21 Oct 2021

US law firm leasing activity rebounds to highest level since onset of pandemic

Long-term leases and relocations have fuelled a resurgence in leasing activity in Q3, new report shows

Fried Frank signed a long-term lease renewal for its headquarters at One New York Plaza in Lower Manhattan in July Shutterstock

Law firm leasing activity in major US markets picked up in the third quarter of 2021, indicating the possibility of a rebound in the law firm real estate market after activity was slowed due to a host of pandemic-fuelled challenges, according to new research. 

Global property agent Savills’ US Law Firm Activity Report for Q3 revealed law firms occupying more than 20,000 square feet leased a total of 2.1m square feet across major markets, a 51% increase from the previous quarter and the highest quarterly total since the onset of the pandemic. 

Major legal centres including New York, Chicago, San Francisco and Washington DC have all seen their leasing activity increase in the third quarter, with new leases accounting for just over half (55%) of activity by square footage, Savills said. 

Los Angeles and Philadelphia, meanwhile, saw an overall decline in activity from the second quarter with few large leases signed in both markets for Q3. 

The increase in activity across these markets has occurred dispute growing Delta variant concerns, according to the report. It remains to be seen what the trajectory of the virus will be heading into the winter months, but 'current volumes are a positive sign that momentum may continue through the remainder of the year.’ 

Among the biggest drivers of Q3’s activity levels was Kirkland & Ellis, which announced it would be moving its Chicago base from 300 N. LaSalle to a 600,00 square-foot space in a new tower located nearby at 333 W Wolf Point Plaza in August. 

Kirkland’s monster deal played a big role in Chicago’s overall leasing activity for the quarter, which saw the volume of leased space quadruple from Q2 to Q3. 

New York’s law firm leasing volume increased by a similarly impressive 94% from Q2 to Q3, in part fueled by Fried Frank’s 15-year lease extension of its 400,000 square-foot space at One New York Plaza in July, a deal that was described as the largest office lease deal in Lower Manhattan since the onset of the pandemic. 

Fried Frank’s was just one of the many long-term extensions signed this quarter, which Savills suggested may be a positive sign that law firms are re-engaging in real estate planning with a forward-facing outlook on how they will utilise office space post-Covid. 

The report also noted that more attention is being paid towards amenities law firm offices may include to make their offices more appealing to lawyers who have become accustomed to remote work over the course of the pandemic. 

"It's become so much more about the people as opposed to about getting the best real estate deal," Thomas Fulcher, the chair of Savills' legal tenant practice group, told Reuters

US law firms are currently grappling with how to bring their lawyers and staff back into the office safely as a result of renewed health concerns over the Delta variant. Optimistic plans published earlier this year by a handful of top 100 US firms set a September date for workforce office returns, but many firms, including Ropes & Gray and Sidley Austin, opted to delay their returns to November or even later.