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NEW YORK CITY-There’s a shifting dynamic taking place in the relationship between brokers and owners and their law-firm clientele. That was the prime message emanating this morning from the third annual LegalSpace Conference. LegalSpace, which attracted some 200 executives from both sectors to the Roosevelt Hotel, is being co-sponsored by Real Estate Media Network and its parent organization, ALM.

Larry A. Silverstein, president and CEO of Silverstein Properties, keynoted the event with his plan for the rebuilding of Downtown, with a special emphasis on the first new build to reach completion, Seven World Trade Center. Silverstein, beyond promoting the benefits of Lower Manhattan generally and 7 WTC specifically, used the event to take a swipe at the insurance companies with which he has been wrangling in much-publicized court cases since Sept. 11. “Paying large premiums for so many years only gives you the right to sue the insurance companies,” he quipped.

The other key morning event was the Town Hall Meeting: How Law Firms Are Moving into the 21st Century. Issues faced by law tenants today, the speakers agreed, are very different from the demands of even five years ago. Cost concerns, globalization and Sept. 11 have all contributed to that shifting dynamic and figure increasingly in lease negotiations. As Jones Lang LaSalle’s Ray Quartararo indicated, “The money has moved from wood paneling to infrastructure and technology. Law firm tenants expect that the building will have the ability to support communications.”

Nowhere is that need for communication clearer than in the use of cell phones in the office, and panel moderator Mitchell Wallsh of Cadwalader, Wickersham & Taft pegged the cost of removing dead zones in the “hundreds of thousands of dollars.” Quartararo added that more tenants are going for that cost and expecting building owners to foot at least part of that bill.

The look of legal spaces has changed to keep up with the times, the speakers said, to reflect speed and continuity as well as prestige. How well the space reflects these concerns impacts not only the client but retention levels as well, a consideration key to any law firm’s bottom line. In fact, Matthew Barlow of Studley stated that the cost of replacing an associate is roughly $300,000, so a facility’s ability to support high-retention figures heavily in the lease-negotiation process as well.

In an increasingly global market sector, the coastal markets factor heavily in any law firm’s strategy, as Wallsh stated. “New York is the hub to the east and San Francisco is the hub to the west,” he said. For New York brokers, quick access to the airports becomes a factor in space location.That globalization is creating more 24/7 office environments, and even such hidden considerations as HVAC costs factor into the lease. “Over the last 20 years, we have been asked to strip our profits out of our non-legal charges such as copying, Lexis, word processing, etc.,” Wallsh commented. “There’s a parallel for the real estate sector. If your tenant needs 24/7 air, overtime air charges shouldn’t carry huge profits.” That, he said, was one way to make the owner/client relationship more agreeable.

Enhanced security and emergency systems are, of course, a fact of life today, and Quartararo stated that in the years after Sept. 11 tenants are taking a much more serious look at their life-safety systems. “They want to understand,” he said. “Buildings are being upgraded and tenants will consider these upgrades in their negotiations.”

It was clear from these concerns as well as the broader list of issues discussed–from audio-visual demands to emergency backup space–that the real estate conversation between broker and law firm is very different than it once was. The inevitability of the changes that have taken place in the sector are much like the consideration of security–it’s simply a part of doing business today, the speakers said.

If you’re looking for space in New York, said Barlow, “you simply can’t avoid proximity to high-risk areas. Many tenants want to diminish risk, but its all part of living in a major city.”

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