California-Based Brokerage's Commissions Fall More Than 52%
Marcus & Millichap CEO Hessam Nadjisaid higher interest rates and financing constraints contributed to a loss in the third quarter. (Getty Images)
By Randyl Drummer
November 3, 2023 | 4:56 P.M.
Marcus & Millichap, the last of the major publicly traded brokerages to post results, reported a third-quarter loss and a sharp decline in sales as property and financing deals declined.
The national investment sales brokerage, based in Calabasas, California, had a loss of $9.2 million, compared to a profit of $21.4 million in the year-earlier quarter.
The loss was mainly due to a combination of lower revenue and increased spending to hire and retain sales staff, develop new technology and fund other growth initiatives, CEO Hessam Nadji told investors on Friday.
Marcus & Millichap is also the second major brokerage to post a net quarterly loss. Cushman & Wakefield, the world's third-largest commercial real estate brokerage, reported a loss of $33.9 million, compared with a quarterly profit of $23.9 million in the year-earlier third quarter.
The largest brokerages reported slowing deal activity as a result of higher interest rates and economic uncertainty. They said some companies are holding off on making decisions on office leasing in the wake of policies allowing remote work during all or some of the workweek changing property use.
Brokerage commissions at Marcus & Millichap fell by more than 52% to $139.8 million in the quarter from the year-earlier period, reflecting “the prolonged market dislocation caused by the severe interest rate shock and financing constraints," Nadji said.
Marcus & Millichap does not release earnings guidance. But the company said in its earnings statement that an rapid rise in interest rates, tightened lending and expectations of an economic slowdown “is still adversely impacting the short-to-mid-term transactional outlook.”