Q1 2026 Earnings Call Transcript

Greetings, and welcome to the First Quarter 2026 CBRE Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chandni Luthra. Thank you. You may begin.

Good morning, everyone, and welcome to CBRE's First Quarter 2026 Earnings Conference Call. Earlier today, we posted a presentation deck on our website that you can use to follow along with our prepared remarks and an excel file that contains additional supplemental materials. Today's presentation contains forward-looking statements, including, without limitation, statements concerning our business outlook, business plans, seasonality and capital allocation strategy as well as our earnings and cash flow outlook. These statements involve risks and uncertainties that may cause actual results and trends to differ materially.

For a full discussion of the risks and other factors that may impact these statements, please refer to this morning's earnings release and our SEC filing. We provided reconciliations of the non-GAAP financial measures discussed on our call to the most directly comparable GAAP measures, together with explanations of these measures in our presentation deck appendix. Throughout our remarks, when we cite financial performance relative to our expectations, we are referring to actual results against the outlook we provided on our fourth quarter 2025 earnings call in February, unless otherwise noted. Also, as a reminder, our Resilient Businesses include facilities management, critical infrastructure services, property management, project management, loan servicing valuations, other portfolio services and recurring investment management fees.

Our transactional businesses comprised property sales, leasing, mortgage origination, carried interest and incentive fee in the investment management business and development fees. Finally, beginning this quarter, our financial results reflect the financial reporting changes we discussed on our fourth quarter earnings call and in our March 24, 8-K. Prior period results have been recast accordingly. I'm joined on today's call by Bob Sulentic, our Chair and CEO; and Emma Giamartino, our Chief Financial Officer.

Now please turn to Slide 3 as I turn the call over to Bob.

Thank you, Chandni, and good morning, everyone. CBRE continued to generate strong financial results while making important strategic gains during the first quarter of 2026. Together, our 3 services segments, Advisory, Building Operations & Experience, and Project Management grew revenue by 20% and operating profit by nearly 30%. Additionally, profits from our data center land development program were delivered earlier in the year than anticipated. Our Resilient Businesses grew revenue by 18%.

This reflects our strategy to grow businesses that are resistant to real estate cycles or benefit from secular tailwinds, which supports strong through-cycle growth. Simultaneously, our Transactional Businesses achieved their highest growth rate of the current cycle at 22%, reflecting our strategy to maintain and extend our market leadership position in sales, leasing, financing, and real estate development. These businesses generate excellent margins and cash flow while providing data and market insights that help us across CBRE. Our work related to infrastructure assets has become a source of significant profits and growth spanning all 4 business segments.

This consists of the services we perform for data centers as well as power, telecom and transportation assets, among others. This is also central to our strategy. We generated more than $3 billion of total revenue from infrastructure activities in 2025 and nearly $950 million in the first quarter. Within the BOE segment specifically, we've created a dedicated critical infrastructure services business line.

This business line includes work for data centers along with the telecom and power assets captured in the Pearce business we acquired last year. Revenue in this business line totaled $1.7 billion in 2025 and $580 million in the first quarter and is expected to grow in excess of 60% this year. The strong momentum we saw during the first quarter in Infrastructure Services and across other parts of our business has continued in the early weeks of the second quarter. Considering this, we are upgrading our EPS expectations to a range of $7.60 to $7.80 for the year, which would result in more than 20% growth at the midpoint of the range.

This assumes that the economic environment remains supportive. Emma will describe our outlook in more detail after she reviews the quarter. Emma?

Thanks, Bob. Good morning, everyone. Our first quarter results exceeded expectations. Even without the pull forward of profits in our land development program, EPS beat our expectations by nearly 10%.

In local currency, our Services segment delivered 27% operating profit growth. And as Bob mentioned, nearly 30% with the benefit of FX. Given this relatively large FX tailwind, I will reference growth rates in local currency, unless otherwise noted, to best reflect our operating performance. Advisory Services revenue saw continued strength in leasing and accelerated growth in sales.

Leasing revenue grew 18% globally and 21% in the U.S. Industrial leasing grew 24% in the U.S., as occupiers continue to act ahead of tightening supply for first-generation big-box facilities. U.S. office leasing revenue increased by 15% with broad-based strength across gateway and non-gateway markets. Additionally, data center leasing revenue more than tripled from last year's first quarter.

