Q3 Law Firm Leasing Activity Strongest Since Onset of Pandemic
Law firms are signing plenty of new leases, often in new locations for them.
Major office markets started to stabilize in the third quarter of 2021. That is also true for law firms, which saw the “strongest leasing volume since the onset of the pandemic,” according to a new report from Savills.
The study was of large law firms using more than 20,000 square feet of space each. In total, they leased 2.1 million square feet in major urban markets. It’s the largest number since the pandemic started and a 51% increase from 2021′s Q2.
But it also stands out in another way, as “there was also an increase in law firms signing new leases—opposed to the renewals and restructures that had dominated over the past few quarters,” the report stated. New leases (including relocations and new locations) accounted for 55% of law firm activity in Q3 by square footage—bolstered by a handful of very large transactions.”
The report points to “more long-term leases signed” as “a positive sign that law firms are re-engaging in real estate planning with a focus on how they will use office space going forward, post-pandemic.”
As the report noted, some significant activity by a few large firms caused larger overall numbers. ” In New York, law firm leasing volume totaled close to 0.8 million square feet—a 94% increase from Q2,” the report said. “ In Chicago, and primarily due to Kirkland & Ellis’ massive lease, volume quadrupled from Q2 reaching 0.7 million square feet in Q3. Washington, D.C. saw volume more than double from Q2 with just under 300,000 square feet leased. Los Angeles and Philadelphia round out the top five markets in terms of total law firm leasing volume for the year, but activity declined from the second quarter with few large leases seen in each of these markets this quarter.”
More than 816,000 square feet among the 14 examples listed in a table of “notable law firm activity” were relocations, helping to shift the balance away from more renewals.