Why L.A.’s Law Market Is Growing Rapidly

Technology, media and entertainment industries are among the fastest growing in Los Angeles—but the ancillary needs of those industries are triggering more growth. Specifically, in the legal space. According to a new report from CBRE, Los Angeles is ranked second in the nation for growth of its lawyer population. From 2015 to 2017, the sector expanded by 11.9%, above the national average of 3%, and second only to Atlanta, which has the fastest growing population of lawyers.

“Los Angeles is seeing substantial growth in the legal sector for a number of reasons. One of the biggest is closely related to the incredible growth in our tech, media and entertainment industries and all the ancillary businesses associated with that. It has also pushed our region’s legal segment to evolve from mostly traditional corporate lawyers into legal experts for start-ups and tech, media and entertainment companies,” Kevin Bender, EVP at CBRE, tells GlobeSt.com. “Los Angeles continues to be a driver of top legal talent, which is a huge contributor to the expansion of legal services. Another reason is that for many years, law firms delayed hiring, but now they are catching up in lockstep with our strong economy and wanting to keep the talent here in Southern California to meet the demand.”

This growth has had a positive impact on the real estate market. From the third quarter 2017 to the second quarter 2018, Los Angeles has had 711,532 square feet of law firm space transactions. Of those transactions, 16.9% were expansions, 47% were renewals and 5% were new-to-market deals. “Los Angeles has been labeled a growth market in the report for its quality balance of law firm support and supply cost,” says Bender. “We are still seeing law firms occupy space in Downtown Los Angeles and Century City, but now several firms are searching for satellite offices within Santa Monica and Playa Vista where a lot of the tech and media growth is occurring. Our research shows that currently nineteen of Los Angeles’ largest 75 firms have secondary offices in either downtown or West LA. No matter where they have moved, proximity to their growing client base is key.”

Law firms tend to use more traditional office space, but Bender says there will be demand for the whole spectrum of office space, from traditional spaces to creative and co-working models. “Law firms need to find the balance of technologically savvy workspaces and the importance of private space,” he explains. “But increasingly, image is playing a bigger role in the legal space as well as these firms are trying to better relate and appeal to their younger workers and their changing and evolving universe of clients, which in this market can include a lot of tech, media and entertainment companies.”

While the growth in the legal industry has had a position impact on office leasing, industries are continue to right size and adopt more efficient workspace strategies. “We continue to expect growth within the legal industry, maybe not always in square footage but in company growth and talent,” says Bender. “We will see more and more law firms change the way they work, which in many cases has reduced their demand for space. New technology has allowed law firms to work more efficiently, enabling lawyers to work from virtually anywhere. The 31.1% of contractions mentioned in the report stem from lawyers becoming more modern and efficient in their use of space.”