The Changing Professional Sector

CBRE’s recent report on the changing nature of the professional services (law firms, accountants, consultants etc) sector throws up a number of interesting points which are reflected in the research that Metropolis carries out with office tenants.

Firstly, cost as a relocation trigger. Professional services firms are using space more flexibly and efficiently in order to reduce costs. Metropolis has spoken to a number of companies that are using shared desk strategies and are looking to take short term serviced offices, instead of longer term leases. Recent examples include Pinsent Masons, Fieldfisher and CMS Cameron McKenna.

Secondly, staff attraction and retention. Companies are using attractive buildings, technology and aesthetics in order to attract and retain key staff. Previous Metropolis blogs have noted the increased willingness of professional firms to consider previously fringe locations, if staff can be housed in an attractive building.

Thirdly, building ‘wellness’ and the positive impact on staff retention. CBRE found that moving staff to a better location had positive impacts on productivity and company efficiency.  PwC’s refurbished Embankment Place is an example.

Fourthly, collaborative space in professional companies. Many accounting and management consulting groups require more dedicated collaborative space than existing locations can provide. In contrast, law firms require more quiet space for individual analysis and client contact. Deloitte recently took space at the Buckley Building, EC1 for this purpose. Metropolis has found professional companies increasingly opting for new space which can be designed to reflect their needs.

Fifthly, the implementation of technology straegies. The rapidly evolving use of technology, for example cloud strategies to allow for more mobile working, has led to re-configuration of office environments. KPMG recently spent £20m on an IT upgrade and Clifford Chance is innovating. Metropolis has found more companies inviting tenders for IT upgrades, amongst this sector, than many others.

Sixthly, outsourcing is becoming more important for cost control. Law firms in particular are making more use of external outsourcing or setting up their own support services operations in regional UK cities. a recent example is Hogan Lovells planning to double its lawyer count in its Birmingham. Metropolis has recently reported on a number of new offices in Manchester, Midlands, Scotland and Belfast.

The professional sector is also seeing a high number of mergers as a way of increasing competiveness and reducing cost. Metropolis reports a steady stream of mergers, which often lead to a requirement to bring offices under one roof. Recent examples are the Moore Stephens merger with Chantrey Vellacott and Charles Russell with Speechly Bircham. In addition in London, mid-level firms indicate that in the search for cost control further fringe locations are being considered such as Battersea, Shoreditch, Stratford and White City.

The outlook for professional services indicates further growth. During the past five years, professional services employment has increased by 20%, adding 42,500 new jobs in Central London according to government statistics forecasts suggest professional services sector will grow by 55,500 jobs between 2014 and 2019. There is 6.8m sq ft of professional sector breaks and expiries scheduled from 2015 to 2021, of which 4.9m sq ft is made up of legal firms. Metropilis’ own figures suggest over 100 companies with nearly 2m sq ft of outstanding London and UK office requirements looking for alternative office space over the next two years.