JLL Says Built out Space for Law Firms Abounds

The first half of 2009 saw a growing trend among law firms to relocate to fully built-out space that had been occupied by another firm, according to Jones Lang LaSalle's Global Legal Perspective 2009. According to the report, across the U.S. there is more than six million square feet of available built-out law firm space.

Law firm revenues continued to fall in the first half of 2009, led by declines in corporate, finance, and mergers and acquisitions practices. As revenues have dropped-off, some firms have looked at their real estate for possible opportunities to decrease overall operating costs. For firms facing relocation, existing built-out spaces are increasingly attractive because they minimize the capital outlay required.

"Space options abound - from new buildings to existing built-out space - while competition for premium space is decreasing and rental rates are declining," noted Tom Doughty, International Director with Jones Lang LaSalle's Law Firm group.

LAW FIRM METRICS for markets served by citybiz real estate:

City
Percent of Class A Market Occupied by Law Firms
Available S.F. of Built-out Law Firm Space

Atlanta
23.3%
200,000

Boston
14.8%
181,730

Dallas
8.1%
700,000

Miami
21.4%
300,000

Washington
36.8%
750,00

The report also notes that declining rents and multiplying space options around the globe continue to create favorable conditions for law firms as new supply and sublease space becomes available. Law firms are expected to maintain their increased leverage in real estate markets across the globe for the foreseeable future because sublease space will keep mounting until job losses stop.

Given current market condition, the report cautions firms to pay particular attention to ownership entities in the buildings where they currently occupy space or are negotiating leases. Many owners are either in or will encounter distress situations over the coming quarters due to purchases or financing based upon aggressive underwriting during the overheated commercial market that existed from 2004 through 2008.