CBRE Group, Inc. (CBRE) | The Buildout — AI Infrastructure
The Verdict
CBRE is a commercial real estate services and investment firm. It touches the AI build-out in four ways: managing data-center construction through Turner & Townsend, operating and maintaining data centers through its building-operations segment, brokering data-center leasing and sales, and acquiring and entitling land through its Trammell Crow development arm. Management frames the move into critical infrastructure and data-center services as comparable in significance to its 1990s outsourcing expansion, and faster, and is pointing capital allocation at data-center M&A.
| Market Cap | — |
| Revenue (TTM) | $43.6B |
| Revenue Growth | +14.5% |
| EBITDA Margin (TTM) | 5.2% |
| Net Debt | $9.1B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Data-center services revenue surpassed $700M in Q2 2026, up nearly 30%, and management forecasts about 25% annual growth for five years and above 15% afterward.
- All four segments grew segment operating profit by more than 25% in Q2 2026, and core EPS has grown at least 18% for five consecutive quarters.
- FY2026 core EPS guidance was raised twice, to $7.80–$7.90, and management introduced a FY2027 floor of at least +15%.
- Total infrastructure services revenue reached about $1.2B in Q2 2026, up more than 45%, and the company says it works on over 1,300 data centers worldwide.
- The Trammell Crow land bank holds about 30 U.S. data-center sites with roughly $900M of embedded gains and, per management, very little CBRE capital at risk.
What We’re Watching
- Q4 2026 core EPS is guided comparable to last year, when significant data-center land profits were realized — a flat comparison sitting inside a raised full-year guide.
- Investment Management raised $1.6B of new capital in Q2, up from $1.3B in Q4 but below management's expectations, with Middle East investors described as cautious.
- Mortgage originations decelerated from +53% in Q1 to +8% in Q2 on lower agency lending, and property sales slowed from +39% to +20%.
- Buybacks are expected to taper; management says no significant incremental capital allocation is included in back-half guidance while M&A takes priority.
The thesis is strengthening on the record: two consecutive guidance raises with a disclosed decomposition, all four segments growing segment operating profit by more than 25%, and a rare quantified multi-year data-center forecast. The offsets are real — the AI-linked revenue is still a minority of the company and rests on pipelines rather than a disclosed backlog. The open question is whether the roughly 25%-for-five-years data-center services claim holds as the build cycle matures.
Earnings Beat
Q2 2026 revenue rose 16% to $11.2B, and gross margin was 18.6% on reported figures. Resilient businesses grew 15% and transactional businesses 19%. GAAP EPS was $0.69 and core EPS $1.56, with core EBITDA up 34%. Free cash flow was nearly $1.7B on a trailing-12-month basis.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $11.2B | $10.5B | $9.8B | +15.1% |
| Gross margin | 18.6% | 17.6% | 93.7% | -7510bps |
| EBITDA | $555M | $693M | $556M | −0.2% |
| EPS | $0.69 | $1.07 | $0.71 | −3.2% |
| Data center services revenue | >$700M | n/a | n/a | up nearly 30% |
| Infrastructure services revenue | ~$1.2B | ~$950M | n/a | +>45% |
During this period of significant AI investment, we expect our data center services revenue to remain elevated at about 25% annually for the next five years and then above 15% as the build cycle matures.— CEO, 2026-07-29
Management tone: Management's tone shifted to offense in Q2 2026. The prior call was more defensive on AI disruption and treated infrastructure as one growth area among several; on this call, data centers and infrastructure became the anchor of the forward story, with a rare five-year growth forecast and a 2030 scale target. Management volunteered the soft spots — a building-operations amortization reclassification that flatters reported margin, a buyback taper, and Investment Management fundraising below plan — and declined to time land monetization or M&A conversion, describing both as inherently hard to predict.
