K Street at Connecticut

WASHINGTON, DC-It’s official. Pillsbury Winthrop Shaw Pittman has inked deal to move its DC offices to 1200 17th St. NW, a 168,000-square foot building under development by Akridge and its investment partner Mitsui Fudosan America. It will be taking 105,000 square feet in January of 2015.

On one hand the lease is good news for those few developers willing to build on spec – as Akridge and Mitsui are doing at 1200 17th St., NW. On the other, the lease is confirms a trend that became apparent with the financial crash and shows no sign of reversing even as the economy improves: law firms are scaling back their real estate footprint, either because they are scaling back themselves or because they are learning to use space more efficiently, or both.

In short, this deal will result in negative net absorption for the market as Pillsbury currently occupies 200,000 square feet at 2300 N St., NW.

“Look at what Pillsbury is doing,” Cassidy Turley’s Art Santry tells GlobeSt.com. “They have gone from a having a bigger footprint to a smaller one. That is the trend now – nine times out of a ten when a law firm moves it is moving from a larger presence to a smaller one.”

This trend is being fueled by a number of factors. The square footage space per attorney is shrinking, in some cases as aggressively as 550 square feet per attorney. Digital content is replacing libraries and electronic media is replacing storage space. A building like the one Pillsbury is leaving, Santry says, could be seen as functionally obsolete with its large floor plates. Why? Because the larger floorplates means more internal space without windows– space that used to be used as storage space and libraries.

“The space that Pillsbury will be vacating at 2300 N Street, NW is a prime example of a building that is no longer optimally suited for the way law firms operate today,” Jones Lang LaSalle‘s Research Director Scott Homa, told GlobeSt.com.

It is not just less space for files and law libraries, he says—the attorney-to-administrative assistant ratios are rising from 2-to-1 to as many as 6-to-1. “As a result, buildings like 2300 N Street, NW – which has a 38,000 square foot floor plate and dark interior space – are becoming functionally obsolete, and are losing out to new buildings with smaller, more-efficient floor plates like 1200 17th Street, NW, which provide a better window line and a brighter interior.”

Most new law firm relocations result in space reductions of around 25%, but based on Pillsbury’s strategy to also shift their back-office functions to another city, they’re cutting even more aggressively than the norm, Homa says.

Update to this story: Lois Zambo, David Lipson and Tyler Bensten of Studley represented Pillsbury. Greg Tomasso and Ben Meisel of Akridge also participated in the negotiations.