlier today, we issued a press release announcing our financial results for the period.

This release, along with today's presentation can be found on our Investor Relations website.

Christian.

Let's turn to the cautionary.

Cautionary note on forward looking statements.

Today's presentation contains forward looking statements based on our current forecasts and estimates of future events.

Statements should be considered estimates only and actual results may differ materially.

During today's call, we will refer to non-GAAP financial measures as outlined by FCC guideline.

Reconciliations of GAAP to non-GAAP financial measures.

Conditions are non-GAAP financial measures and other related information found within the financial tables of our earnings release.

Today's presentation.

Also please note that throughout the presentation.

Prisons and growth rates are just comparable periods of 2021.

In local currency unless otherwise stated.

It doesn't mean following along with our presentation.

I'll begin on page four.

I'd like to I'd like to turn the call over to our CEO John Forrester.

Thanks, Mike and thank you to everybody joining our call today.

We reported continued topline growth across all three segments, resulting in fee revenue of one point to $8 billion.

So this is 2021.

On a year to date basis fee revenue was up 18%, while adjusted EBITDA is up 29% versus prior year.

While the majority of our service lines that performed well. This year. We are now feeling the impact of trading challenges and headwinds in specific areas, namely in subdued activity in our substantial greater China platform.

Due to the extended and continuing Covid related lockdowns.

A stronger U S dollar generating significant foreign currency drag versus prior year.

And our capital market service line globally, which is experiencing low volumes compared with the same quarter of 2021.

Looking ahead to the general environment over the coming quarters. It is reasonable to assume that recessionary conditions will continue to permeate the real estate sector, particularly in transactional business.

Notwithstanding this our revenue performance in the quarter illustrates the result of the multiyear strategy, we have deployed with discipline to build a fully diversified and a more highly recurring revenue related business.

His strong platform along with our continued progress and capital allocation strategy to prioritize investments in the long term growth sectors of our industry.

Continues to position us nicely.

Now us to more successfully navigate through the current macroeconomic environment.

Fluid environments create opportunities for the largest global players to grow market share.

Inevitable flight to quality.

Now let me highlight a few trends that are working through our sectors under a parent in the quarter.

In the office leasing sector. The return to office continues to trend higher as the pandemic fades now to post pandemic high of nearly 50% occupancy in the U S.

Businesses are largely back to signing longer term leases again, nearly matching pre pandemic norms.

There are small, but notable number of major cities, which are lagging due to the unique set of challenges, but these trends and others cements our view that office.

Holding remains highly relevant.

It is also clear that there is a growing disconnect between supply and demand.

Newly built high quality office space that offers it offers exceptional amenity and sustainability fundamentals now accounts for a significant portion of the positive absorption.

However, this is in la relatively limited supply with approximately 70% of the world's office had been true now more than 20 years old and renovated.

We see that disconnect between what most occupies now demand relative to what the market is generally offering because the considerable opportunity in our sector.

In life Sciences, our revenues year to date have grown 19% versus prior year illustrating the opportunity the secular trends.

If a company like US who are able to offer highly skilled advice in emerging sectors.

Turning to the industrial leasing sector record performance over recent years has continued in the third quarter.

Globally, we expect e-commerce penetration will be a strong tailwind for many years to come as countries continue to climb up the online curve.

And then multifamily population growth and household formation will continue to grow globally, creating more demand for homes.

The recent rise in mortgage rates will make renting the more affordable option multifamily is now the largest asset class in terms of sales volume accounting for more than 40% of total volume in 2022, According to real capital analytics.

And lastly, the share of the world's population, aged 60 or over is expected to continue to grow doubling in size by 2050, which we believe presents a strong tailwind for numerous sectors, such as life Sciences Medical office and self storage.

Our investments joined the past few years and these and other secular areas.

<unk> and the strong growth, we've experienced and demonstrates our agility to pivot as markets evolve.

Now turning to our property facilities and project management service line performance.

Our recurring revenues remained resilient and continued to generate growth increasing 14% in the third quarter versus prior year.

Consistent with previous quarters, our project management and global Occupier outsourcing businesses continue their exceptional momentum up 40% and 8% in the third quarter versus prior year, respectively.

Clients driven by the secular expansion continued to turn to Cushman <unk> Wakefield to partner on their largest challenges whether that'd be occupancy requirements sustainability objectives, while reducing costs within their organization.

The impact of the headwinds and the weakening macro environments are most keenly illustrated in our capital market service line.