Outside the U.S., leasing revenue rose by double digits in Asia Pacific, led by Japan, while EMEA saw mid-single-digit growth. Global property sales revenue growth accelerated from Q4, rising 39%, led by the U.S. and Asia Pacific. U.S. property sales revenue increased 64% as all major property types delivered double-digit increases. Outside the U.S., growth was notably strong in Japan.

Mortgage origination revenue increased 53%, fueled by strong volumes from debt funds and the GSEs. Our loan servicing portfolio grew 5% to more than $460 billion. Advisory SOP grew 35%, delivering strong operating leverage. Turning to the Building Operations & Experience segment.

Revenue grew 16%. In addition to significant growth in our new critical infrastructure services line of business, which Bob described earlier, our local facilities management business continued to increase revenue at a mid-teens rate. In the Americas, revenue was up almost 30% as this region had 1 of its best start to a year. Enterprise Facilities Management revenue also grew by double digits, led by the technology, industrial and life sciences sectors.

BOE's SOP increased 23%, with operating leverage driven by an amortization cost reclassification. Excluding this change, SOP growth was in line with revenue growth as expected. Turning to our Project Management segment. Revenue increased 11%, while pass-through costs rose 9%.

Growth was underpinned by strong infrastructure activity. Among real estate projects, growth was driven by the technology sector and was broad-based, led by double-digit growth in Asia, the U.K. and the U.S. SOP grew 14%, reflecting operating leverage. In the Real Estate Investments segment, SOP exceeded our expectations, driven by earlier-than-anticipated data center land sale profits.

We continue to have embedded gains of approximately $900 million that will be monetized over the coming years. In Investment Management, recurring asset management fees increased driven by higher net asset value. However, operating profit declined due to lower incentive fees and promote income. We raised $1.3 billion of new capital during the quarter and ended Q1 with more than $155 billion of AUM, in line with Q4's level.

Now I'll discuss free cash flow and capital allocation. We produced $1.7 billion of free cash flow on a trailing 12-month basis, reflecting 78% conversion. As we've discussed previously, cash incentive compensation is paid out in the first quarter based on the prior year's performance. Due to the strong performance in 2025, free cash flow conversion was lower than the prior year's Q1. We expect to end in 2026 with free cash flow conversion around the high end of our 75% to 85% target range.

We have repurchased nearly $540 million of shares year-to-date, reflecting our continued belief that our share price does not reflect the sustained long-term growth trajectory of our business. As Bob indicated, we now expect full year core EPS of $7.60 to $7.80, up from $7.30 to $7.60, previously. The increase is driven by our outperformance in the first quarter and early part of the second quarter, momentum in our infrastructure services-related businesses and strong pipelines across our company. We are increasing our outlook for advisory and BOE.

Advisory is now expected to deliver high-teens SOP growth. We are expecting approximately 25% SOP growth for BOE, which includes high teens growth due to improved performance in the underlying business and the remainder due to the cost reclassification. There will be an offsetting increase to depreciation and amortization, resulting in a neutral impact to net income. Our SOP expectations for project management and REI remain unchanged.

Our outlook assumes no material changes to the macroeconomic or interest rate environment. And in terms of seasonality, as a result of our first quarter outperformance, we expect to generate nearly 40% of EPS in the first half of the year, a higher percentage than we would typically achieve. With that, operator, we'll open the line for questions.

[Operator Instructions] And our first question comes from the line of Anthony Paolone with JPMorgan.

Great morning. Nice quarter. My first question relates to just how you're thinking about the second half of the year because the first quarter and first half looks quite strong. And so wondering if you can get into a little bit more of your thinking into how much of that maybe was pulling forward stuff you thought would happen later in the year versus just outright strength and trying to get a sense of your conservatism or how you're thinking about 2H.

Sure, Tony. So we increased the midpoint of our guidance from $7.45 to $7.70 of EPS, as you saw. As Bob talked about and I talked about, we pulled forward our development profits that we expected to generate later in the year to the first quarter. So there's no impact to our guidance for our REI segment. .