Management Guidance
For FY2026, management raised core EPS guidance to $7.80–$7.90 from $7.60–$7.80, equating to 23% growth at the midpoint, and guides more than 20% core EPS growth in Q3 with Q4 likely comparable to last year. It introduced a FY2027 floor of at least +15% core EPS, assuming no material changes to the macroeconomic or interest rate environment. It forecasts data-center services revenue at about 25% annually for the next five years and above 15% afterward, and an infrastructure business of roughly $10B revenue and more than $1B EBITDA by 2030. Free-cash-flow conversion is guided near the high end of 75%–85%.
Trajectory
Trailing four-quarter revenue growth averaged 14.6%, and the code-computed trajectory signal reads accelerating. The quarterly path is uneven — $10.3B in Q3 2025, $11.6B in Q4 2025, $10.5B in Q1 2026 and $11.2B in Q2 2026 — because development-land profits and transactional volumes land lumpily; Q1 2026 benefited from earlier-than-anticipated data-center land-sale profits while Q2 had none. Margin is the softer part: gross margin held roughly steady across the trailing four quarters while operating margin fell about 140 basis points and EBITDA margin about 110 basis points. Part of the reported segment-margin improvement comes from a fleet-amortization reclassification that is net-income-neutral.
The Model
The model projects FY+1 revenue of $46,450M and EBITDA of $3,886M, an 8.4% EBITDA margin. For FY+2 it projects revenue of $51,350M and EBITDA of $4,491M, an 8.7% margin. The near-term case is anchored by the raised FY2026 core earnings guide, the resilient services contract base and the roughly $1.2B quarterly infrastructure run-rate; the FY+2 step-up depends on infrastructure and data-center services compounding while the transactional block keeps recovering.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $40.5B | $46.5B | $51.4B |
| YoY Growth | — | +14.5% | +10.5% |
| EBITDA | $2.1B | $3.9B | $4.5B |
| EBITDA Margin | 5.1% | 8.4% | 8.7% |
Projections are the median of 4 independent model runs. The model’s revenue sits 0.9% above analyst consensus.
For FY2026, management raised core EPS guidance to $7.80–$7.90 from $7.60–$7.80, equating to 23% growth at the midpoint, and guides more than 20% core EPS growth in Q3 with Q4 likely comparable to last year. It introduced a FY2027 floor of at least +15% core EPS, assuming no material changes to the macroeconomic or interest rate environment. It forecasts data-center services revenue at about 25% annually for the next five years and above 15% afterward, and an infrastructure business of roughly $10B revenue and more than $1B EBITDA by 2030. Free-cash-flow conversion is guided near the high end of 75%–85%.
What Could Go Right — and Wrong
- Data-center services keeps compounding at or above the roughly 25% management forecasts, turning a multi-year aspiration into a demonstrated track record.
- The stated binding constraint — labour — eases as the recruit/train/place model scales, lifting the ceiling on how fast infrastructure demand converts to revenue.
- Building operations and project management keep delivering the low-double-digit segment profit growth management guides for 2027 on a growing base.
- The land bank converts at the rate it is being replenished, realizing part of the roughly $900M of embedded development gains.
- Investment Management fundraising recovers above the $1.6B raised in Q2 as cautious Middle East investors return.
- Hyperscaler capital spending pauses or digests, and data-center services growth falls below the roughly 25% annual claim.
- Labour, power, water and entitlement constraints prove binding rather than transitory, pushing revenue conversion into later periods than guided.
- The transactional block rolls over: mortgage originations already fell from +53% in Q1 to +8% in Q2 and property sales from +39% to +20%.
- Investment Management fundraising stays below plan while Real Estate Investments goes roughly flat in 2027 against a strong 2026.
- Cost and financing headwinds build: depreciation and amortization stepped up on Pearce intangibles, and buybacks are tapering.