Challenging prior year comparisons along with a markedly different environment are reflected in our results for the third quarter.

As such we do not expect 2022 capital markets revenue to outperform the record set last year, particularly over the second half.

While the market may perhaps takes some time to recalibrate as the higher interest rates and inflationary environment takes its toll.

We remain well positioned to navigate through this environment, given our global position and industry leading teams.

And our people are in an exceptional position to advise our clients on the many opportunities that will be created through this environment and subsequent recovery.

The longer term fundamentals that support our business and our industry remain robust.

As a globally diversified industry leader with a strong balance sheet and ample liquidity, we have doubled down on our already high focus on cost management and careful investment discipline we.

We will continuously seeking the highest return for our capital allocation in order to maximize value for our shareholders.

We remain confident about the performance of the business and our progress against our multiyear strategy.

Our exceptional leaders and dedicated teams in the field continue to deliver exceptional service every day to our clients.

We know from experience the challenging conditions can also bring opportunity.

We were recognized by the global business community for our insight and leadership to the global pandemic and we intend to stand confident with our clients as we help them navigate and realize these opportunities.

With that I'd like to turn the call over to Neil to discuss in more detail our financial performance nail.

Thank you John and good afternoon, everyone.

For the third quarter fee revenue of $1 $8 billion grew 8% as of prior year fee revenue growth reflects strong leasing and pls and performance offset by lower capital markets activity in the third quarter.

This is probably yeah.

Adjusted EBITDA for the third quarter of 202 million declined 5% versus prior year.

And adjusted EBITDA.

Principally driven by higher Commission expense.

Currency headwinds and Covid related Lockdowns in China are higher Commission expense was the result of brokers in the U S achieving higher payout is earlier than prior year.

Due to the strong growth in brokerage and the first half of it yet.

Offsetting these headwinds were the earnings recognized from upgrades, starting joint venture, which performed in line with expectations for the quarter.

Adjusted earnings per share for the quarter was 43 cents.

Decrease of 10% versus prior year.

Taking a look at our fee revenue by service line in the third quarter leasing revenue increased 16% versus prior year.

Leasing fee revenue exceeded pre pandemic levels, increasing 12% over the third quarter of 2019.

Both the Americas office sector, and the industrial logistics sector continued to perform well during the quarter.

Capital markets fee revenue declined 18% in the third quarter, all segments declining versus the challenging prior year comparison.

As a reminder, Q3 'twenty one capital markets revenues grew 111% versus the comparable prior yeah in a markedly different macroeconomic and interest rate environment.

Third quarter capital markets revenues were still above third quarter 2019 level by 12%.

And a lot of brokers said this line's performance across our entire TNF and service offering was again strong this quarter, particularly in our project in facilities management businesses with P. M S N and valuation and other service lines at 14% to 5% respectively.

Turning to our segment results for the quarter.

<unk> revenue was up 7% year over year, driven by strong performance in leasing and TNF and leasing revenue improved 20% year over year that was about 2019 pre pandemic levels.

Capital markets fee revenues declined 17% in the quarter that's.

Challenging prior year comparison.

Adjusted EBITDA of $166 million increased 5 million versus prior year.

The adjusted EBIT performance, principally driven by our Greystone joint venture offset by higher Commission expense in brokerage.

With more brokers achieving higher patches.

And in prior years.

In EMEA fee revenue growth of 6% was driven by growth across TNF and leasing and valuation and other.

Leasing grew 6% with performance across nearly all markets and sectors.

Capital markets declined 14% versus a challenging prior year comparison.

Adjusted EBITDA of $25 million declined 4 million versus prior year, primarily driven by unfavorable currency headwinds as a result of a stronger U S. Dollar.

On a local currency basis, adjusted EBITDA grew 7% for the quarter.

In Asia Pacific fee revenue growth, 12% was driven by the performance of our P. M. S N set of slides, which grew 27% for the quarter.

Partially offsetting this growth was a decline in our capital markets business, a 42% versus prior year.

This was principally driven by the impact of Covid related Lockdowns in China.

Adjusted EBITDA of $12 million was down 57% versus prior year, driven by declines in China and earnings from our banking joint venture as well as the impact of government subsidies and other APAC countries reflected in our prior year results.

Moving to our balance sheet, our financial position remains strong we ended the third quarter with $1 $5 billion of liquidity consisting of cash on hand of $381 million and availability on our revolving credit facility of $1 1 billion.

Had no outstanding borrowings on our revolver.

Leverage was two eight times at the end of the third quarter slightly up from the second quarter.

