Law firms are a bright spot in a dire office leasing market

Thought leader Presented by The Counselors of Real Estate

By Kelsi Maree Borland

June 26, 2024 at 03:45

Law firms are actively leasing space and boosting office leasing activity at a time when market demand has weakened.

Law firms they have a history to back it up office market. During the creative office revolution, law firms provided a lifeline to traditional office owners, and amid today’s office market correction, law firms remain avid users of office space.

From the adoption of hybrid work styles to the retirement of the corner office mentality, they stand as an example of how the office market will evolve, shall we say. Raymond TrevisanCRE, executive executive director with Cushman and Wakefield and a member of Real estate advisorsand Anthony DellaPelleCRE, the global president of Real Estate Advisors, two law firm leasing experts.

Law firms are the center of the office leasing business

Law firms are voraciously leasing office space, even as demand for US office space has fallen sharply. According to research from Cushman & Wakefield, law firms accounted for 7.2% of office leasing activity in major markets, and firms committed to creating 3.2 million square feet of space in the first quarter of of the year. Activity exceeds leasing activity for the sector in Q19 and 1Q21 and puts law firms on track for another strong year of leasing activity.

“The legal sector has really been a bright spot in the office market over the past few years,” says Trevisan. “From 2022, the percentage of firms choosing to increase their space has increased, with firms moving into new offices rather than renovating.”

The law firm office relocation trend has been beneficial for office landlords keen to secure tenants amid a growing supply of vacant space – and firms have benefited from having ample options for new premises at attractive rental rates in many markets. According to Trevisan, as one of the few sectors that is expanding rather than contracting, law firms have more leverage in lease negotiations.

Redefining office use

Despite the impressive office rental display, law firm office use is evolving. Like the rest of corporate America, most large firms have adopted a hybrid work schedule with lawyers and office staff three days a week, and instead of large corner offices, law firm footprints typically have smaller partner offices.

While most firms see hybrid work as important for recruiting and retaining talent — especially among young lawyers — DellaPelle says law firms are unlikely to increase remote work beyond two days a week. “Most law firms have found that they are more efficient, productive and successful in person,” he says. “We work better and serve our customers better.”

However, in many ways, the space needs of law firms are growing. DellaPelle notes that law firms are opting for offices with ample common spaces for collaboration, client meetings and large staff meetings. With the adoption of technology and digitization, law firms also need less space for files and resources and less space for support staff. As a result, DellaPelle and Trevisan expect law firm leasing activity to remain strong through 2025 and beyond.

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