Part of the problem, of course, is that law firms are not willing to move out of the city's East End and CBD, where law firms traditionally hunker. Occasionally, a firm will stray to Georgetown, the West End or Capitol Hill, notes Tom Doughty, international director. "But by and large, no one wants to be a pioneer. There is little appetite to venture out of these neighborhoods," he tells GlobeSt.com.
However, law firms that are willing to settle for the next best thing--class A space--are finding that they have more choices than in earlier real estate cycles. Their leverage with landlords has increased due to growing vacancies, JLL says in a new report, "Legal Market Smart."
Asking rents at existing and under construction trophy buildings have risen 12% since year-end 2006 to an average $75.11 per-sf, JLL says. In the next 18 to 24 months, tenants can expect rent growth at the trophy level to increase more slowly at about 7% as 1.4 million sf of the class A space delivers in 2008.
Doughty suggests law firms in trophy buildings that have leases due to expire over the next four years should consider renewing now. The pace at which the rents will increase in the next 12 months is far slower than they will be once the economic recovery is underway, he adds.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