We have an active pipeline of opportunities, but we will be disciplined and selective as we consider how we deploy capital going forward.

While the business has performed well in 2020 to certain areas have now impacting our profitability, including weaker capital market conditions continued COVID-19 related lockdowns in China and foreign currency headwinds.

As a result, we have already implemented targeted cost actions to reduce costs.

Bend.

Further cost actions are being evaluated as part of our annual budgeting process.

We'll provide an update at our year end earnings call.

As we finish up the year, we expect revenue in the fourth quarter to decline as a result of slowdown in transactional activity.

Economic uncertainty.

Anticipate brokerage being down materially with me see somewhat more resilient capital markets in the fourth quarter.

We expect our pls and business in the quarter to be flat, primarily due to the timing of new contract balanced against exiting contracts, which is in line with our initial operating assumptions from the start of it yeah.

As we've consistently said we are pleased with the performance of our P&A business, which provides recurring revenues, especially during periods of uncertainty.

<unk> business has grown well this year and we anticipate full year growth upper single digit range driven by continued market share capture and strong activity from our project management business.

Given the headwinds we are now facing we now anticipate adjusted EBITDA margins for the full year 2022 to be down versus prior year, but still well above 2019 levels as a result of our cost programs over the past several years.

We are still in the process of developing our operating plan for 2023.

Sean mentioned, one a number of scenarios could still play out in 2023. It is reasonable to assume that recessionary conditions will be evidence, particularly in transactional businesses.

The length and depth of such scenario sponsor.

In terms of top line trends, we anticipate revenues to be more stable and resilient given the recurring nature of the business.

In brokerage, we anticipate tougher comparisons, particularly in the first half of the year given the macroeconomic environment.

This L revenue mix will likely impact adjusted EBITDA margin.

As mentioned earlier, we will continue to be focused on targeted cost controls while it's.

During that we continue to selectively invest in growth areas to set us up for a strong recovery.

It provides clear 2023 guidance on our next earnings call.

With that I'll turn the call back to the operator for Q&A portion of today's call.

Thank you if you'd like to register a question. Please press the one followed by the four on your telephone you will hear three tone prompt to acknowledge your request.

If your question has been answered and you would like to withdraw your registration. Please press. The one followed by the three one moment. Please for the first question.

Our first question comes from the line of John D. Loutro with Goldman Sachs. Please go ahead with your question.

Hi, Good afternoon. Thank you for taking my question. So you guys basically mentioned that you know you've you've you're focused on cost management could you. Please elaborate you know what are the levers that you will have two fully at your disposal and then I think you said that you've already implemented targeted cost.

Got it.

Yeah.

Or maybe that was APAC I'm sorry.

Could you perhaps elaborate there more in terms of what these are exactly thank you.

Alright. Thanks for the question. This is John I think there was a blip in the in the line that we've already auctioned targeted cost actions across the whole business not specific to any region. We began this work.

Just at the turn of the end of half one when we felt the market was likely to be moving against us. So.

The way I would answer your question is that.

We over the last three years in particular have been extremely highly focused on cost management and also using that as a tool to expand our margin $250 million of structural cost being taken out of cushman and Wakefield during that period I mentioned that the back end of that some 30 million is also she is.

It's showing up in 2022.

Now on top of that we're already taking action to strip out costs in line with the volume changes that were seeing in our transactional business as well as being extremely cautious on our deployment of cash in and discretion being discretionary areas. So I think that we've done extremely well as it.

Cost management team over the recent period.

That muscle memory has deepened the company we've applied it already.

This financial year and that will have a material impact on our year end close and as Neil said in his coal as we build the plan for next year, we will give more guidance on the actual construction, but theres nothing im seeing in the type of cost plans being put out.

By our peers that isn't already fully formed within cushman and Wakefield at this point.

Neil do you want to add anything to that.

Well I think you said it well Joe Yeah.

No totally understand that look I think it's also you know an incrementally worse macro environment right. So was just hoping to get more incremental color around that but thank you.

Help us understand how you get comfortable around your leverage.

And how should we think about capital allocation.

You know going into 2023, just given where the trajectory of interest rates is going and given where your leverage that.

First of all as contemplated in a plan. They also contracts that wrote an angle off so we'd be expected to be a little more muted than we've seen throughout the year in the fourth quarter. And then also you know a lot of our P. M. F N business isn't Asia Pacific and so there will be some ethics headwinds there. So you know what we feel very good.

The business, we expect to see that you know.

