Lendlease to Lay Off 10 Percent of Its Staff

Lendlease (LLC.AX) will lay off 10 percent of its global staff. Seven hundred forty people will lose their jobs as the Australian globally integrated real estate group looks to achieve between $80 million and $100 million in cost savings. 

Lendlease currently has 7,800 employees in Australia, China, Italy, Japan, Malaysia, Singapore, the UK, and the US. The company will lay off 5% of its Australian staff and the other 5% of its international personnel in the following months. 

CEO Tony Lombardo sent an internal memo to the staff, explaining the layoffs as a strategy for Lendlease to "shift to being an investment-led company with a leaner operating structure, where resources are shared and not replicated in the market." 

"The headcount reduction will not impact Lendlease's project delivery or its targets for work in progress, completions, and funds under management," a company spokesperson told Reuters. 

At the end of June, Lendlease froze hires "due to the tough conditions for property developers and concerns about rising costs across the building industry."

Moreover, the cuts reflect challenging times for the commercial real estate sector, where office vacancies are at the highest levels in 30 years. According to National Association of Realtors Chief Economist Lawrence Yun, continual rises in rates will, in part, cause commercial real estate transaction volumes to decline by 27% overall in 2023.

Statista, however, predicts the global value of commercial real estate to increase in 2023 to reach US$115.00tn. Moreover, commercial real estate will show an annual growth rate (CAGR 2023-2028) of 3.03%, resulting in a market volume of US$133.50tn by 2028. Several factors drive this growth, including new trends, like the rise of co-working spaces and increased remote work, with many companies looking for smaller, more flexible office spaces.

This is the second cut since Lombardo took over in 2021, when he laid off 400 people, mainly from the Australian roster, and achieved $170 million in cost savings.  

Today, Lendlease's shares dropped 4.91%, from $8.58 to $8.13.