WASHINGTON, DC—Law firms are rethinking their space needs, not to mention their bottom lines. The upshot, as we all know, is that the days of sprawling offices featuring a generous allowance of per square feet allocated to attorneys and their staff is over.
So why then are local law firms paying rental rates in new leases that are actually higher than the rates they would have paid by staying put? That is what Sherry Cushman, executive managing director and head of Cushman & Wakefield's Legal Sector Advisory Group, says is happening the DC market. And the answer, she goes on to tell us, is actually quite simple—the way law firms view commercial real estate has changed so fundamentally that the rental rate is almost besides the point.
"The large law firms are making decisions about their commercial real estate that are based on how it will impact their business – and future flexibility," she tells GlobeSt.com. If a law firm secures space in a building that promises more flexibility and the type of modern, open-floor space design that will facilitate collaboration and other business practices, then a higher rental rate pays for itself, she explained.
At first glance this seems to be at odds with some of the findings of C&W's second National Legal Sector Benchmark Survey, which C&W conducted in partnership with ALM Legal Intelligence, sister organization to GlobeSt.com.
For example, it noted that its survey found that the survey found that 12% of firms that negotiated a relocation of their lease in the past year relocated into a smaller envelope of space. Only 4% increased in size when they relocated the space. Money, it would seem, was the driving force and to be sure, it is a consideration for the legal sector, which is undergoing a significant makeover.
The major deals law firms have inked in DC in recent months, Cushman says, entailed a higher rental rate.
"But what was essential to them was that the building they were moving to would support their business."
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