Nice cheapest yeah and expect.

Strange coming into next year.

Okay has there been any appreciable.

Appreciable change to just the pipeline and Rfps and things of that nature.

Tony This is John no the the the the nice momentum we've seen in <unk>.

<unk> payment F M.

Businesses across the world in the last two to three years continues at this at.

At the same sort of right, we know where we are.

A really good when right we have a really good retention rate, that's actually showing up in the numbers in the in this quarter and year to date and is Neil says we we we you know we continue to think of that will will move on traditionally in recessionary times. It's.

Recurring revenue businesses that can actually do pretty well.

Corporate to try to reduce their own cost based apply to real estate through outsourcing.

And we thought we totally expect got to continue.

With the volatility surrounding the Macroeconomy at this point.

Okay.

And on China can you maybe put some framework around just how big a business that is for you all because I mean, I can understand that the drag, but I feel like it's come up a bit more in your commentary then maybe some of your peers.

Happy to happy to again, it's John the whole tone of the.

We have long been a leader in real estate services in China.

And the way our business destruction at this point you might remember we did a joint venture.

With banking services I think over two years ago, now, where we placed a recurring revenue business with that market leader.

So the structure of that means that we only see a flowed through of EBITDA.

When that is down a little bit just hit straight on the EBITDA line and of course, largely the transactional business within greater China is extremely muted through the full you'd like it to the full you know as we see very little activity now ultimately what is a headwind towards this year becomes a tailwind one sure.

Released so we are optimistic about the overall real estate fundamentals that.

But in terms of revenue.

Isn't material because ultimately we have this extremely large recurring revenue.

Business in a in a pocket in Asia Pacific, which drives the business, particularly in terms of volatility to continued pleasing growth.

Okay got it.

And then my last one is on the cost side and if I look at just your third quarter Opex was you'd have $315 million thereabouts was up I think 4% year over year is that kind of the area that you would target to try to protect margins I think John you had mentioned trying to reduce.

Cost commensurate with the volume declines are just trying to understand how how hard or not that maybe just if it's got to come out of that line because the other costs are pretty much already variable or maybe I'm looking at it wrong.

Tony I think I think you've got it right you know about 45% about cost US you know all variables of those will move and those are just move with revenue about 40% of the costs are semi variable that's where we are.

Have already initiated cost controls those are discretionary spend things like TNT things like marketing that sort of thing and so you will see some savings there already actioned and then about 15% of all costs more fixed and that's where you know those those costs take longer that's where you know those are the cost of.

The address as we go into next year, but as you'd think about costs at Britney is variable cost it will come down very quickly with with the drop in revenue.

Okay and those percentages you just gave that's across total both you know cross services as well as Opex not just that Opex wine. So that is absolutely right you are.

Okay.

Okay right.

Okay.

Thank you.

Our next question comes from the line of Michael Griffin City. Please proceed with your question.

Great. Thanks, maybe we can go back to John comments on the the office leasing demand seems from your out look like it's still pretty solid do you have a sense for your occupier clients are are they taking more space or less space and do you notice if they're looking for anything different when they're making these these decisions.

Uhm, Michael Thanks, I'm happy to elaborate on it because some of the things we've been talking about for awhile now truly showed up in in Q3.

It was a really solid months furrows, so a quarter for us and leasing but without really highlighted the fact that.

As an organization we tend to focus.

On high quality assets globally. So the flight to both quality in terms of class a and then within class a highly sustainable.

Real estate man that that was a highly traded.

Asset class in leasing in the quarter.

Far more muted I believe through the through the boot levels B and C.

So the flight to quality and within that the lease terms being signed by occupiers Ah back to pre pandemic known so therefore, there's a commitment from the occupational market to see office as important as it was before the pandemic now in terms of the amount of space. We are in this evolving and.

<unk> more hybrid use of space and ultimately at this point, we are seeing some occupies in some sectors looking at a slightly lesser takes but.

Uhm and remind everybody on the call that ultimately.

Revenue is relies on deal volume and the dynamic if changing the market not specifically the amount of space in total utilized.

One final point, which is.

The vast majority of cities around the world back to very similar to pre pandemic norms, both in desk utilization.

Type of net absorption that we're seeing but there are some very notable major global cities, which has happened to you know to be the very visible into the that's tends to be when many headquarters are located this London New York.

San Francisco, where a long commute times and other challenges amendment actually there's a more dynamic office leasing market going on at this point, but I think are funny, what I would say is that we're seeing some considerable construction cost increases coming through the market at this point, which makes the viability of <unk>.