Looking Ahead
Over the next 12 months the first test is whether the second half delivers the back-weighted guide. Q3 2026 must clear more than 20% core EPS growth and convert some of the land-bank sites management says are earmarked for sale; Q4 then compares against a year with significant data-center land profits. After that, the questions are whether data-center services holds near 25% growth, whether Investment Management fundraising recovers, and whether the newly introduced FY2027 floor of at least +15% core EPS survives Advisory's expected moderation.
- Q3 2026Q3 core EPS print — Tests management's guide of more than 20% core EPS growth.
- Q3 2026Land-bank sales — Sites from the ~30-site bank earmarked to sell in the quarter.
- Q4 2026Q4 land-profit comp — Core EPS guided comparable to a quarter with big land profits.
- FY2027FY2027 guide and results — Tests the newly introduced floor of at least +15% core EPS.
- By 2030Infrastructure scale target — ~$10B infrastructure revenue and >$1B EBITDA targeted.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $35.8B | $40.5B | $43.6B | +13.4% |
| Gross Margin | 19.4% | 36.7% | 17.7% | +1,728bps |
| EBITDA | $2.2B | $2.1B | $2.3B | -3.8% |
| EBITDA Margin | 6.0% | 5.1% | 5.2% | 91bps |
| Net Income | $968M | $1.2B | $1.3B | +19.5% |
| Free Cash Flow | $1.5B | $1.2B | $938M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)17.7%
- EBITDA Margin (TTM)5.2%
- Net Margin (TTM)3.0%
- ROIC7.1%
- FCF Conversion41.3%
- SBC / Revenue0.5%
The Company
CBRE describes itself in its 10-K as the world's largest commercial real estate services and investments firm, based on 2025 revenue, and says it is a global market leader in most of its business lines. Clients in 2025 included nearly 90% of Fortune 100 companies and many of the world's largest institutional real estate investors. It advises occupiers and investors, manages and operates buildings, runs projects, and develops and invests in real estate. Its fastest-growing work is infrastructure and data centers: project management for data-center construction, critical-infrastructure operations and maintenance, data-center leasing and brokerage, and land acquisition and entitlement.
The company runs four reporting segments. Building Operations & Experience was established in 2025, with prior periods recast, and holds enterprise and local facilities management, property management and digital infrastructure services. Project Management runs through majority-owned Turner & Townsend, acquired in 2021. Advisory Services covers leasing, capital markets, loan servicing and valuation, and Real Estate Investments contains investment management and real estate development through Trammell Crow. In Q1 2026, BOE was $6,491M of $10,527M consolidated revenue, Advisory $2,024M, Project Management $1,838M and REI $199M. CBRE operates in more than 100 countries; its 10-K 'plants' are offices — 280 in EMEA and 154 in Asia Pacific — not factories.
Business Segments
Competitive Landscape
CBRE's 10-K describes it as the world's largest commercial real estate services and investments firm by 2025 revenue and says it is a global market leader in most of its business lines. The record shows the competitive set on two sides: brokerage and advisory rivals, including Newmark, and site-based and data-center facility-management competitors EMCOR and ABM. Management argues its scale, ability to invest and global footprint are the moat in hyperscaler relationships.
- Cushman & Wakefield (CWK)Listed as a brokerage and advisory competitor; a documented quote has Cushman naming CBRE among its competitors. Its data-center-related revenue grew 83% year to date.
- Newmark (NMRK)Listed as a brokerage and advisory competitor; a documented quote has Newmark naming CBRE among overlapping-competency competitors. Newmark moved to #2 in U.S. investment sales.
- EMCOR (EME)Listed as a site-based facility-management competitor; a documented quote has EMCOR naming CBRE in its commercial and government site-based divisions. EMCOR's RPOs rose 44%.
- Named in the supply-chain dataset; not discussed.
- Colliers (CIGI)Named in the supply-chain dataset; not discussed.
Supply Chain
CBRE sits on both sides of the data-center chain: it sells services into data centers — program management, operations, leasing, entitlement — and buys data-center equipment and services. Most links in the record are inferred rather than documented.
More on CBRE: Earnings recap