Most businesses are hesitant to rent new office space, but one downtown business guy seems ready to move forward with new deals. Landlords are increasingly relying on law firms, many in search of better services and perks, to fill new offices or those vacated by the pandemic.
It’s not that law firms are growing faster than other businesses. But lawyers are more likely to return to the office, and the legal industry is further along in striking the right balance between work-from-home and in-office strategies. The vast amount of new or renovated space available also means that attorneys have more opportunities to fill spaces that will impress new hires, as well as attract more associates and partners back to the office.
“Law firms are busier right now than a lot of other industries,” said Joe Learner, vice president of commercial real estate firm Savills. “The competition for associates is so fierce that they really need something better than the competition to gain an advantage.”
Kennedys Law is just the latest to make a move. The global firm has agreed to occupy nearly 10,000 square feet on the 36th floor of the CME Center at 30 S. Wacker Dr. in the West Loop beginning in October. The firm will be moving from its office at 100 North Riverside Plaza.
Like many center owners, CME Center owner Tishman Speyer recently completed major renovations aimed at attracting new tenants, renovating the two-tower building’s lobby and adding amenities such as tenant lounges, a conference center and new facilities. fitness.
Savills Corporate Managing Director Perry Kaplan, along with his colleagues Eric Feinberg, John Goodman and Brandon Nasatir, helped Kennedys Law devise a new real estate plan.
Many other law firms also took advantage of the opportunities to improve their spaces. Kirkland & Ellis agreed last summer to vacate 300 N. LaSalle St. and occupy about 600,000 square feet in Salesforce Tower, a 60-story building that rises along the Chicago River scheduled for completion in 2023. Additionally, Chapman and Cutler left 111 W. Monroe St. in the Central Loop for the BMO Tower, a new 51-story skyscraper next to Union Station.
The pandemic-related slowdown has made landlords anxious to welcome new tenants. The city center’s vacancy rate hit 19.7% in the first quarter, a record and up from 16.2% a year earlier, according to Colliers International.
It’s not just Chicago businesses that are on the move. Across the country, law firm employees return to the office nearly 30% more often than workers in other industries, according to a 2022 Savills report, citing data from Kastle Systems, a security firm that tracks card usage.
The need for face-to-face interaction with clients helps bring lawyers back, according to Learner, and partners don’t want to mentor new associates via Zoom either. But even though that leads many businesses to look for space, it’s not a bonanza for homeowners. Savills found nationally that not a single law firm signed a deal in the first quarter for more than 100,000 square feet.
“Most of the relocations we’re seeing now have resulted in firms taking up less space, or taking up the same amount of space, but using it to accommodate more attorneys,” Learner said.
The newer Class A buildings favored by law firms typically have fewer interior columns, allowing for more efficient use of space, according to Margaret Poster, CEO of Cushman & Wakefield.
That’s a plus, he added, as it helps continue a huge cultural shift underway in the legal world. In the past, partners often occupied the largest offices, in many cases approximately 1,000 square feet, while associates made do with a fraction.
“That is no longer the case,” Poster said. “Companies are becoming much more democratic and universal office size is now the norm.”
It’s yet another plus for young lawyers, and by taking up less space, firms can afford the rents demanded by new amenity-rich properties like Salesforce Tower and BMO Tower in Chicago, and One Vanderbilt and the Hudson Yards complex in Midtown Manhattan. .
“We’re seeing the same thing in every big market in the country,” Poster said.
Learner said he expects this high level of activity from law firms to continue.
“You would think that at some point the fierce competition for talent would take a break and companies would relax a bit,” he said. “But right now there doesn’t seem to be an end in sight.”