Faced with soaring costs to build and operate office space, law firms are searching for ways to manage their budgets while meeting the needs of their practices.

The cost to build a typical law firm space in downtown Washington, D.C., has jumped 50% since 2019, according to Savills USA. At the same time, furniture costs have increased by 30%, and mechanical, electrical and plumbing (MEP) costs have risen by 15%. These substantial increases are not expected to continue, according to Savills' executive director of project management, David Fletcher, whose experience includes building out more than one million square feet of high-end law firm space. “The market is not as volatile as it has been, and, over the last couple of years, post-pandemic conditions have eased demand,” said Fletcher.

Two major factors always drive construction costs: materials and labor, said Fletcher. Materials costs typically rise because of strained supply chains, high demand and shipping logistics, while labor costs move with demand for workers in specialized trades. The growing demand for labor in the data center market might have a ripple effect on other sectors, including law firms, as they may need to offer higher rates to secure contractors for their projects, said Fletcher. For law firm construction projects, the price of steel plays a major role in the extensive framing required for tenant interior work as does copper, which is widely used in electrical wiring, HVAC systems and plumbing. Carpet prices are more impacted by the cost of oil, and materials like wood veneers used in paneling and furniture can experience significant price fluctuations, said Fletcher. As such, design choices become critical in managing construction budgets.