Beyond Trophy Space

Lack of Supply, Rising Rents Challenging Law Firm Office Norms - Seite 2

There are unique resource models such as Fish & Richardson shifting a substantial part of its non-revenue functions to Minneapolis or White & Case recently doing the same in Tampa, Florida. Innovative workplace strategy has driven examples like Foley & Lardner providing 12,000 square feet of space and pro-bono office hours for a digital co-working community in Chicago's River West area, potentially creating new revenue for the firm.

"A good real estate strategy is central to overcoming some of the key challenges law firms face in managing costs and productivity," said Tom Doughty, co-lead of JLL's law firm practice group. "As the real estate market continues to strengthen, larger firms are considering moving some administrative employees to less costly cities located beyond major metropolitan hubs. And in all their locations, they're exploring ways to use space more efficiently."

Follow the Clients
As firms move away from the CBD, they are drawn to areas with proximity to their client base. This transition comes with its own benefits and challenges. For example, law firms find themselves competing for prime space with fast-growing tech companies in markets like Silicon Valley, Seattle and Austin, Texas.

In Silicon Valley, law firms now occupy 20 percent of the office market, compared with eight percent in 2011. Prime office locations are limited, especially in Palo Alto where law, venture capital, private equity and growing tech firms are all jockeying for the same space until anticipated development delivers new space available in nearby Menlo Park.

In Dallas, several national law firms have opened offices recently in the booming energy hub, including McGuireWoods, Holland & Knight and Schiff Hardin. While the percentage of law firms occupying the market has held steady at 14 percent since 2011, they are taking over larger blocks of space, indicating growth. Currently, 31 firms are using more than 50,000 square feet of office space, compared with 22 firms in 2011. New construction is already underway.

Luring Talent
As firms follow pockets of growth and stretch beyond core city centers, they are recognizing the benefits of moving to locations closer to where their top young attorneys live, work and play. Hiring is expected to pick up for law firms in the second half of 2014, especially among candidates with three to seven years of experience who can "hit the ground running," according to legal staffing firm Robert Half Legal.