In terms of the raise from $7.45 to $7.70, 1/3 of that is based on the outperformance in the first quarter in advisory and BOE and 2/3 of that raise is increasing our expectations for the remainder of the year. Within advisory, we're seeing strong pipelines going into Q2 and especially in the U.S. And so despite the fact that there's uncertainty in the macro, we are raising our outlook in advisory for the remainder of the year. But remember that, that growth will still decelerate going into the second half, given we're working against tough comparisons.

And then within BOE, we're raising our guidance for the remainder of the year slightly given the strength in both critical infrastructure services and local.

Okay. Got it. And then my second question really is the roughly $30 billion in pipeline and projects in Trammell Crow right now. Can you talk about how much is, say, industrial data center office and so forth? And just the prospects of that -- you mentioned the $900 million, just the prospects of that potentially just being further accelerated and seeing that as the year progresses?

Yes, Tony, the biggest portion of the Trammell Crow in-process portfolio and pipeline portfolio is in 3 areas. So industrial, multifamily and data center land. The thing to know about Trammell Crow Company, forever that business has been really good at acquiring land, entitling land, improving land and positioning land to be more valuable than it was before we got involved with it. That is a core competency of that business.

And as we've moved through various parts of the cycle, we've aimed at business in areas that we thought had secular tailwinds. So if you remember, coming out of COVID, CBRE was and continues to be a massive office building business. And COVID hammered everything about office buildings, but we moved aggressively into industrial land and multifamily land and multifamily development and industrial development. And within 2 years, we are back to record earnings.

What you're seeing now is a considerable amount of investment in multifamily and industrial because we believe there is a dearth of new development that will be coming on over the next few years, and we're well positioned to do that. We've talked a lot about that. But we also, around the country, have secured dozens of land sites that have the potential to be data center land sites over time. And we're working with various data center users, especially the hyperscalers to get that land entitled, get that land powered, get water into the land.

And we think we'll have a relatively steady stream of opportunities and data center land over the next few years. It will be lumpy. For sure, it will be lumpy and as evidenced by the first quarter, our harvest so far this year is kind of what we thought it would be for the first year, and Emma gave you some perspective on that.

[Operator Instructions] Our next question comes from the line of Steve Sakwa with Evercore ISI.

Maybe, Bob, if you could just maybe elaborate a little bit on maybe some of the conversations that you and the team have had with some other C-suite executives just more around kind of where their head is on the macro. And I realize that the problems in the Middle East kind of occurred fairly late in the first quarter. So not much time to impact that business. And maybe that's tempering your enthusiasm for the back half a little bit.

But just how are you sort of thinking about leasing and sales? And I guess what would it maybe take to create more challenges in that business moving into the back half of the year?

A bunch of different things going on there, Steve. So 1 is what's going to happen specifically with regard to the Middle East and things that are directly impacted by the Middle East. One is what's going to happen to the economy more broadly. Big theme, obviously, is what's going on with artificial intelligence, big theme is what's going on with job creation and all the old jobs disappear.

So I'll comment on each of those. . Starting with the economy. People feel generally good about the economy and less energy prices spike to the point where we end up in a situation where there could be a recession in parts of the world that are energy specific -- or energy sensitive, maybe global recession. I don't think people think that's going to happen, but they're worried about that.

Most companies that we interface with are not particularly impacted by what's specifically going on in the Middle East. If you look at our company, none of our 4 business segments have as much as 5% of their profits in the Middle East. So it didn't impact us in the first quarter. It hasn't impacted us so far in the second quarter.

Most of the companies that we're working with have not been massively impacted there or even all that materially impacted. And so they're watching like we are, but not that worried about that specifically. The whole AI job creation or job destruction thing that is unfolding and ping-ponging back and forth, lots of discussion around that, lots of headlines around all the jobs that are going to be eliminated by AI. And so we've tried to dig deep and get some kind of empirical underpinning based on the business we do with companies.

And I will tell you that kind of the market-facing headlines don't sync up very well at all with what's going on in our direct conversations with these clients. So to give you a statistic, if really there was this view that all these jobs are going to be eliminated by AI, you would think that the users of space would be backing off on their leasing of space, not just currently, but you would think they'd be taking shorter-term leases for fear that they weren't going to need the space in the future. The average length of lease we're doing in office buildings today hasn't decreased by a day. It simply hasn't decreased.

