Legislation agency actual property transactions proceed to realize momentum in 2024 after reaching a stage of leasing demand in 2023 that met pre-pandemic exercise, in response to a brand new report from Savills.
Authorized sector leasing quantity from the primary quarter to the third quarter elevated by 29.9 p.c in comparison with the identical interval final 12 months, as proven within the agency’s newest analysis examine.
Apparently, downsizing transactions had been up by 6.7 p.c in comparison with 2023, reflecting legislation companies’ efforts to adapt their area utilization to shifting market dynamics.
“Over the previous 4 quarters, quarterly leasing quantity has averaged 2.3 million sq. ft, a notable rise from the 1.5 million sq. ft quarterly common recorded between 2020 and 2023,” in response to the report. “This pattern highlights the constant leasing momentum of current quarters, with volumes often surpassing pre- and post-pandemic ranges over the previous 5 years.”
A majority of companies wish to keep in place, with 55.9 p.c of leasing exercise doing so this 12 months via the third quarter, in keeping with 2023 ranges.
Occupancy adjustments confirmed 35.4 p.c downsizes, 34.5 p.c expansions and 30.1 p.c negligible measurement adjustments.
After preferring relocations earlier this 12 months, by the third quarter, renewals turned extra widespread as restricted high-quality choices, rising enchancment prices and landlord monetary constraints made transferring much less possible.
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As a result of tenant enchancment allowances more and more fall in need of protecting build-out bills, there was a “regular shift” to longer lease agreements to handle record-high building prices, the report indicated.

Deal with high-quality workplace areas
“Legislation companies strongly want high-quality workplace areas, at the same time as different industries shift towards distant work,” Doug Ressler, enterprise intelligence supervisor at Yardi, instructed Business Property Government.
Legislation companies are leasing premium workplace areas with fashionable facilities to draw and retain expertise, Ressler noticed. These areas usually embody options like touchless elevators, networking areas and eating services.
“Many legislation companies relocate to prime areas, usually benefiting from favorable leasing phrases in markets with excessive emptiness charges. This pattern is especially noticeable in cities like New York and San Francisco.”
Ressler mentioned legislation companies have actively leased giant quantities of area regardless of the broader workplace market challenges. For instance, in 2023, legislation companies leased round 12 million sq. ft of workplace area within the U.S., with vital exercise in main markets.
“These traits spotlight the authorized sector’s distinctive method to workplace area, balancing the necessity for high-quality environments with strategic relocations to optimize prices and advantages,” Ressler mentioned.
Want for in-person interactions
Legislation companies emphasize the significance of bodily workplace area for collaboration, coaching and sustaining company tradition, in response to Michael Romer, Esq., co-managing associate, Romer Debbas.
Based on Romer, that is mirrored of their choice for areas that facilitate in-person interactions.
“As legislation companies proceed to face challenges posed by distant work and competing companies working nearly or predominantly nearly, it’s promising to see the authorized neighborhood seem to recommit to an in-person mannequin,” Romer mentioned.
A bodily workplace area the place attorneys and employees can collaborate and share concepts is important for a legislation agency’s success and long-term survival, Romer noticed. “The distant work idea can present sure quality-of-life advantages to established attorneys. Nonetheless, it hinders the training and development of the following technology of attorneys, to not point out workplace morale.”
The Savills survey targeted on companies with 20,000+ in sq. footage, usually bigger companies that thrive on institutional shoppers paying two to a few occasions the hourly charges of small legislation companies.
“Workplace area expense is much less of a priority for such companies,” Romer mentioned. “In the meantime, small to mid-size companies wrestle to stability workplace area and the legal professional expertise wanted to occupy it. Many producing attorneys who want to stay distant would swap companies or look elsewhere in the event that they needed to report back to the workplace every day.”
Companies proceed to discover how their workplace area generally is a instrument in recruiting and retaining top-tier expertise.
In lots of circumstances, they establish areas the place they’ll create efficiencies inside their bodily areas to offset the upper rental charges commanded by the latest and most tasty buildings that many companies have pursued, in response to Stream Realty Companions’ Vice Chairman & Managing Director Craig Wilson.
“For a lot of companies, being in a constructing with an lively vibe, a complimentary tenant base and engaging, high-caliber facilities is paramount to giant particular person workplaces, libraries and a few of the different fixtures of legislation companies of the previous,” he instructed CPE.