DC Law Firms Favor Relocation Over Renewals

Washington, DC–A new CBRE’s report finds DC law firms have been choosing relocation over lease renewals this year.

“Relocation remains a clear preference for many large firms in the legal sector as it provides the best opportunity to both rebrand and right-size,” said Lou Christopher, Vice Chairman of CBRE. “As these firms move to brand new, higher-quality space, they’re able to shrink their footprints by an average of 20%. A lease renewal, which may include renovations to upgrade the space, can be disruptive to employees and the work environment.”

According to the CBRE report “Legal Sector Trends in Washington, DC,” law firms occupy 52% of all leased trophy space and continue to look for the highest quality space, primarily new construction but also redeveloped properties. Six law firms, over the past two years, have pre-leased a total of 854,000 square feet, all on the top floors of new buildings, with 967,000 square feet of Trophy/A+ space remaining available on lower floors.

“With such a soft office market, DC area law firms are seizing the opportunity to move from the older buildings into newer buildings located in vibrant neighborhoods, close to the metro and even close to where some of the partners live,” Christopher tells GlobeSt.com. “Landlords, eager to lease, are offering a variety of concessions and free rent to entice quality tenants.”

Some of the building amenities which attract law firms to these newer buildings include floor-to-ceiling windows, rooftop conference rooms, rooftop fitness centers, multipurpose rooms, lounge areas, coffee stations, and collaborative spaces.

“Firms are seeking brighter, open and more flexible spaces where partners and admins can see other in an open space and move to a multipurpose room or a lounge area if privacy is needed. If people see each other talking on the phone or focusing on creating a presentation, they tend to be just as or more productive as well,” says Christopher.

Another reason law firms find it important to move is that relocating allows them the opportunity to reposition their brand thus attracting and retaining top employees who appreciate their firm’s geographic location and the myriad of building amenities, says the CBRE report. In the “lawyer capital of the world,” D.C. is home to 53,778 resident active attorneys. These statistics, provided by the American Bar Association, equates to one attorney for 10 private sector workers, thus exceeding the national average of one attorney for every 96 workers. Recruiting top talent, as a result, is fierce and competitive and if the new and shiny real estate plays a significant factor in candidates accepting an offer, law firms are working to make it happen.

With landlords offering maximum concession dollars, they are looking for a longer lease commitment. Whereas larger law firms, who are utilizing approximately 50,000 square feet, used to sign 10-year leases, they are now agreeing to 15-year leases. Smaller law firms, using less than 50,000 square feet, are now signing 10-year lease agreements instead of 5-year commitments.

As we move into 2019, the trend of law firms moving from older products with less amenities to the new assets will continue.

“The reality is law firms want those 9-foot ceilings, rooftop spaces and open areas and so owners, looking to achieving the highest rents, will deliver,” says Christopher. “There’s enough capital out there to keep constructing or redeveloping buildings as its viewed as a safe investment.”

CBRE Group, Inc., a commercial real estate company, offers a range of services including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.