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(Reuters) – Law firm leasing exercise in main U.S. markets rose within the third quarter of 2021, a brand new report from international property agent Savills Inc mentioned, suggesting a gradual rebound within the legislation firm actual property market greater than 18 months into the COVID-19 pandemic.
The report, launched Monday, discovered legislation companies occupying greater than 20,000 sq. toes leased a mixed 2.1 million sq. toes in Q3 2021. That is a 51% uptick from Q2, when Savills tracked 1.4 million sq. toes of leased area.
Giant legislation companies leased 5.4 million sq. toes in main markets in 2020, a 37% drop from 2019, Savills mentioned earlier this 12 months.
“It’s definitely not ‘recovery mode’ just yet,” Sarah Dreyer, vice chairman and the pinnacle of Savills’ Americas analysis, mentioned of the third-quarter outcomes. “It’s the earliest indication that law firms are wanting to re-engage in real estate planning, and that they feel comfortable making longer-term lease commitments than they had earlier in the pandemic.”
Dreyer added that main expansions and renewals that companies inked in Q3 had been made on a long-term foundation of no less than 10 years.
A significant driver of Q3’s leasing exercise was Kirkland & Ellis, which introduced in August it was shifting out of its present Chicago office at 300 N. LaSalle to a 600,000 square-foot office area within the new tower being constructed a few half mile away at 333 Wolf Level Plaza.
Given its measurement, the transfer accounted for a giant slice of the latest leasing exercise in Chicago, which noticed its quantity of leased area quadruple between Q2 and Q3, Dreyer mentioned. However Dreyer mentioned her evaluation that the nationwide market has thawed nonetheless holds.
“I don’t think it’s skewing the trend,” Dreyer mentioned.
New York noticed a 92% enhance in legislation firm leasing quantity between Q2 and Q3, whereas Washington, D.C., noticed its quantity greater than double in the identical time interval, Savills mentioned. Los Angeles and Philadelphia’s quantity dropped in Q3 in comparison with Q2, the corporate discovered.
Law companies have begun to rethink their office area wants after the surprising success – and excessive profitability – of distant work, mentioned Thomas Fulcher, the chair of Savills’ authorized tenant follow group.
Law companies are now not simply asking what number of staff they will put right into a smaller area, however what sort of facilities and options will “energize” and appeal to staff and shoppers to the area, Fulcher mentioned.
“It’s become so much more about the people as opposed to about getting the best real estate deal,” Fulcher mentioned.
Law companies have needed to modify office return plans as coronavirus instances rose within the U.S. as a result of Delta variant. A number of companies that set obligatory return dates for the summer time or early fall have needed to push again these plans to November and even later.
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Reporting by David Thomas
David Thomas studies on the enterprise of legislation, together with legislation firm technique, hiring, mergers and litigation. He’s primarily based out of Chicago. He might be reached at [email protected] and on Twitter @DaveThomas5150.