Law Firm Office Leasing Jumps 46% in the First Quarter

Earlier this year Cadwalader, Wickersham & Taft renewed 225,000 square feet at their headquarters at 200 Liberty Street in New York City. The firm chose to stay in place but contracted by roughly 34.7%, or 120,000 square feet, giving up several floors. Another renewal in the first quarter was Katten Muchin Rosenman for 204,000 square feet at their headquarters at 525 W Monroe Street in Chicago. They also reduced their footprint, though not as drastically as Cadwalader, by returning 7.3% or 16,000 square feet of space to their landlord. 

These two deals, the largest for the quarter despite the retraction of space, helped to deliver the strongest start to the year for the legal sector since before the pandemic, according to Savills. For the first quarter law firm leasing totaled 1.6 million square feet, it reported – a 45.5% jump from 2022’s fourth quarter of 1.1 million square feet, bringing the sector closer to the typical leasing volume of about 1.4 million square feet. 

Before this quarter, leasing activity among law firms had slowed with many putting off major decisions to see what the economy would bring.

It is a welcome change for office landlords, with 65.4% of law firms renewing space in 2023. About three-fourths of leases were for 100,000 square feet or more, most of that for law firm headquarter offices, which is typically larger than auxiliary or non-headquarter spaces.

 Another large lease of note was New York’s Wilson Sonsini Goodrich & Rosati, which relocated to 31 W. 52nd Street, taking 132,502 square feet. That firm has long been known for its work for technology stars. Other New York City firms were also active in leasing activity, claiming almost one-third or 29.4% of all transactions greater than 20,000 square feet. 

Meanwhile law firms in Boston, Washington, D.C., Houston, Los Angeles and San Francisco took a mix of strategies from relocation to expansion and even restructuring, proving there’s no single tactic that works for any of these legal giants.

Savills also noted that landlords convinced many firms to stay by using such traditional bait as offering building upgrades and concessions. For example, Tishman Speyer got Katten to stay by adding two new outdoor terraces. Concessions, while present, may be running their course, however.

But widespread growth appears unlikely to be in the cards. Many firms are expected to resist entering new markets this year due to a slowdown in revenue growth and firms looking to scale back their costs, particularly if there’s an overall economic downturn.