Report: Office Rental Deals Abound for Law Firms, But Competition May Heat Up for 'Trophy' Space
Law firms are currently getting good deals on office rentals, but a new report suggests that could change in the next few years.
In most major U.S. markets, law firms continue to have the upper hand in office space negotiations, according to a report (PDF) by Jones Lang LaSalle, a financial and professional services firm specializing in real estate. Average rents are discounted by 10 to 20 percent from 2007 highs, landlords are granting an average of eight months’ free rent on a 10-year lease, and average tenant improvement allowances are $47 a square foot.
The exception is in markets with strong activity in the energy or technology sectors, such as Northern California, Denver and parts of Texas, where rents are increasing.
The dynamic favoring law firms “may change as early as early 2014,” the report says, “in some places where market conditions are tight and many top firms have a presence, all seeking to be in core, urbanized, trophy and class A space.”
The report cautions that large spaces are already in limited supply in 20 markets.
Jones Lang LaSalle created a new index of the nation’s best markets for law firms and listed the top 10. The list is based on potential business growth, strong local legal employment, and the availability of premium space at a discount. The top cities on the list are Los Angeles, Washington, D.C., New York City, Chicago, Dallas, Atlanta, Boston, Philadelphia, Houston and Minneapolis.
