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Modest growth expected as law firm contractions begin to slow


Law firms are a key sector in the District of Columbia office market.  Not only do law firms pay the highest rents, they also comprise over a third of the overall tenant base in the core downtown markets of the CBD and the East End, occupying nearly as much space as the federal government with other non-law private sector tenants rounding out the rest of the market. 

The effect of the Great Recession on Washington, DC’s law firms was twofold.  While the wake of the financial crisis brought a few high-profile mergers and dissolutions, the space efficiency trend also caught on during this time.  From 2008-2012, the dissolution of firms including Howrey, Thelen, and Dewey & LeBoeuf returned over 500,000 square feet (sf) to the leasing market.  Then, in 2014, the mergers of Patton Boggs with Square Sanders and Cooley with Dow Lohnes naturally caused the firms to consolidate their real estate.  The result was nearly 200,000 sf of high-quality, move-in ready sublease space becoming available, causing further competition in an already soft leasing market.

Legal services employment has seen a pronounced decline through the Great Recession and subsequent recovery.  With fewer attorneys to house and technological advances paving the way for increased space use efficiencies, the impact on the region’s office market that caters to this key sector has been pronounced.  Starting around 2008, many of the largest law firms began to contract - either by renewing early to take advantage of a tenant’s market while giving back unused space or by negotiating attractive terms in brand new construction and moving to a more efficient layout.

The trend of law firms moving to new construction has been most prevalent with firms like Arnold & Porter, Pillsbury, and Venable leading the way. In 2012, Arnold & Porter signed a lease to move into 373,000 sf at 601 Massachusetts Avenue, NW, approximately 75,000 sf less than it originally occupied. The next year, Pillsbury committed to 105,000 sf at 1200 17th Street, NW, a 135,000 sf contraction; and in 2014, Venable signed for 240,000 sf at 600 Massachusetts Avenue, NW, 50,000 sf less than its prior location. Of the office development throughout the CBD and East End, 51% of the space is leased by law firms. Since 2008, approximately 35% of leases signed by the region’s largest law firms (including renewals) have been moves to new construction or an office that went through a complete renovation.  Wherever there is new development downtown, you will likely find a strong anchor tenant from the legal services industry.

With law firms occupying so much of DC’s core office space, these consolidations have had a significant effect on net absorption. This situation, however, is expected to reverse in the near future.  Gross domestic product (GDP), the stock market, corporate profits, and employment are all at all-time highs.  Meanwhile, legal services employment is the lowest it has been in 16 years.  With all of the major economic indicators pointing towards growth, demand for legal services is sure to grow and with it, the hiring of more lawyers and support staff.  With nearly 80% of the largest DC law firms having transacted over the past 7 years, we expect flat to modest positive net absorption in the law firm space moving forward.

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By: Nathan Edwards

Director of Research, DTZ- Washington, D.C.

Email Nathan:

nathan edwards, nathan edwards cassidy turley, cassidy turley, cassidy turley research, cassidy turley dc, cassidy turley washington dc








Contributor: Joe Wood and Bethany Schneider, Research Analysts, DTZ

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