Jones Lang LaSalle Research: Legal Industry Finding Efficiencies and Rightsizing Nationwide

CHICAGO, Nov. 15, 2011 /PRNewswire/ -- The legal sector is weathering the effects of today's economic strife with many law firms nationwide rightsizing their space needs and renewing their leases. Of those firms with leases expiring, nearly two-thirds are deciding to stay in their current location, according to Jones Lang LaSalle's yearly "Law Firm Office Perspective" report.

While law firms in most major markets continue to search for space efficiencies, they still play an important role in the overall health of the commercial real estate sector, occupying 17.1 percent of Class-A downtown office space nationwide.  

Currently, New York City boasts the most law firms leasing more than 50,000 square feet or more (117), closely followed by Washington DC (91), Chicago (54), Los Angeles (42) and Boston (33).  Meanwhile, geographies with the greatest percentage concentration of law firms include Austin, Tex., Tampa and Washington, DC, all three areas boasting 30 percent total occupancy of law firms throughout their markets.  

"Confidence levels, both consumer-related and business-related, have declined over the past few months," said John Sikaitis, Director of Office Research, Jones Lang LaSalle.  "The legal industry is typically a lagging indicator when it comes to the overall economy, and has continued to add jobs. However, revised economic forecasts do not bode well for firms' near-term business prospects and we predict most law firms will keep growth contained over the next few quarters."  

However, the 2011 report found that law firm tenants are still able to negotiate discounts of at least 5 percent for direct-leased space and 25 percent or more for subleased space.  While small to mid-size firms will see that trend continue for the foreseeable future, the window of opportunity may be closing for large firms with significant space requirements.

Tom Doughty, head of the Law Firm Group said, "In Chicago, only three available blocks of Class-A space larger than 200,000 square feet are currently on the market and a variety of firms including DLA Piper, SNR Denton and Latham & Watkins (as well as a variety of other corporate users) are in the market with large requirements. New York on the other hand, has nearly 100 law firms occupying more than 50,000+ square feet who account for 42 percent of the total market.  Law firms actively looking for space include Arnold and Porter, Pillsbury and Sullivan & Cromwell.  Another notable city is Los Angeles, where 16 percent of the market is occupied by law firms. Further, law firms currently comprise 32 percent of the overall active requirements in the market.  Four firms are currently in the market for more than 50,000 square feet of space in the Los Angeles market."  

"The relative shortage of large-block Trophy-class space could eventually drive the development of one or more new office towers over the next several years," Doughty said. "Until then, though, the limited amount of big-block options will reduce leverage for large firms."

Sikaitis added, "While nearly all U.S. office market fundamentals have tightened over the past 12 months, most markets have seen a remarkable slowdown in the past two or three months. The anomaly is markets that are heavily exposed to technology and energy.  These markets will continue to see growth and employment gains, and accordingly, leverage for law firms in these markets will continue to diminish"

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE: JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse in real estate with $47.9 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.

SOURCE Jones Lang LaSalle