$62M Law Firm Lease Reflects Market Trend

LOS ANGELES-The law firm of Greenberg Glusker Fields Claman & Machtinger has signed a 15-year renewal for 61,806 square feet of office space at 1900 Avenue of the Stars in Century City in a deal that reflects an active leasing market for law firm space in the Los Angeles area despite the dissolutions of some firms and layoffs at others in response to the economic downturn. In some cases, out-of-town law firms are establishing an immediate presence in L.A. by hiring attorneys from firms that have dissolved, while in other cases new or existing firms are expanding within the market, as in Seyfarth Shaw’s recent lease of 55,000 square feet in Downtown L.A. for its second Los Angeles office.

Gary Weiss of Los Angeles-based Madison Partners, who represented Greenberg Glusker along with Clay Hammerstein of CB Richard Ellis in Los Angeles, tells GlobeSt.com that although Greenberg Glusker’s renewal at 1900 Avenue of the Stars is for the same amount of space that it has been leasing, the deal resembles an expansion in many respects and demonstrates the law firm’s confidence both in its own business and in the L.A. market. For example, Weiss points out, Greenberg Glusker has been subleasing space to other tenants as a way of warehousing the space for future use, but it is now going to return that subleased space to the building owner and take an equal amount of space in a reconfiguration that will be more efficient.

In addition, Weiss explains that Greenberg Glusker, which has been using between 10,000 and 15,000 square feet of space for its legal library, will be converting that space into attorneys’ offices and conference rooms. “A lot of law firms today are coming off of 10- and 15-year leases that have tenant improvements and office layouts that are 10 to 15 years old,” Weiss says. But with the computerization of legal research, many of the firms no longer see the need for shelves full of books and are reconfiguring their space to greatly reduce the amount dedicated to law libraries.

Weiss adds that the 15-year commitment by Greenberg Glusker, like other leases signed by law firms in L.A., stand in contrast to the trends in much of the general office market. “Most office tenants are not leasing any more space than they absolutely need right away,” he says, and most of them are signing short-term deals because of their uncertainty about their businesses and the economy.

Dennis B. Ellman, partner and chair of Greenberg Glusker’s Real Estate Group, comments that the firm’s new lease with Century City-based building owner TOPA Equities Ltd. demonstrates a commitment to the future by the 50-year-old law firm. Seyfarth Shaw demonstrated a similar commitment recently when the firm signed a lease for 55,000 square feet in Downtown Los Angeles at Brookfield Properties Corp.’s 1.8-million-square-foot Bank of America Plaza, where Seyfarth plans to expand in the spring. The firm, which last fall added five real estate lawyers from the Downtown L.A. office of Sonnenschein Nath & Rosenthal, has been in L.A. since 1974 and says the new Downtown office will complement its existing office in Century City.

When Seyfarth Shaw hired the five new attorneys, it said the new lawyers would broaden and deepen its capabilities in workouts, foreclosures and other specialties for which demand is increasing as a result of changing market and economic conditions. Also last fall, Greenberg Glusker said that it had formed a new restructuring and loan workout group to specialize in “opportunities that arise in connection with the acquisition, disposition, restructuring, repositioning and workout of distressed real estate assets.”

In another move related to the economy, the law firm of McKenna Long & Aldridge recently expanded its real estate litigation practice with the addition of 17 lawyers formerly with Los Angeles-based Brown Winfield Canzoneri Abram Inc. The Brown Winfield attorneys will expand the capabilities of McKenna Long & Aldridge in terms of providing legal services that will be in demand as a result of the economic stimulus bill’s emphasis on “shovel-ready infrastructure projects that require our joint expertise,” the law firm said.

The same downturn that is generating this demand for legal services and expansions of some offices, of course, is responsible for the dissolutions and downsizing at other firms. According to the National Law Journal, a sister publication of GlobeSt.com through parent company Incisivemedia.com, at least eight law firms have opened offices in the Los Angeles area since the start of the recession and many of them have done so by hiring lawyers who became available because of breakups or other changes wrought by the recession.

The Journal points out that more new law firms have opened here since the beginning of the downturn than in any other major metropolitan region in the nation. The new firms are keeping office space filled that otherwise would be vacant, while existing firms like Greenberg Glusker and Seyfarth Shaw are signing some of the largest office leases in Los Angeles.