Skip Ribbon Commands
Skip to main content

News release

NEW YORK, NY

Law Firms Occupy 11% of Manhattan’s Office Space

JLL’s Law Firm Perspective finds 119 law firms each occupy at least 50,000 SF of office space


NEW YORK, November 13, 2014 — JLL’s 2014 Law Firm Perspective found that New York law firms continued to prioritize efficient space utilization and remained in contraction mode during the past year. Manhattan’s legal sector occupies 11 percent of the city’s Class A office market, down slightly from 11.4 percent in 2013. According to the report, 119 law firms occupy more than 50,000 square feet of office space each throughout Manhattan, compared to 125 law firms one year ago.

Activity among New York’s legal sector over the past year has resulted in three firms committing to leases greater than 100,000 square feet — two relocations and one renewal — compared to four renewals larger than 100,000 square feet at this time in 2013. During the second quarter, White & Case signed the largest lease year-to-date, a 440,000-square-foot relocation four blocks north to 1221 Avenue of the Americas from 1155 Avenue of the Americas. During the third quarter, Weil, Gotshal & Manges LLP inked a renewal for 390,000 square feet at 767 Fifth Avenue and Paul Hastings LLP signed a lease to relocate into 190,914 square feet at 200 Park Avenue.

Nationwide, many mid- to large-size law firms have already rightsized their space needs and renewed their leases. The U.S. legal sector gave up about 17 percent of its space on average upon relocating in 2014, up from 14 percent in 2013. The rightsizing trend appears to be slowing, depending on the city, with JLL finding that anywhere from 55 percent to more than 90 percent of law firms in primary and secondary markets have already devised substantial efficiency measures in new or restructured leases.

“Law firms have typically preferred renewing to reduce their capital outlay, but several factors today are converging in favor of relocation,” said Kenneth Siegel, international director, with JLL. “Older, inefficient installations, the cost and disruption of renovating in-place and the space efficiencies that can be achieved in newer buildings have all contributed to relocation decisions. In New York specifically, law firms seeking both a cost advantage and state-of-the-art facilities are considering relocations westward within Midtown and into relatively newer stock Downtown where pricing for Trophy space is on par with Class A space in Midtown.”

New York boasts the most law firms leasing 50,000 square feet or more, followed by Washington DC (92), Chicago (54), Los Angeles (36) and Boston (28). Meanwhile, geographies with the greatest percentage concentration of law firms include Washington, D.C.; Silicon Valley, Calif.; Fort Lauderdale, Fla.; and Austin, Texas, all areas in which law firms account for 30 percent of total occupancy in Class A core submarkets.

The Law Firm Perspective report found that law firms face more supply constraints than nearly any other industry because of the sector’s concentration in core assets in central locations, the tightest segment of domestic office markets. In Manhattan, for example, the inventory of trophy office buildings most frequented by law firms commands a 17.6 percent premium in Midtown and an 11.1 percent premium Downtown compared to Class A space.

“Historically, the largest concentration of law firms in Manhattan were clustered around Grand Central Terminal and in the Plaza District to take advantage of the area’s many mass transportation options,” said Siegel. “However, with market dynamics shifting and employee commuting patterns evolving, the majority of law firm partners are no longer commuting to the city from Westchester and Connecticut. The New York metropolitan region’s geographically diverse workforce has opened up the opportunity for law firms to relocate outside of the city’s traditional submarkets.”

Much of the new construction underway in Midtown will not be delivered until 2018 or later, significantly limiting the supply of new, efficient space available to firms. Further in the future, the city’s plans to rezone the Vanderbilt Corridor may offer the possibility of new construction near Grand Central, including the proposed One Vanderbilt.

JLL is a leader in the New York tri-state commercial real estate market, with more than 1,600 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2013, the New York tri-state team completed approximately 25.9 million square feet in lease transactions, arranged capital markets transactions valued at $2.1 billion, managed projects valued at nearly $7.0 billion, and oversaw a property and facilities management portfolio of 95.3 million square feet and an agency leasing portfolio of 67.0 million square feet.

About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or 280.0 million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $53.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.