It's held steady for the last several years, and it's holding steady now. So to put your money where your mouth is, thing would suggest that the fears around job losses aren't quite as high as the headlines. I can tell you for our company when we look at what's going on, we anticipate some job loss in certain areas. So we have AI initiatives underway to create efficiencies in the company.

And so for instance, we have lots of people in call centers around the world, thousands of them. We think some of that -- we think we can rationalize that by maybe as much as 25%. We're going to be able to cut back on research. We're going to be able to cut back on our human resources or people organization.

But the most profound thing going on in our business today as we've moved into critical infrastructure in a 3 billion last year in our services business is already almost $1 billion in the first quarter, we can't hire enough people. Our biggest challenge is across that business, we're having trouble getting the various skilled people we need. And we're not alone in that regard. I'm sure that anybody that's following the market is seeing the same thing.

So there's a myriad of things going on when we talk to others in our sector and others in the companies we serve. But net-net, I would not say there's a lot of fear about what's going on right now at least in the foreseeable future.

Great. Maybe just as a quick follow-up, Emma, I know you talked about the $540 million of buybacks. I think in the excel file, it showed $530 million of actual buybacks in the quarter. Could you either provide a share count or an average buyback price that's associated with that $500 million? I just want to make sure we have kind of our shares moving forward accurate for the model.

Yes, the price is in the high 140s. It's around $148. .

Our next question comes from the line of Stephen Sheldon with William Blair.

Really nice results here. First, I wanted to ask about training partnership with Meta around data center capabilities. And Bob, you're just talking a little bit about some of you can't hire enough people, I think, critical infrastructure. So I guess, do you see similar opportunities with other big tech and AI companies.

And then as we think about something like that, is it more like a onetime revenue opportunity or there kind of recurring resilient revenue streams that as you kind of that could be built as you be supported by a partnership like this. I guess how we be thinking about these opportunities?

It's definitively not a onetime thing. We're building a capability there in multiple cities around the U.S. to recruit, train and place technical people to support Meta's data center initiative. And it is really, really hard to get those people and we're recruiting and training those people and sending them not only into CBRE's teams to support Meta, but into our competitors and others in the market. They viewed us as having a unique ability to hire and train people.

We have a big operation in that regard. We hire something like 30,000 people a year, and so that we ended up in that position. The bottom line is, with these companies that we interface with to do critical infrastructure and data center work, there's a broad base of things that we can do to support them, and this is something that surface because of our brand and our scale and our breadth here in the U.S. and in other places around the world, that we were well positioned to help them with, and we expect this to be an enduring service that we provide.

Very helpful. Maybe then as a follow-up, around the commentary on average office lease durations holding steady. Would be curious with industries, you guys have the flexible co-working business with industries. What have you seen there?

Have you seen demand for more flexible space start to pick up? Is that something that could structure -- if, let's say, average lease duration start to pull back, would you even potentially see an uptick in demand for solutions like industrial that give companies more flexibility? I guess, how are you thinking about that?

Yes. The number of industrial units that we're adding is exceeding our expectation in underwriting when we bought the business. We're quite pleased with the pace at which we're adding those units, and we expect it to continue this year and into the foreseeable future. And the thing about that business is that I think anybody that's been following us knows we bought that business because we thought it was a premium offering that would be interesting to corporates in addition to small- and medium-sized businesses, and we're seeing that play out, just like we're seeing strength in every other part of the office market.

We're also seeing that Industries' capability as an experienced company is becoming an increasing opportunity for us with our corporate clients on the facilities management side of things. So yes, we're seeing good momentum there, and we're quite excited about it.

Our next question comes from the line of Julien Blouin with Goldman Sachs.

Congrats on the quarter. Clearly, a very strong first quarter for both investment sales and leasing. I guess, just curious on -- I know you say the pipelines continue to look very strong. One of your peers last week was commenting on the fact that they are seeing sort of client decision-making slowing down given the lack of visibility.

And when you have sort of this sort of instability, long-term investments just becomes slightly harder to make. I'm just interested, are you seeing any signs of that? And if you do see -- if we do end up seeing an impact, is your expectation more that we could see that in EMEA and APAC versus the U.S.?

