Generally law firms have been able to reduce the portion of their budget they spend on real estate. According to a Citi Private Bank survey of 156 law firms, occupancy costs accounted for 12.1% of total expenses in 2015, a figure that has declined by an average of almost 1% every year since 2010.
The portion of revenue that firms allocate for real estate has declined by an average of 1.2% during that time, to 7.2% in 2015. Meanwhile, firms in the bank's sample group reduced their square footage per lawyer by 0.2% each year between 2010 and 2015, though cost per square foot rose an average of 1.6% annually.
Matthew Barlow, executive vice president at the commercial real estate brokerage Savills Studley, estimates that firms spend between $30,000 and $90,000 per lawyer on base rent. The wide range is a result of the fact that there is great disparity between rent costs and square footage per lawyer.
But while firms try to shave money off their spaces, they have also recognized that they can use their offices to attract talent. The number of law school students dropped to 37,058 last year from 52,488 five years earlier, so competition for the best hires has grown. Firms want offices that associates will want to work in, whether because of the rooftop deck, the child care center or the bright workspace.
“People want modern desirable space to remain competitive from a recruiting and retention standpoint,” says Matthew Barlow, executive vice president at the commercial real estate brokerage Savills Studley. “In order to create that space, it requires a lot of capital. In order to justify the spending of that capital, you've got to get efficient.”
This is a portion of an article originally written by GlobeSt.com sister publication, ALM's American Lawyer. To read the original full story, with further details on law firms downsizing office space, click here.
Generally law firms have been able to reduce the portion of their budget they spend on real estate. According to a Citi Private Bank survey of 156 law firms, occupancy costs accounted for 12.1% of total expenses in 2015, a figure that has declined by an average of almost 1% every year since 2010.
The portion of revenue that firms allocate for real estate has declined by an average of 1.2% during that time, to 7.2% in 2015. Meanwhile, firms in the bank's sample group reduced their square footage per lawyer by 0.2% each year between 2010 and 2015, though cost per square foot rose an average of 1.6% annually.
Matthew Barlow, executive vice president at the commercial real estate brokerage Savills Studley, estimates that firms spend between $30,000 and $90,000 per lawyer on base rent. The wide range is a result of the fact that there is great disparity between rent costs and square footage per lawyer.
But while firms try to shave money off their spaces, they have also recognized that they can use their offices to attract talent. The number of law school students dropped to 37,058 last year from 52,488 five years earlier, so competition for the best hires has grown. Firms want offices that associates will want to work in, whether because of the rooftop deck, the child care center or the bright workspace.
“People want modern desirable space to remain competitive from a recruiting and retention standpoint,” says Matthew Barlow, executive vice president at the commercial real estate brokerage Savills Studley. “In order to create that space, it requires a lot of capital. In order to justify the spending of that capital, you've got to get efficient.”
This is a portion of an article originally written by GlobeSt.com sister publication, ALM's American Lawyer. To read the original full story, with further details on law firms downsizing office space, click here.
Continue Reading for Free
Register and gain access to:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
