By: Rob Roe, Managing Director, JLL
Law firms hit record revenue levels in 2014 … just in time to face an increasingly competitive marketplace.
JLL’s newly released 2015 Law Firm Perspective revealed that the market’s job growth hasn’t been this high since the late 90s. But as the legal market expands, firms face fewer office choices and higher rent in Trophy and Class A spaces (i.e. the typical preference for law firms).
Thus, a notoriously traditional industry is taking a new approach to real estate, moving away from downtown locations and toward mixed-use, efficient designs. For more on how the economy and office market are impacting law firms, see what JLL’s Director of Office Research, John Sikaitis, has to say.
Closer to home, law firms across Ohio, Michigan and Pennsylvania are also facing tighter office markets and fierce competition for top talent. JLL’s new report includes a market-by-market analysis of the U.S. landscape.
Law Firms: What’s Happening in Your City?
The legal industry is enjoying the profits of success, literally. JLL’s report found that 16% of AmLaw 100 firms have profits per partner exceeding $2.5 million. Below, take a closer look at the activity happening in Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh.
Large blocks of quality CBD Class A space are dwindling in the Queen City, which puts local firms in a tight spot. JLL suggests firms make moves as “meaningful rent growth will begin to surface in the next 12-24 month.” While rents are rising, there are several office projects in the works that will offer additional Trophy space in the CBD—keeping rents stable for now.
For local Cincinnati firms, the window to make leasing choices is here.
Most Cleveland law firms have focused on rightsizing in recent years, creating blocks of available space downtown. Plus, thanks to demand fluctuations, rent growth has slowed allowing for the perfect opportunity to renew or extend current leases. Cleveland will likely enjoy a tenant-favorable market through 2017.
On the downside, signage and new construction opportunities are limited. A few projects have been proposed, but if put into motion, will be costly for tenants.
The law firm environment in Columbus is strong: market, business and talent conditions are all favorable. Though quality, large blocks of Class A space are limited, proposed projects in the Capitol Square submarket offer firms new opportunities for space in the coming months.
Firms looking to make a leasing decision should act quickly as Columbus slowly moves into landlord-favorable territory.
Downtown office space is hot in Detroit. More and more businesses are moving there and less space is available. While there are many redevelopment opportunities ahead for Detroit, law firms can seek premium space in the suburbs at a lower cost. Likewise, Class B office space remains largely available.
Looking ahead, downtown offices can expect to see increased real estate expenses as “landlords upgrade office towers and market fundamentals tighten,” according to the report.
Vacancy has dropped to just 5.9% in Pittsburgh. While available Trophy space remains tight, many of the city’s largest companies have announced plans to rightsize. The result? A number of large blocks available for growing firms and future opportunities for local law firms.
A development to watch, Tower Two-Sixty, is under construction, bringing more than 120,000-square-feet of Trophy class office space to the market.
For more information about the law firm market in your city, download the full 2015 Law Firm Perspective.
About the Author
Rob Roe is Managing Director of Jones Lang LaSalle, Great Lakes Region and manages the Regional Brokerage Operation. Mr. Roe is responsible for providing real estate transaction representation and consulting services for Jones Lang LaSalle clients around the world. View Rob’s full bio to read up on his experience, or connect with him on LinkedIn.