I think there's more worry in APAC, in Asia over the impacts of higher -- and Continental Europe a little bit over the impacts of higher energy prices. We really aren't seeing decision-making slowing down as it relates to industrial leasing or office leasing. Where we're seeing some slower decision-making is corporate capital investment, except for data center investment. And we think part of what's going on there is that resources are moving from other types of real estate-related capital investment to data center investment.

But there could also be a little uncertainty that is creeping into. Capital investment is 1 of those things that tends to slow down a little bit when there is some uncertainty. So we have seen some decision-making slowdown there. But really not on the leasing side.

It hasn't surfaced yet for the -- it certainly hasn't surfaced in data centers. Obviously, Emma gave you those numbers, but it hasn't surfaced as it relates to kind of traditional warehouse leasing, traditional office leasing. Office leasing is strong all around the world, maybe a little less so in Europe. So we really aren't seeing yet that slowdown in decision-making.

We'll see how things unfold, but we're not seeing it now.

That's very helpful. And maybe going back to the AI topic. I was wondering how your thoughts on the risk from AI have maybe evolved since last quarter. Do you still believe that your BOE segment is where some risk of disintermediation lies and less so on the capital market side.

And I guess, how do you think about some of these headlines that are out there around sort of smaller AI-based start-ups that are reported to be gaining traction in smaller commercial real estate transactions and sort of bypassing traditional brokers in the process? And do you think there's a risk that if they prove themselves at sort of the smaller sized transactions like 6 or 12 months from now, they could be used for $10 million or $20 million transactions.

Yes. Well, I'll kind of hit that at the end here. I'll walk you through how we think about AI. So we start by thinking about it like we do with everything.

We are very driven by our strategy. And as you know, our strategy is to be diverse across asset types, service types, geography and client types. And we very definitely have pursued this strategy of pushing resources into areas of secular tailwinds. AI is creating a considerable secular tailwind for our company right now, and it's fairly broad-based.

To the point where I think our move into critical infrastructure and data center services is going to be at least as profound as our move into outsourcing was in the '90s and early 2000s and much faster. Again, I want to reiterate some of the numbers we laid out, $3 billion. And this is independent of our land program in Trammell Crow Company. $3 billion of revenue last year, almost $1 billion of revenue in the first quarter, growing almost 50% this year, some very strong opportunities for us to do M&A in that area because of the track record we've established for M&A. This is a good home for targets.

It's a good home for employees. And our brand and history positions us well with clients. So a lot of opportunity there. We think that's the overwhelming impact to our business.

The second thing we look at is what we can do to enhance the products we have. So if you go across our 4 segments, Brokerage, Building Management, Project Management. We are developing AI-enabled tools in every 1 of those areas. We've been able to attract some very strong people.

Again, I think our brand and our scale has helped us. There's a lot of interest in real estate. We've been able to attract some technology people and then some AI people that have helped us there. And we're very bullish about the product suite we've developed.

I think it's going to help us do more business than we've done before. The next place is efficiency. This is where there's going to be some potential loss of employees. And I commented on this earlier.

We're going to see some efficiency in our offshore service centers. We're going to see some efficiency in the research area and financial planning and analysis and human resources. There's a lot of those areas, and we think the gains will be fairly significant. It's going to take time to get those gains, because you have to develop the tools and then you have to implement the tools and then you have to reorganize yourself and limits.

So there will be some eliminations there. Where we think we're most protected, and I commented on this last quarter, is in our transactional businesses. So our investing businesses, our brokerage businesses, our development business, where you lead with strategy and negotiations and creativity. And I know there's been commentary.

We've read it, we've seen it, "Oh my gosh, in the brokerage business, there's all this data-related and financial analysis related work that goes on, that's going to be squeezed down by AI, which is going to cause revenues to be squeezed down". Well, if you really know how that business works, the vast majority of what we spend in that business goes to our brokers, the vast majority of what we spend. It doesn't go to financial grinding and analysis and data. We do a lot of work in data, we do a lot of work in financial analysis, but the majority of the expense is around brokers.

And what the brokers provide is specifically the strategic help, this creative help, this negotiating help, the knowledge that goes beyond the data that's on the street. And that's why, over the years, when I've been asked, as you guys get bigger and stronger, you're going to use that leverage to squeeze down your brokers? The answer has always been no. The real value in that business comes from that creative strategic thinking.

