As indicated in a new report, although the US legal industry reached record-breaking revenue last year in the amount of $81 billion, a number of law firms are now focusing on efficiency in an effort to define office locations and layouts. Simply put, to ensure that today’s offices remain practical well into the future, the legal sector is using development and real estate strategies coupled with creative space.
To accomplish this, law firms are becoming smarter and more accepting of innovative opportunities within location and office space strategy. Keep in mind that law firms still worry about cost, but for the current market, they have the chance to be innovative and prepare for the needs of the future by going with smart design.
At one time, offices had massive interior space for staff and support functions, but this has changed. Another change involves residing in the core central business district. More and more, law firms are choosing prestigious office towers and moving outside of core areas. Without options, and having the desire to create a superior office experience for millennial hires, law firms are settling into locations outside traditional city markets.
Even though there is little space available in core business districts, leasing activity within the big four law firm markets, including Los Angeles, New York City, Washington DC, and Chicago, is on the rise. Combined, these markets posted leasing activity of 4.3 million square feet, which equates to more than 50 percent of the national total for last year. The buildings and neighborhoods in which law firms are moving solidify a definite shift.
Away from Mainstream
Two areas in particular have seen an influx of law firm tenants. Hudson Yard in New York and Mount Vernon Triangle in Washington DC are attracting law firms that at one time resided in downtown locations.
As a result, office vacancy for Class A space downtown has decreased significantly. At the same time, rents for other properties in which the law firm market is moving have increased 2.5 times. With low supply for trophy assets, rents spiked to $57.97 per square foot for skyline markets, with an anticipated increase of 18.1 percent by the end of this year.
The bottom line is that law firms around the country are once again competing for talent. As part of the hiring strategy, these firms are choosing locations outside of the more conventional 9-to-5 downtown locations. In addition, law firms are adopting live-work-play environments that millennials find most appealing.
Whether moving to a new development or existing facility, a large number of new tenants are investing in workplace improvements. As revenue for law firms continues to climb, there is more capital for modernizing office space, including better layouts and high-tech features.
Traditional office space previously used by law firms is outdated. Because of advanced technology, law firms no longer need massive law libraries or oversized file rooms. Even support staff ratios have declined. Because of this, and now that law firms are once again making money, it is the right time to come up with creative solutions for both building and location.
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