Q2 Office Leasing for Law Firms Was a Mixed Bag
Activity in the sector did decline year-over-year in the second quarter, but when compared to dips in other industries, the legal profession rode high.
Office leasing among law firms has dropped due to COVID-19, but compared to other sectors its decline has not been that steep, according to a new report by Savills.
Leasing activity in the second quarter among law firms occupying offices of more than 20,000 square feet fell by 31% year-over-year. At the same time, leasing activity in the financial services sector declined 56%; the technology, advertising, media and information sector declined 51%; and co-working, one of the sectors most impacted by work-from-home measures, declined 82% year-over-year, the report stated.
The legal office leasing story, however, is very much a market-to-market one. Washington DC experienced a 47% rise in law firm leasing this year, with two major transactions closing: Mayer Brown renewed 173,000 square feet in the Central Business District while Wiley Rein consolidated from two adjoining buildings to 166,000 square feet at a new trophy location, also in the CBD.
Los Angeles also saw a significant increase in law firm leasing volume into 2020, according to the report, with three firms using over 50,000 square feet. Morgan Lewis and Allen Matkins renewed and expanded in the market, while Pillsbury Winthrop Shaw Pittman downsized and relocated.
Other markets were soft. “San Francisco and New York have shown signs of being more negatively impacted by current circumstances,” the report said. In both cities, availability is on the rise, overall deal volume has declined significantly, and a flood of sublease space has hit the market. San Francisco saw no significant law firm leasing activity in 2020, and New York, which usually leads in law firm demand by volume, saw a 45% decline from H1 2019 to H1 2020.
Only two law firm leases over 100,000 square feet were signed in New York: Allen & Overy renewed 143,000 square feet in Times Square on a short-term basis, canceling plans to relocate due to COVID-19, while McLaughlin & Stern renewed 112,000 square feet in Grand Central. Houston, which faced the double whammy of the Coronavirus and the decline of the oil and gas industry, experienced a whopping 90% drop in law firm leasing activity year-over-year.