It's true in our investing businesses. It's true in Trammell Crow Company. That land development business is not going to be disintermediated by AI. It's going to be enabled by AI.

So we're not sitting here today. I'm sure there's going to be ways AI does stuff that it hasn't done before, and we're all going to figure that out over time. But we think we're reasonably well protected there. And then when you hear these anecdotes about some proptech company that says they're disintermediating the brokerage business, I would ask them to show you their revenue stream and see what you get.

Our next question comes from the line of Brendan Lynch with Barclays. .

Maybe a few follow-ups on the data centers. How is the Pearce acquisition trending versus the $90 million of EBITDA contribution you had originally anticipated for 2026. And maybe in terms of expanding the data center platform, what are some of the other verticals or some verticals you could potentially expand into?

Yes. I'm going to answer the back half of that question and Emma will [indiscernible]. Pearce, by the way, is not a big data center business. So it's telecom power, et cetera.

But in the data center business, we're seeing big impact in our brokerage business. We're seeing big impact in our building operations and experience business where we formed this critical infrastructure line of business, and we're doing a lot of project work there, we're doing a lot of building management work. We do work on over 1,300 data centers around the world. And then, of course, we're continuing to see in turn towns in our big project business, a lot of work, and we have opportunity to expand all those things.

Turner & Townsend has primarily over the years, before we combined with them, been European, Middle East, Asia Pacific business with some activity in the U.S. Now they're growing rapidly in the U.S., leveraging the network of professionals that CBRE has. On the contrary, our data center services, building management and small projects business in the white space has been primarily U.S., and now we're seeing a big opportunity to expand that in Europe and Asia. So those are some areas we're focused on.

And I think Emma can talk about M&A. But I think if you look at the M&A strategy, we've had, you'd be confident that there's opportunity for us in those areas around the world. Emma, I don't know if you want to add to that?

Yes. Just to add on Pearce front and specifically to your question, it's performing well in line with our expectations. One important thing to note is if you take the $60 million of revenue that we forecasted for 2026, you can't ratably lay out across the quarters because there is a seasonal element business, given that they're maintaining cell towers and wind farms and solar. So the weather has an impact on the revenue here.

So if you exclude Pearce in the first quarter, our BOE revenue growth was mid-teens. .

Okay. Great. That's helpful. And maybe just 1 follow-up.

If I heard you correctly, it was about $900 million of embedded profit in the land bank. And you talked about dozens of other land opportunities that you could monetize in the future. How should we think about the steady state contribution, understanding it's going to be lumpy, but just your ability to acquire attractively priced land and add some value-add components to it and kind of keep that pipeline steady over the next couple of years?

Yes, the $900 million is not land profits captured in Trammell Crow Company. It's all profits captured in Trammell Crow Company, including the land. And the data center land opportunity, we have lots of sites that we have the opportunity -- the potential opportunity to monetize, but it's hard. It's really hard.

You have to get approvals, you have to get power, you have to get water. And as a result, we have not been overly aggressive about forecasting what might happen there. . We're very excited about the potential. We like the portfolio of sites that we have control.

We have very little capital of our own investment in those, by the way. We really like the ability we have to work with hyperscalers and other data center clients to help them get land positions. But we're knowing how hard that business is and the scarcity challenges around things you need and the public opposition and so on and so forth, we're being very measured about the outlook we're establishing for that. But the $900 million is all the profits we see captured in Trammell Crow Company today.

And we are filling that back up at the same rate. We're emptying it out, I guess, is what I would say.

Our next question comes from the line of Jade Rahmani with KBW.

I wanted to ask about AI and how you've rolled it out to your teams. Could you quantify what percentage of your teams are using it? And if you're limiting who can use it? And what are you doing to maintain the closed-loop system in terms of your data, where data is the linchpin of value in that business?

Jade, we're like everybody else. We're working our way through that and trying to figure it out. And you didn't say it explicitly, but you kind of implied it. One of the things we're watching very closely is it can get really expensive really fast if you don't control who has the access to use it and what they can use it for.

And our Chief Operating Officer, Vikram Kohli, who's also over our cost control program and specifically has reporting up to him the technology part of our business right now is watching very closely how we're using AI and where we're using it. how we're using it to improve our products and where we're using it randomly around the system. And as you can imagine, there's a lot of that. And I will just say broadly that we are controlling it controlling who has access to it, controlling what we use it for. And we're reasonably pleased like we have been historically that we're attacking new technology in a measured way where the benefit we're getting is in balance with the cost, we're expanding on it.

