Law Firm Lease Activity Dipped to 1.1M SF in Q1
L.A. tops NYC, Chicago and Washington DC in leasing volume as 66% percent of US transactions involved relocations, Savills says.
Leasing activity among US law firms dipped to 1.1 million SF in Q1 2022 after ending 2021 with two consecutive quarters of 1.5M SF in leasing volume, according to the latest report from Savills.
“While still well above the lows seen earlier in the pandemic, leasing volume within the legal sector was relatively tepid compared to the last two quarters,” Savills said.
Since 2018, the five-year average for law firm leasing volume has been 1.4M SF. Law firm lease volume peaked in 2019 at about 2.8M SF, then plunged to 1.5M SF in Q1 2020; the lease volume bottomed out in Q2 2021 at about 800K SF.
According to Savills, none of the law firm office leases signed in Q1 involved space exceeding 100K SF.
The largest lease during the first quarter was a renewal from Foley & Lardner LLP in Washington DC for 95K SF, which Savills said was less than half the size of the footprint the firm occupied when it originally leased space in the same building 20 years ago.
The Savills US Law Firm Activity Report noted that 66% of all leases in Q1 involved relocations.
“Relocations dropped off during the pandemic when firms shifted heavily towards renewals. As pandemic uncertainty recedes, law firms are becoming increasingly more confident about taking advantage of soft market conditions and relocating, often to newer, higher-quality spaces,” Savills said.
More than a quarter of the law firm leasing activity nationwide, measured in square footage, was in Los Angeles, which recorded seven lease transactions.
Los Angeles leapfrogged New York, Chicago and Washington DC, the top three markets, respectively, in Savills 2020 and 2021 law firm leasing activity reports. Savills report covers transactions of over 20K SF.
The Saville report noted that occupancy rates for law offices continue to outpace the national average by a healthy margin, based on Kastle Systems’ entry-card swipe barometer. In its March 31 barometer report, Kastle said law firm occupancy is averaging 71%, compared to 43% for all other industries.
“As the number of workers returning to (law offices) continues to increase, leasing activity will likely follow suit. As activity rises, options are beginning to dwindle in prime properties with key talent locations, and best-in-class space is seeing an increase in pricing,” the report said.