Law firm leasing activity has experienced a strong uptick in demand to start the year, with volume for properties over 20,000 square feet doubling year-over-year to 3.4 million square feet for the first quarter. The pace of leasing demonstrates that demand remains active across a range of markets and firm sizes, according to Savills’ first-quarter US law firm activity report.
Last year was the most robust year since 2019 for law firm leasing, with 10.2 million square feet worth of deals, up 20.5% from the previous peak of 8.4 million square feet in 2019. Over the past four quarters, quarterly leasing volume has averaged three million square feet, a sharp increase from the 1.5 million square foot quarterly average between 2020 and 2023. This trend signals a sustained return to pre-pandemic leasing volumes, said Savills.
Many firms are choosing to stay put as rising build-out costs and a lack of premium space make renewing and restructuring more favorable than relocating, according to Savills. The report revealed that nearly 69% of firms elected to remain in their current space during the first quarter. Those that are relocating are showing a preference for top-tier buildings with high-quality, amenity-rich spaces that support talent retention and client experience.
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Climbing construction costs and lagging tenant improvement allowances are prompting law firms to seek longer lease terms to balance the gap, said Savills. Concessions remain relatively strong, but those allowances usually are not enough to cover full build-out expenses.
“In tighter markets where premium space is limited, firms are locking in longer terms to secure top locations, often negotiating added flexibility into their deals,” said Savills. “In more tenant-friendly markets, firms face similar cost pressures but have more leverage to structure leases with options such as extensions, restructures, or expansion clauses.”
More than 40.4% of renewals and relocations signed during the first quarter were downsizes, up from 33.9% during the first quarter of 2024. Expansions accounted for 30% of lease activity and an additional 30% represented negligible changes in square footage. On average, downsizing firms decreased their footprint by 27,011 square feet while expanding firms grew by an average of 23,770 square feet, according to the report.
The top law firm lease during the first quarter was Mayer Brown’s 330,662 square foot renewal and expansion at 1221 Avenue of the Americas in New York. New York led all markets in law firm lease activity, accounting for 23% of the total legal volume and 17.5% of the number of lease transactions nationally.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
