So that – so the uptick again in March and we’re looking to see what happens in April considering a lot of the negative macro headlines came out during April.
Alex Kramm: Good. Thanks guys.
Operator: Your next question comes from the line of Jade Rahmani with KBW. Please go ahead.
Jade Rahmani : Thank you very much. Do you see a big opportunity in private credits driven by the pullback in the banks? And if so, how do you expect that to manifest in the business? Would you look to acquire any companies? Or retarget brokers on certain key relationships? Just if you could comment on the opportunity in private credit?
Christian Ulbrich: Well, it is correct that traditional lenders are not as active as they have been in the past. And I think it is very likely that this will continue to be the case for the foreseeable future, which obviously offers a lot of opportunity for our non-traditional lenders to come in. What we are actually pretty agnostic to the question where the money is coming from, we have an excellent overview on all the players in the market and are trying to arrange the best debt opportunities for our clients, which are available in the market. So this is for us normal course of business and it doesn’t need any kind of M&A on our side to tap into that market.
Jade Rahmani : In terms of the GSA multi-family business, that’s another area where banks – certain banks are pulling back. Do you see that as presenting opportunity to gain market share?
Christian Ulbrich: We have a very strong market share in that business already and we still believe that there’s room for us to continue to grow. I would be much more optimistic about the lending environment of the multi-family business, because overall, the demographics are in most geographies quite helpful here. And that has demonstrated in the past to be a very, very resistant and resilient business – asset class. And so, I think going back to your previous question, the lending – the changes we see in the lending environment are much more visible in the commercial space than in the multi-family space.
Jade Rahmani : Thanks very much. And finally, just on JLL Technologies that the slowdown in sales was so much surprising. I know the profitability still requires additional scale. But was that different from your prior outlook or was that anticipated? And when do you expect that trend could reverse itself?
Christian Ulbrich: Well, I mentioned it in our third quarter earnings call that we took actions on the sales and marketing expense and that that will have an impact going forward. So what you have seen in the first quarter is, part of that impact. That was also then kind of complemented – unfortunately complemented by some delayed decisions by several large of our technology solution clients who kind of scales back on this feet of new implementations. What is important to notice that the SaaS business within JLL Technologies performed reasonably well. And so, we would expect that this shortage is going on for, maybe one or two more quarters before we obviously pick up again. But more importantly, as we pointed out already last year, we have decided in the current uncertain environment that we are putting probability above top-line growth.
And so, we are very, very focused on the bottom-line. And once we have that business back to this kind of at least a breakeven point, and then we will look at the overall market environment and if the overall market environment is then in the situation, which would encourage us to kind of go stronger on sales and marketing expenses, we will do so and that will then drive stronger top-line growth again.
Jade Rahmani : Thanks very much.
Operator: [Operator Instructions] And your next question comes from the line of Patrick O’Shaughnessy with Raymond James. Please go ahead.
Patrick O’Shaughnessy: Good morning. What are you guys seeing right now in terms of average office lease duration? Are companies more willing to sign longer leases at this point in the cycle?
Karen Brennan: Hi Patrick. Good morning. I’ll give some stats around the US office market, that’s easiest to get the data on that. So, for the first quarter, we didn’t see much movement from the – from what we had last year. The weighted average lease term overall was 7.8 years, which was the same as it was for all of 2023. If you go back, it’s still below pre-pandemic levels on a total basis, if you go back to 2019, the weighted average lease term was 8.6 years. I will say that due to the increased sublease selectivity that I mentioned earlier, so people leasing – taking subleases instead of the direct leases, that is actually pulling down the overall weighted average lease term. And we expect that will continue, while the market works through some of that that space overall.
If I look at the direct, to give you an example, if I look at the direct weighted average lease term that’s 8.3 and the sublease weighted average lease term is 4.3 years, so quite a big difference.
Patrick O’Shaughnessy: Got it. That’s helpful. Thank you. And then, have your changes in financial reporting methodology is due to your communications with the SEC? Have those changes impacted how you’re managing the business in any way? Do you guys still think about margins internally?
Karen Brennan: No, so it hasn’t changed how we manage the business internally or how we think about things. So along with a host of other KPIs, we still use both direct – the fee revenue and adjusted EBITDA margin metrics internally. And our management team is still compensated in part under the adjusted EBITDA margin calculated and we disclosed that in our proxy statement. So we’ll continue to do that. And then, just to highlight that the information needed to calculate both of these is still available in all of our earnings release information that we provide.
Patrick O’Shaughnessy: Terrific. Thank you.
Operator: Your next question comes from the line of Anthony Palone with JP Morgan. Please go ahead.
Anthony Palone : Yes, thanks. I just had a follow-up on JLL Tech. I know it’s not a big revenue line, but when I look at that, I was thinking of like building engines and such where when the client adopted, it’s likely a pretty recurring business. But it was down a bunch and so, I don’t know maybe help me out with that just to understand what was happening there and how to think about it on a go-forward basis?
Christian Ulbrich: Anthony, as I just stated, the JLLT revenue bucket is mostly built up by our SaaS revenue products. One of them is building engines, Keurig was another one. And then, of our Technology Solutions business where we usually help clients by implementing third-party software and service that. And that third-party software business, that declined this quarter quite significantly for the two reasons I stated. We reduced our sales and marketing teams as stated in the third quarter call last year and we had some delays in decision-making from clients for new assignments. On the SaaS business, that has been relatively steady this quarter. You mentioned building engines, building engines is very often connected to transactions.
