Law firms intensify demand

A recent report by property consultant CBRE underlines recent Metropolis research on the law sector in London.

The report highlights law firms efforts to use their space more efficiently as well as using lease events to rebuild IT networks and change working methods. The report also estimates there are currently 24 medium/large office requirements by law firms in central London (Metropolis is currently tracking 28 searches over 10,000 sq ft in London), including DLA Piper, Withers and Ashurst.

Nearly 800,000 sq ft of central London office space was let to law firms in 2014 (a similar level to 2013) including: Mishcon De Reya taking 116,000 sq ft at Africa House, Kingsway; HowardKennedyFsi’s 54,600 sq ft letting at 1 London Bridge; Ropes & Gray’s 45,000 sq ft pre-let at One New Ludgate; DWF’s 43,000 sq ft deal at 20 Fenchurch Street. In addition, Boodle Hatfield took 23,000 sq ft at 240 Blackfriars, and Radcliffe’s le Brasseur agreed a deal to take 29,000 sq ft at 85 Fleet Street.

In addition, a wave of law mergers has led to a number of firms bringing two previously separate operations together under one roof. There are currently over a dozen mergers at various stages and some recent examples include Locke Lord and fellow US law firm Edwards Wildman; Morgan Lewis and Bingham McCutcheon, as well as Charles Russell and Speechly Bircham.

Looking ahead, a number of firms are saying they plan to re-gear leases at impending renewal including Simpson Thatcher & Bartlett, Dechert, Watson Farley & Williams, and Kirkland & Ellis. There has been a gradual trend to dispose of surplus space in recent years. However, there is nearly 5m sq ft of lease expiries and break options, amongst law firms, approaching in the next five years, so activity looks likely to be brisk and deliberations often start early. CBRE’s survey work indicates that discussions may begin four or five years ahead of any lease event, with the broadest possible consultation among the firm’s partners and lawyers.

Metropolis forecasts that with the combination of lease expiries, expansions, mergers and new market entrants; law sector office moves could reach an average of nearly 1m sq ft per annum in central London over the next few years.

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