Arends: “Law firms are definitely looking at their human capital as a way to bring revenue and wealth to the bottom line.” Arends: “Law firms are definitely looking at their human capital as a way to bring revenue and wealth to the bottom line.”

CHICAGO—Like the traditional office sector, law firms are beginning to see the value in collaborative space, food amenities and long-term leases that allow them to amortize the capital expenses of modernizing their space, Colliers International’s Daniel Arends, a principal in the firm’s Chicago-office, and Colin Scarlett, EVP in the firm’s Vancouver office, tell GlobeSt.com. We spoke with Arends and Scarlett, who lead Colliers’ specialized Law Firm Services Group, just as its latest research report was released, about how law firms are viewing their space and the latest emerging real estate trends.

GlobeSt.com: How are law firms changing the way they look at real estate?

Arends: Law firms are starting to be more engaged in the workplace strategy that other sectors are utilizing, as the role of culture is gaining importance in law firms. They used to be more focused on efficiencies gained through raw numbers, but now they are looking at ways to obtain efficiency through culture. They are definitely looking at their human capital as a way to bring revenue and wealth to the bottom line.

Scarlett: Traditionally, law firms have looked at office space as a line item on their expense sheet. But now they’re looking at office space as an asset; they’re looking to leverage it and create some talent acquisition and branding strategies through their real estate.

GlobeSt.com: Which amenities are law-firm tenants most interested in for their office space now?

Scarlett: Within their space, amenities tend to come from what they’re trying to solve for, and these days it’s knowledge transfer and cross-selling practice groups. This is typically achieved through collaboration spaces like cafés, which bring people out of their offices into a central area for direct interaction. You have the corporate commercial lawyer or attorney who could potentially drive business to a litigator, but they need the physical space to do that. So, law firms are thinking about that from an amenity perspective, trying to solve for recruitment and retention.

From the building, firms are looking for bike facilities, showers, fitness facilities and the ability to provide really interesting food amenities to help with recruitment and retention. Rather than a McDonalds or 7-Eleven, they’re looking for really unique and healthy food options in a great environment.

Arends: I’ve seen this in buildings that have seven or eight different vendors. It resembles more of a market than anything else. There’s a broad experience of food options, plus a ton of Wi-Fi options. It seems every major building in Chicago has Wi-Fi lounges, which act as alternative spaces to work and meet.

Scarlett: "There’s a huge emphasis on margins, so law firms are looking at the space itself to help reduce expenses and make money." Scarlett: “There’s a huge emphasis on margins, so law firms are looking at the space itself to help reduce expenses and make money.”

GlobeSt.com: What other law-firm trends are emerging?

Arends: You probably only see about 5% of North American law firms using an open floor plan. They still primarily want private offices, but more firms are encouraging collaboration to pick up additional service lines and do more business for their client. There’s a pressure on fees. You might see rental-rate increases of 3% to 4%, but the overall user cost is lower because they’re providing services more efficiently.

Scarlett: Firms are dipping their toes into being open plan. You’re seeing this in London, but it hasn’t really arrived to North America. There’s one Vancouver firm that’s half open plan and half closed offices, with some senior partners and associates in the open plan. This is interesting for a major firm in North America, as they can use the same space at the same cost to solve for knowledge transfer and efficiencies. The cost of construction is so high, and a lot of firms are looking for longer-term leases and more flexibility to amortize the capital expenses of modernizing their space. There’s a huge emphasis on margins, so they’re looking at the space itself to help reduce expenses and make money.

GlobeSt.com: In which US markets are law-firm rents highest? What are the factors causing this?

Scarlett: Simply put, it’s a matter of supply and demand, Economics 101 really. Much like in other sectors, rent is highest in Manhattan and San Francisco. Lots of demand and little supply.

Arends: There’s very little new construction available in those cities. They’re historically the highest, but now it’s been accentuated. The market will continue to get tighter in these major markets.