Legal Office Leases Up 50% From Recent Lows
60% of firms chose to relocate their offices and 40% stayed in place.
Given that it prefers in-office work, the legal sector was a major driver for leasing in 2023 in what otherwise was a challenging year for office landlords.
Law firms continue to be in the market for new and/or upgraded space, and this activity will create more tightness in top-tier office buildings, according to a new report from Cushman & Wakefield.
Law firm leasing activity is up 50% from the lows in 2020 and 2021, committing 16.9 million square feet (msf).
Cushman & Wakefield said major markets again are most active, with New York City’s 4.3 msf of commitments during the year and more than 1 msf in Washington, DC, and Chicago.
Some 60% of legal occupiers chose to relocate their offices and 40% stayed in place.
Most that relocated did so to expand their office size and most who stayed put maintained their square footage.
Firms that downsized their space by 40% on average while those who expanded increased the size of their office by 24% on average.
Average effective rents rose year-over-year but are still under pre-pandemic levels. New leases had an average effective rent of $52.86 per square foot outside of the 10 major markets and $62.05 within them.
Tenants benefited from higher concessions in 2023 and the average tenant improvement (TI) allowance grew by 43.3% YOY for new leases and 27% YOY for renewals, according to the report.
Net Lease Spring:
Held April 16-17 in NYC, Net Lease Spring will bring together hundreds of dealmakers from the nation’s top firms. This year’s program will feature 5.5 hours of face-to-face networking and over 5 hours of content focused on micro and macro trends for 2024, being resilient through market volatility, how to serve your corporate tenant clients and much more! Learn more or register here.
Multifamily Spring:
Multifamily Spring is coming to New York City this April 18. This year’s program will bring together the industry’s most influential and knowledgeable real estate executives from the multifamily sector for 5 hours of face-to-face networking and over 5.5 hours of can’t miss sessions. Learn more or register here.