IRVINE, CA—Eliminating their library, standardizing private-office sizes, increasing attorney-to-staff ratios and investing in technology that diminishes document-storage needs are among the ways law firms are reducing their footprint, JLL's SVP Ryan Hawkins tells GlobeSt.com. According to the firm's annual law-firm report, Orange County-based law firms are experiencing a variety of real estate challenges including a lack of available blocks of contiguous space in amenity-rich projects, a tightening market causing landlords to pull back concession packages, strong rent growth limiting the number of value options and a trend toward efficient space utilization being challenged by rising local construction costs. Still, law firms are taking advantage of real estate opportunities in the region, including a growing creative-office market providing more options for firms looking for progressive space that appeals to new recruits, increased speculative development expected to add new space alternatives in the Airport Area and South Orange County submarkets and a deep and diverse talent base for recruiting in the area. We spoke exclusively with Hawkins about the Orange County law-firm market, what these firms are seeking in real estate and how they are meeting the challenges they face.
GlobeSt.com: What are law firms are looking for in Orange County space?
Hawkins: With rental rates for class-A office space continuing to climb and limited supply of contiguous blocks of space, OC law firms are looking for ways to maintain or reduce their footprint by occupying space more efficiently. As a result, we are seeing very few firms leasing more space when their existing leases expire."
GlobeSt.com: How they are dealing with the specific challenges they face in that market?
Hawkins: For the time being, most OC firms have focused on enhancing the flexibility and efficiency of their space, in terms of both their physical office layout and lease terms, to counter increasing rental rates. Firms that are able to embrace modern layouts and enhanced efficiencies are often able to reduce their total occupancy needs by 15% or more. OC law firms are achieving this by eliminating or reducing the size of the library, standardizing and reducing private office sizes, increasing attorney-to-staff ratios, investing in technology that reduces document-storage needs and creating more shared interior spaces to enhance collaboration.
GlobeSt.com: How they are being creative with what's available in order to meet their needs?
Hawkins: The challenge firms are facing is how to implement these efficiencies while they occupy space. As a result, we have seen many firms elect to relocate altogether into more efficient space rather than go through the headache and business disruption of an occupied renovation. Firms that are downsizing in place are using the space they are giving back as swing space while they make renovations to their retained space in order to make it more efficient.
GlobeSt.com: What are Orange County law firms' real estate plans for the future?
Hawkins: The future is bright for OC law firms, and there is reason for optimism. AmLaw 100 gross revenue grew 4.6% last year, and we've seen significant expansion in legal consumer industries like technology, real estate and financial services here in Orange County, which is all good news for law firms. However, there has been so much change in the way law firms occupy space over the last five years that having flexible space is key. Once again, those firms with the greatest flexibility in their physical layouts and lease terms will be well positioned to meet the changing needs of the industry in the future.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