<unk> quite difficult, which will see.

A focus on the refit of the B M C portfolios sitting in the market. So actually when they will come through as highly sustainable once capitalist being allocated to those assets, which will release up Ah more aligned supply to demand because at this point there is disruption isn't enough hi <unk>.

Alrighty Gray day, highly sustainable assets globally to satisfy corporate demand.

Gotcha I I really appreciate the color there and then maybe just one other one on on cross selling crossbows of science I know you've talked about this being a focus on the past and just let the capital markets side of the business seemingly you know pretty muted for the near term that does that make cross selling opportunities you know harder and and how would you plan to address that.

The services.

The services provided by organizations Cushman and Wakefield play to the full suite of needs of our clients. So I think you're you're focused on the investor owned that when there's a lack of activity in terms of of trading and sales and capital markets owners tend to double down on the quality of the income streams I have from their occupies so they think.

Very focused on the retention of those tendons the provision of high quality services to them, but to focus on the provision of really high quality property management skills, particularly in the return to office that we're seeing at this point, but across all asked that classes.

So yes. There is there is a sort of a doubling down on the ability for us to sell a broader set of services to occupies sorry, two owners, who would likely to be holding that off that something longer at this point, but also just highlight of course that was there may be a muted level of actual capital markets deals in terms of sales going through.

At this point.

The need to refinance continues.

The link.

Of recent years, so that's where we can also provide.

Capabilities is not just in the.

Equity sales side of the business, but it's also.

The depth refinance opportunity and that will continue through this next period.

Alright, that's it for me thanks for the time.

Our next question comes from the line of Stevens Sheldon.

Blair. Please proceed with your question.

Hi, Thank you you've got that naturally on for Stevens team today.

So I think generally be suspect just sort of 10 per cent of offer places to come do each year somewhere in that ballpark, but given that that can has been kicked down the road a bit with some of these shorter term leases do you think you've been seeing some of that pent up demand or the pent up leases flow through or is that still.

Largely to be seen.

No I think we're in a relatively normalized period part of of the lease renewals or relocations by by the occupiers.

Yes, there was that period in the pandemic, where they kicked one O two years and I think with the the volatility volatility that we're seeing in the market now and the general approach towards caution by most corporate occupies globally.

There may be more cans being kicked actually over the next couple of years, particularly as organizations settled on what they think the future of the office truly is.

But that's sort of in the system of our revenues now and whilst we don't expect releasing to be immune from from falls in global GDP cause there's a high correlation particular to G. D P and job growth, we do think that.

The settlement of short term renewals and also pre pandemic long lease and norms that were saying we will continue.

I understood Okay.

And then switching gears with greystone, you've now got a bit more exposure to them multifamily and D. C. M side of things, which you just touch on briefly but.

And the prepared remarks, you had said that performed relatively in line with expectations I. Just wanted to ask if you could talk a bit more about how that is performed in the corner and maybe specifically towards quarter and what you saw there.

So yeah, they're prepared remarks were very clear about performing as we'd expected in the quarter.

Now three quarters into our ownership relationship with Greystone. Our teams are really beginning to gel and go to market. Together. We have found that it has been a very positive sales proposition for us and we're beginning to grow market share and that that equity debt market totally in U S. <unk>.

Family. So we're very pleased with the acquisition with the teeming that we're doing with the the gravestone team and ultimately as part of our plan.

To be the primary multifamily full service provider in the market in the U S. At this point, but.

But globally in the future.

Okay. That's great. That's all for me. Thank you.

As a reminder to register for a question press the one four.

Alright next question comes from the line of Patrick O'shaughnessy with Raymond James. Please proceed with your question.

Hey, good evening, so year to date, you're operating cash flow is negative $195 million. Obviously, there's some seasonality in cash taxes that you had to pay for last year's earnings.

How are you thinking about cash flow over the remainder of this year and then probably more importantly for 2023.

Yeah sure Patrick you're right.

What are we actually had <unk>.

The cash flow the $38 million in cash cash flashing knows always seasonal we've seen uploading the first half of the year and then what city in Florida in the back half of the year.

This year was a unique yeah in that we had three things which impact cashflow. The first as we said throughout the year was the significantly higher bonuses and commissions that we pay down tied to 21 performance are those the big the phone that's especially in December got paid out this year so that.

It was a drag on cash flow. This yeah. We also had some nol's. We're all along stop cash taxes are slightly higher and then what's the increase P. M. F. N business. There was an abnormal timing mismatch off some reimburse about payments and receivable and so that had a negative impact on the Senate majority of.

