Law firm leasing dips amid industry's revamped office plans - Reuters.com
The Let Life Tower (L) and Chrysler Building are seen out the windows from the 54th floor of the 77 story One Vanderbilt office tower in midtown Manhattan. REUTERS/Mike Segar
(Reuters) - Law firm office leasing volume decreased across major U.S. markets in the first quarter of 2022, down to 1.1 million square feet from over 1.5 million the previous two quarters, according to a Wednesday report by commercial real estate brokerage Savills Inc.
Data in the report from Savills, which tracked law firm leases over 20,000 square feet, shows that an apparent leasing rebound for firms in Q3 of 2021, after diminished activity due to COVID-19, has not lasted.
The report called Q1 leasing volume for 2022 "relatively tepid," though it also said the pace of leasing tends to slow somewhat at the start of the new year.
The latest leasing dip comes as law firms have had to reconsider their space needs, which have shifted due to the pandemic. Many are bringing lawyers and staff back to the office this spring, but on a hybrid basis.
Many law firms rethinking their spaces appear to favor relocating offices over renewing leases. In the first quarter, 66% of firm leases signed were relocations by square footage, Savills said.
Pandemic-related "softness" in the markets has given commercial tenants "additional leverage" in negotiating better deals for upgraded space, said Devon Munos, a Savills research director and an author of the report.
In looking to get employees back to the office, firms are seeking "high-quality space with amenities," so they can "earn their employees' commute," Munos said.
During the height of the pandemic, in contrast, law firms and companies uncertain about the future may have chosen to simply renew a lease, at least in the short term, she said.
At the same time, there weren't any law firms in the first quarter that signed a lease for more than 100,000 square feet, and there may be fewer leases that cross that line going forward, according to Savills.
Munos said that law firms began cutting down on their "square-foot-per-attorney ratio" over the past two decades, a trend then "amplified" by COVID-19.
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Sara Merken reports on privacy and data security, as well as the business of law, including legal innovation and key players in the legal services industry. Reach her at [email protected]
source: https://www.reuters.com/legal/legalindustry/law-firm-leasing-dips-amid-industrys-revamped-office-plans-2022-05-04/
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