SAN DIEGO-Today's successful law firms recognize how technologyis reducing their need for office space. From the ever increasingtelecommuting to utilizing the efficiencies created by electronicstorage of pleadings and documents, firms are finding opportunitiesto eliminate wasted office space. So says Colliers International'sRon Miller, member of Colliers' law firm servicesgroup. GlobeSt.com exclusively chatted with Miller on trendsshaping the law industry's usage of office space.

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GlobeSt.com: What significant change have you seenwith San Diego's Law Industry over the last 10years?

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Miller: San Diego's demographics arechanging. In 2000, 95% of the major law firms were doing businessfrom downtown's Central Business District. Today, more than 50% ofthe major law firms are doing business 20 miles north of the SanDiego Courthouse. Being closer to where emerging industries, highand bio-tech companies are located along with proximity to wherepartners live has necessitated establishing offices in the NorthCity West area (UTC and Carmel Valley).

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GlobeSt.com: Which of the larger law firms haverelocated from the CBD and what has been the impact on the officeleasing markets?

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Miller: In Q2 2014 LathamWatkins consolidated their offices into Carmel Valley, thehighest priced class A office building in San Diego, while vacating77,000 square feet at One America Plaza. In 2010, Foley &Lardner relocated to Kilroy Centre Del Mar (Carmel Valley) leavingbehind 31,000 square feet at Emerald Plaza, which has been vacantfor almost four years. McKenna Long also vacated 44,000 square feetin downtown and moved to UTC in 2010.

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GlobeSt.com: Does the Law Industry still requireclose proximity to the San Diego Courthouse and Downtown ingeneral?

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Miller: Yes and no. Many of the largerlaw firms that have their main office in North City West alsomaintain a satellite office in the CBD. Procopio decided to makethe CBD their primary location with 100,000 square feet spread overseveral floors at 525 B St. while adding a 29,000-square-footsatellite office in Carmel Valley. Latham Watkins and McKenna Longboth will continue to maintain a presence downtown with satelliteoffices at One America Plaza.

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GlobeSt.com: What are the biggest opportunities andchallenges facing the Law Industry?

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Miller: Fivetrends that are shapingthe future for law industry's office space usage include:

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> 75% of applications will be in thecloud by 2016

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> 100 billion + mobile devicesglobally by 2015

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> 50% of the workforce will be Gen Y“Millennials” by 2018

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> 80% of the work is highlycollaborative

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> 40% of the workspace is occupied atany given time

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These implications are staggering, especially for law firms, asworkspace decisions also impact the brand and culture of the firm,and its ability to recruit and retain top talent. These trends willalso contribute to reducing the amount of square feet required perattorney.

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GlobeSt.com: Explain any challenges that Law Firmsencounter when relocating their offices? With the high cost of upgraded tenant improvements, landlordsare requesting longer initial lease terms (seven to 10 years) tojustify the upfront cash investment. Furthermore, landlords arerequiring additional security whether it is in the form of largersecurity deposits or other means of securitizing the lease. Thisburden must be worked out ahead of time as law firms' dynamics areconstantly changing with the ownership structure and who will beleft “holding the bag”at the end of the day.

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GlobeSt.com: With San Diego's class A officemarket improving, can law firms still find good leasingopportunities?

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Miller: Opportunities and favorablelease terms still exist. In mid-2015, The Irvine Co.will completeOne La Jolla Center, a new 300,000-square-foot class A office towerin UTC providing first generation space choices in the mid $4.00per square foot per month range.

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However, discounted lease rates can be found as a result ofcompanies that are right-sizing or relocating out of San Diegoleaving high-end second generation space options available in theClass A submarkets. There are sizable sublease options in CarmelValley as Santarus and Trion have placed their respective spaces atKilroy Centre Del Mar on the market. Latham Watkins' former officeat One America Plaza (Downtown) and Cushman Wakefield's formeroffices at Sunroad Corporate Centre (UTC) are both directlyavailable with their respective landlords.

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With an 18% CBD vacancy rate, leasing incentives are stillavailable in Downtown's CBD as Landlords backfill law firm spacefrom companies that have merged and/or migrated to North City West. By moving into previously built-out space, law firms canavoid Landlord's additional lease securitization normally requiredfor their significant tenant improvement investment. Executive Suite operators are also competing for former law officeswhere densely built-out executive offices lends itself to costeffective solutions with minimizing their tenant improvementinvestment and avoiding unnecessary securitization. Forexample, Premier Executive Suites recently leased Latham Watkins'former offices in the Carmel Valley area.

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.