The difference really is timing related this year as we look to next year.

Let the cycle cash conversion rate remains in that 30% to 40% range Castro. This year will be Lola catch her last year was significantly higher and then as we go into next year. Once again will we remain very focused on cash flow and cash flow conversion.

Alright, that's helpful. Thank you.

And then APAC is there a path back to double digit adjusted EBITDA margins, given the cost actions that you're taking.

I think the I think the most likely prospect will be to a b a pick up in in transactional business across a pack and reopening in particular.

China.

As I say, we have a very large.

Large scale the P. M F M business out there so driving up to double digits doesn't come necessarily from within that service line alone. We do need the the the mix issue to come back with transactions given so much about business out there is actually pay M. F. M. Therefore, largely labor applied to.

Client's sites, there isn't a huge amount of Alpex I've got this this this question if there isn't a huge amount of all things apply to that business, but we we would we'd being very cautious on way, we find cost opportunities across the whole business in a bucket is not immune to that.

Alright understood. Thank you.

Our next question comes from the line of Ronald Camp Camden.

With Morgan Stanley . Please proceed with your question.

Just a couple of quick ones back to the castle question.

He talked about sort of the seasonality year to year.

Or some of the differences year to year anyway, you take a step back what's the sense of what's the annual run rate of the operating castle, we should be thinking about.

Historically on on the desk and so forth right granted that 2021, and 2020 are sort of odd years, but sort of in your mind's, what what's that number usually trying to do.

Yeah. So I think if you take the average of the two years, you're getting pretty close to a 25% to 30% cash conversion rate based on adjusted EBITDA and that is the that is the target that that I would use over the long run.

I think it's.

S. As I said a lot of this year's cash flow was timing you saw the very significant I think last year with higher than expected as we said said so that's appropriate good guide uhm actually look forward at the business.

Okay, Great and then.

I'm just going back to some of the comments on four Q I I've got that yeah.

Flat, maybe you remind us again, what what you were thinking for all these things.

[noise] of any color commentary there in terms of that that year over year growth I think I missed that.

Yeah sure you know at this point given the significant uncertainty we seeing as we moved the fourth quarter and the fact that December is such a big month, we are not providing specific guidance, Iran. Brokerage. What we are saying is that we expect it to be down significantly.

And then we've also give them guidance around the logically expect given the fact that we are going to be extremely cost conscious will cost focused and.

Protecting that margin. So you will see the brokerage, which obviously has a higher flow through we'll do our best to protect marching against that but it's very difficult to fight that makes and so you know that.

That's what I'm, saying I can imagine.

Great and then my last question is I think the commentary on an office I was really helpful. Maybe as you as you think about some of the other sort of articles industrial Department, you know, even hotels or whatever maybe I'd love some commentary on.

You know views there how those are performing you know opportunities there as well thanks.

Oh I'll deal with the the the very large asset classes I think we can talk about logistics because you said in the commentary on the tape.

Taped a piece that the quarter was still very strong and cause logistics and industrial leasing generally with only 1% vacancy rates in the U S.

So we do think that that is likely to continue.

Through the long term retail is is showing a very robust response to.

What was it a long term change in the amount of physical retail required by.

By the World and and we continue to seek pleasing growth in Retold leasing service line, although it is from a significant.

Significantly low base than his.

Historically.

The real story is in the evolving nature of of the newer asset classes I touched on the Gulf we've seen so far this year and life Sciences.

Point to similar.

Pleasing growth that comes through from the work that we do in data centers.

Another secular growth area. So.

In a way in the same way with it for offices this room to make a generalization because you need to look at the quality of the office the sustainability level of the office tend to the location of the office.

Most asset classes.

Need to be discussing the in a in a more granular level, but on the whole I was just had leasing enough.

Three showed up barely noticed before us reflecting.

Reflecting the strength of the brand in opposition to the global markets, but we do not expect it to be immune.

From the from the impacts on G. D P. They're kind of floating through the macro economy at this point.

Great. Thanks, so much.

There are no further questions at this time I will now turn the call over to John Forester for closing remarks.

Just to say thank you for everybody for joining us here today and of course for all of those clients and our team members listening. Thank you for your ongoing support Cushman and Wakefield and we look forward to continuing our relationships with all of our clients and of course all of our great time. Thank you.

That does conclude the conference call for that we thank you for your participation and I'll tell Ya proof disconnect your lines.

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