Law Firms Face a Commercial Real Estate Shift in Primary and Secondary Markets

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By: Robert Kramp, Vice President and Director of  Research, Jones Lang LaSalle, Midwest and Great Lakes Region

The national economy is looking up, and the momentum is expected to continue into the new year. However, in the midst of a market shift, the law firm market will meet new challenges in 2014. According to JLL’s newly released Law Firm Perspective:

“After nearly seven years of enhanced leverage, firms encounter markets with shrinking quality options, resulting in landlord confidence jumping, fueling heightened rents and diminished incentives, a trend forecasted to continue into 2014 and 2015.”

The law firm market will continue to shift in favor of the landlord. This year, only about 29% of U.S. legal markets are forecasted to remain in tenant-favorable territory. But, with an imbalance between supply and demand, new development is likely to pick up.

In concurrence with a major market shift, law firm decision makers are also reevaluating their workplace strategies to better align with emerging office space trends. According to a JLL poll, 71.7% of law firms are looking for ways to more efficiently use space. In result, 41.3% of firms are shrinking, and only 10.9% are growing.

Law Firm Market Composition in the Midwest

JLL-Law-Firm-GraphFollowing national trends, many local law firm markets in the Midwest are seeing limited space available for prospective moves or new office locations, and are also slowly moving into landlord-favorable conditions. During 2013, Cleveland, Cincinnati, Columbus and Detroit all saw an increase in the percentage of Class A market occupied by law firms. However, each of our local cities also face unique challenges and opportunities in the legal CRE market.


Cleveland’s law firm market saw a significant upturn from 2012 to 2013. In fact, the percent of law firms with active tenants in the market increased from 5% to 20%, and (another indicator of positive growth), the number of locally-based AmLaw 100 firms increased from five to six. In total, almost 30% of the class A market (27.7%) is occupied by law firms.

During the past year, there was major buzz surrounding Cleveland’s new Ernst & Young Tower, which was the “first multi-tenant office building to be constructed in Cleveland’s CBD in nearly 20 years,” according to JLL.  When the new tower officially opened for business, it was almost 90% leased. And—in good news for law firms—plans for another Cleveland tower are being considered.


The Cincinnati law firm market began to flatten out and stabilize in 2013. Faced with limited space for new locations, most firms opted to renew their leases and continue operations at their current space. Subsequently, the percentage of firms in the market decreased during the past year (from 15% to 10%), and the number of law firms taking up 50,000+ square feet remained the same (eight).

Looking ahead, prospective office space is planned for The Banks, which will provide new opportunities for law firms seeking new space. The Cincinnati market will slowly transition to landlord-favorable conditions, likely remaining neutral through 2016.


JLL researchers deemed 2013 Columbus law firm activity “lively.” The number of law firms occupying more than 50,000 square feet increased from last year (from eight to nine), and the percentage of Class A market space occupied by law firms increased (22.3% to 28.5%). Historically, the local law firm market has been a key contributor to economic activity.

To the detriment of law firms, the Columbus market is quickly moving into landlord favorable territory. However, in positive news for tenants, lease rates are forecasted to stay low in 2014.  Columbus is also experiencing an increase in law firm market demand as evaluation continues on the Marcellus Shale activity.


Activity was “quiet” in Detroit’s law firm CRE market during 2013, but despite slow movement, the percentage of active law firm tenants in the market did increase from 2012 to 2013 (10% to 23%).

Slow economic activity in Detroit has posed an obstacle for the growth of local law firms. But, because vacancy is high, there is great availability for those seeking new space. Rents are also in the tenant’s favor, as well as the opportunity for concessions.


Despite limited space in the market, Pittsburgh boasts the highest number of AmLaw 100 firms in the Great Lakes region (nine). Grant Street and Liberty Avenue (downtown) are currently home to most of Pittsburgh’s law firms (29 out of 31), and JLL researchers are predicting that law firms will soon take interest in the latest development at The Gardens and North Shore Place.

Overall, the Pittsburgh market is facing high rents in landlord-favorable conditions, yet opportunities exist with new development in the pipeline. 

Law Firm Outlook for 2014

From a national perspective, rent will continue on an upward climb across the law firm market. After polling the legal community, JLL also found:

  • 71.7% of U.S. law firm markets forecasted a rent increase in 2014.
  • 37% expect to see a decrease in concessions.
  • 34.9% predicted that firms (with greater than 50,000 square feet) are faced with limited space options, and may seek new construction or may simply renew.

For more information, download the full 2013 Law Firm Perspective. If you’d like to schedule an appointment for your law firm, please send a message to

About the Author

robert_kramppAs Vice President and Director in the Midwest and Great Lakes Region at Jones Lang LaSalle, Robert has experience in the industrial, retail, multifamily and land sectors. Read up on Robert’s experience or connect with him on LinkedIn.

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