{"id":1004705223,"date":"2024-03-06T11:32:10","date_gmt":"2024-03-06T19:32:10","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004705223"},"modified":"2024-03-20T05:12:26","modified_gmt":"2024-03-20T13:12:26","slug":"surging-law-firm-leasing-provides-office-sector-bright-spot","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/surging-law-firm-leasing-provides-office-sector-bright-spot\/","title":{"rendered":"Surging Law Firm Leasing Provides Office Sector Bright Spot"},"content":{"rendered":"
\n
\"\"\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
\u201cWhether rightsizing, growing or keeping space \u2018as is,\u2019 firms need to respond to their expiring leases or take advantage of current market conditions,\u201d says Thomas Fulcher, Savills vice chairman, Mid-Atlantic region lead & director.
Image courtesy of Savills<\/em><\/figcaption><\/figure><\/div>\n\n\n

Fourth-quarter leasing by U.S. law firms<\/a> surged to its highest levels since 2019, as velocity rose 45.1 percent in 2023 compared to the previous year, and 2.8 million square feet of space was leased. <\/p>\n\n\n\n

That good office news came from Savills, which analyzed law firm transactions over 20,000 square feet across key markets for its latest U.S. Law Firm Activity Report<\/em><\/a>.<\/em><\/p>\n\n\n\n

The majority of the firms\u201456 percent\u2014chose to stay in place while expansions made up 43.6 percent of relocations and renewals in 2023.<\/p>\n\n\n\n

Last year, 7.8 million square feet of office space was leased by law firms, the highest annual total since 2019, when 8.4 million square feet was taken. The robust final quarter pushed 2023 to the highest post-pandemic quarter recorded but Savills stated consistency played a crucial role throughout the year as leasing activity exceeded 1.5 million square feet each quarter. The average quarterly leasing activity last year was 1.9 million square feet, up by 0.5 million square feet from the 2022 quarterly average of 1.4 million square feet.<\/p>\n\n\n\n

\n\n\n\n

READ ALSO<\/strong>: What Workers Want Now in Office Design<\/a><\/p>\n\n\n\n

\n\n\n\n

\u201cThe timing of real estate transactions is typically driven by lease expirations. During the pandemic, firms held off on negotiating as they waited to see what the future held. Now that many firms\u2019 workplace strategies are becoming clearer, they are making long-term decisions with more and more confidence,\u201d Thomas Fulcher, Savills vice chairman, Mid-Atlantic region lead & director, told Commercial Property Executive<\/em>.<\/p>\n\n\n\n

\"\"\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
Quarterly law firm leasing volume.
Chart courtesy of Savills<\/em><\/figcaption><\/figure>\n\n\n\n

\u201cWhether rightsizing, growing or keeping space \u2018as is,\u2019 firms need to respond to their expiring leases or take advantage of current market conditions,\u201d he said.<\/p>\n\n\n\n

Fulcher said he expects law firm leasing to continue to be strong moving forward.<\/p>\n\n\n\n

\u201cFirms are committing to office space as essential to the long-term health of their organizations and requiring their professionals, some more aggressively than others, to be in the office at least three days per week,\u201d Fulcher told CPE<\/em>. \u201cAt that level of attendance, it is inefficient to give up too much space if everyone who is coming in that amount gets their own office. However, firms continue to push to be more efficient with their space. We are seeing more commonly increased hoteling and doubling up of associates in an office.\u201d<\/p>\n\n\n\n

Stay or go?<\/h2>\n\n\n\n

When it came to deciding on whether to move to new space last year, Savills found a majority of law firms stayed put rather than relocate when it was time to sign new leases. The 2023 statistic was 56 percent stay in place versus 44 percent for relocations\/new leases. That was the highest percentage since the beginning of the pandemic in 2020 when 69.7 percent of firms chose to stay in place versus 30.3 percent relocations\/new leases. In 2022, Savills found 66.1 percent of firms chose to relocate and 33.9 percent stayed in place when signing a lease.<\/p>\n\n\n\n

\"\"\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
Legal Tenants Favor \u201cStay\u201d in 2023.
Chart courtesy of Savills<\/em><\/figcaption><\/figure>\n\n\n\n

\u201cBefore the pandemic, and as recently as 2022, firms showed a strong preference for relocating while upgrading the quality and increasing the efficiency of their space,\u201d the report stated.<\/p>\n\n\n\n

Savills points to several contributing factors for the higher percentage of firms hesitant to move in 2023:<\/p>\n\n\n\n