But it's something you've got to watch really closely.

Just switching to transactions. Just wondering if you can give any comment as to whether the pipeline has slowed at all. driven by the increase in rates and also modest widening in CBRE borrowing spreads that we've seen.

So Jade, the pipeline hasn't slowed at all and going into Q2 the pipeline is actually stronger than we would have expected it to be at the beginning of the year. I think what's important to note about rates that we get asked about a lot. As long as the tenure has been around in the 4% to 4.5% range, we've seen sales activity and loan origination activity continue to grow and accelerate. So as long as there is a significant spike above that, we don't expect to see any slowing. .

Our next question comes from the line of Seth Bergey with Citi.

I guess, just wanting to go back a little bit to capital allocation. You did kind of the buybacks in the quarter. And has AI changed the way you kind of think about your capital allocation priorities as you think about buybacks or kind of resilient businesses that bolt-on? Or is there any sort of incremental investments or kind of AI companies that you would look to kind of add to the platform?

So our capital allocation priorities remain consistent and they have over time. We are always prioritizing M&A, and if anything, as Bob mentioned earlier, we see even greater opportunity for M&A at this point than we have historically, especially in the data center space. And so we will continue to prioritize M&A. But of course, as you've seen, as we're monitoring our pipeline and thinking about what we can convert in a year.

We're going to fill that in the buybacks, especially when our price remains undervalued. In terms of investing in AI, as Bob said, it's similar to how we invest in technology. And we're constantly organically investing through our CapEx in technology and now AI to support our business, and that will remain unchanged. I don't expect us to be investing in specifically AI companies, like we didn't make large investments in technology companies historically.

And then I guess you talked a bit about raising headcount where it makes sense and using AI to kind of increase productivity. It might be a little early, but do you have a sense of how that can kind of change the margin profile of certain segments kind of over time?

So it's very difficult to speculate how it will impact over time, but it will. I think it will take a number of years, and it will start in our functions. I mean, Bob mentioned our HR teams, our shared service teams, but even those head count reductions, we anticipate happening a few years from now versus immediately. So time will tell in terms of how that will explicitly impact our business.

Our next question comes from the line of Ronald Kamdem with Morgan Stanley.

Great. Just a quick one. Going back to sort of the BOE. I think you mentioned earlier in the call that the sort of ex the acquisition, the revenue growth would have been, I think I heard mid-teens if that's correct.

And I think the messaging has been that, that growth rate has been sustainable for quite some time. I guess my question is, is there a way to sort of double click and think about how much of that growth is driven by existing tenants expansion there versus sort of new businesses? And has that mix sort of shifted as the business has changed over the past couple of years?

So the way we think about that business is between our Enterprise Facilities Management, our local business and then now our Critical Infrastructure Services business. So Enterprise is a solid double-digit grower -- low double-digit grower over time. Local as it's been expanding into new markets, I mentioned earlier, we have still significant growth within the Americas. Our local business grew revenue in the Americas this quarter of 3%.

So that's bringing that growth above that double-digit, low double-digit range. And then our Critical Infrastructure Services business, as you saw, has tremendous growth within it. So it is going to keep that growth rate within our BOE segment in that mid-teens range and potentially above over time. .

Helpful. And I guess my second question is, as I'm sort of thinking about whether it's advisory services versus BOE versus project management, at sort of this point in the cycle is advisory -- is the greatest margin upside still in advisory services because of potential transaction upside? Or how do you guys think about sort of the potential margin uplift in some of those other segments?

So advisory is nearing -- has already gone back to the 2019 levels of margins, which we think is a relatively steady state margin for that business. There will be incremental margin uplift throughout this year. But where we think the opportunity is, is within BOE and within project management. Those margin gains, as you've seen, are steadier and more incremental over time, but we see opportunity for those to increase. .

And we have reached the end of the question-and-answer session. I would like to turn the floor back to CEO, Bob Sulentic, for closing remarks.

Thanks, everyone, for joining us today, and we'll talk to you again in 90 days when we report on our second quarter.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.