City law firms examine office needs
24th February 2017
Six City law firms have put their office requirements – totalling 630,000 sq ft – under review, as the sector battles with business uncertainty.The largest is Berwin Leighton Paisner, which has instructed Cushman & Wakefield to advise on the future of its London HQ following the 2019 expiry of its 162,000 sq ft lease at Adelaide House, EC4.Baker McKenzie has launched a workspace review, understood to be led by CBRE, to consider the future of its 160,000 sq ft offices at100 New Bridge Street, EC4.The news comes on the back of Hogan Lovells canning its 350,000 sqft requirement this week and deciding to stay put at Deka’s Atlantic House, EC1 until 2026. Earlier this month the firm asked partners to contribute £50m to the business after its cash holdings tumbled, although it recently posted an 8% increase in its turnover outside the US.It is considering options for the future of its 92,100 sq ft of space at Royal London’s 21 Holborn Viaduct, EC1and Meridian House, EC4.This has had a subsequent knock-on effect on the investment market. Malaysia’s Lembaga Tabung Haji is now planning to refurbish 10 Queen Street Place, EC4 after the collapse of its occupier, King & Wood Mallesons, thwarted a potential £220m sale. It has appointed Knight Frank to provide strategic advise on asset managing the 232,000 sq ft building.Large law firm requirements have long been bread and butter for the City market, with the sector taking on 3.4m sq ft, or 7% of take-up in the City core last year, according to EGi research. However, that appears to be changing as the legal sector responds to uncertainty and starts to catch up with workspace innovations already adopted by tech and accountancy firms.Freshfields’ pre-let of 255,000 sq ft at Brookfield Property Partners’ 100 Bishopsgate, EC2 will see it reduce its City take-up by 30%, shedding 116,000 sq ft in London while doubling the size of its Manchester hub at One New Bailey in Manchester. The law firm has also secured an option to increase or decrease its space at 100 Bishopsgate by 50,000 sq ft before it relocates in 2021.Philip Pearce, executive director in Savills’ central London office team, said: “I think if you’re doing a pre-let anywhere at the moment, then with such high levels of uncertainty then absolutely it would be prudent to ask for some degree of flexibility in the form of being able to put space back or add more.”He added that law firms tend to take around 15% less space when they relocate, due to changing working practices. “In some ways it’s more efficient to move because you can start with a clean canvas.”When CMS, Nabarro and Olswang merged earlier this year the firms released around 200,000 sq ft of office space into the market and took on 80,000 sq ft at CMS’s existing HQ at Hines’ Cannon Place, EC4.Stephen Millar, CMS UK managing partner, said it chose Cannon Place because the company liked the 50,000 sq ft floorplate designed for an investment bank, which allowed it to redefine lawyers into sector-based teams rather than traditional practice departments, and allow for 15% more capacity.JLL’s head of legal services, Richard Norton, said cost pressures, client pressures and staff pressures were all influencing the changes in office requirements for law firms. He predicts the trend for flexible working, open plan requirements with improved shared amenity spaces to grow in the sector.