After big 2023, law firms are leasing even more this year

First quarter office activity increased 48%: Savills

After Big 2023, Law Firms Leasing Even More This Year

(Photo Illustration by Steven Dilakian for The Real Deal with Getty)

The verdict is in: law firms are an office landlord’s dream.

Law firms leased roughly 1.7 million square feet across the country in the first quarter, the Commercial Observer reported from Savills’ U.S. Law Firm Activity report. That’s a jump of 47.6 percent from last year’s first quarter, which fed into a big year for law firms and office activity.

Critically, the trajectory of law firm leasing has exceeded that of pre-pandemic years. The quarterly average of leasing activity by law firms has been 2 million square feet since the start of last year, compared with a 1.5 million-square-foot average between 2020 and 2023; the quarterly average from 2018 to 2019 was 1.8 million square feet.

“Our sense is that we are deep into the ‘new normal’ with law firms making real estate decisions, for the most part, as they did prior to the pandemic,” Savills’ Tom Fulcher told the Observer.

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In recent years, law firms have been lifted to top tier status among office landlords hoping to fill empty buildings with tenants who won’t be going remote anytime soon. Last year, law firms leased 12 million square feet around the country, according to Cushman & Wakefield, prioritizing new and high-quality spaces.

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Still, some law firms are cutting down on office space as in other industries. Though Finnegan, Henderson, Farabow, Garrett & Dunner, was responsible for the largest lease in the country in the first quarter, it still downsized by 38,000 square feet from its previous deal.

Meanwhile, relocations have slowed among law firms. In the first quarter, 54.1 percent of leases signed were for law firms changing homes, down from 66.1 percent of activity in 2022 and more than 57 percent in each of the two years before the pandemic. Nearly three-quarters of the relocations were for tenants to move to newer buildings.

Holden Walter-Warner