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News Release

EMEA

Law firm office leasing reaches tipping point in Europe


​With global growth prospects volatile and continuing to diverge, law firms will encounter diverging market conditions across Europe over the next 12 months according to Jones Lang LaSalle’s Global Law Firm Perspective 2013.

The study, an annual barometer of law firm real estate trends around the world, details opportunities for portfolio optimisation in what has been a challenging environment for firms.

2013 has been another year of change in the broader economic operating environment in which international law firms operate, fuelling increased optimism for 2014 and 2015.

“London remains a core market for law firms and sentiment is on an upwards trajectory. Latest research from Legal Week indicates a third consecutive year of growth for the top 50 firms and this has been reflected in improved demand for office space this year. However, the supply of appropriate office stock in the City of London is reducing, and law firms face the potential for rental increases and diminishing incentives due to a number of large lettings and the tightening of supply. The need to plan ahead in respect of property strategy has never been greater.” Said Richard Proctor, head of Central London Tenant Representation at Jones Lang LaSalle.

By August 2013, seventeen letting transactions in London had secured over 535,000 square feet (sq ft) of floor space – already above the three-year quarterly average (522,291 sq ft) and +114% up on the same period last year. The two largest transactions in the year-to-date were CMS Cameron McKenna who leased a total of 140,190 sq ft at Cannon Place, EC4, and Bird & Bird who have taken a pre-let of 136,200 sq ft at 12-14 New Fetter Lane, EC4.

In Germany too, law firms may face more landlord-favourable conditions over the next 24 months in select locations including Munich and Frankfurt where rents are reaching €31 and €34 square metres (sq m) per month respectively.

“Law firm growth in the German Big 7 has been evident in leasing activity – with around 150,000 sq m of office space in each of the last two years. Although activity has been more restrained in 2013 with only 45,000 sq m of new office space leased in H1, growth drivers remain positive with both the number of lawyers and revenue growth increasing.” Said Randy White, regional director, Tenant Representation at Jones Lang LaSalle Germany.

Increasingly positive economic news across much of the Eurozone is likely to impact both revenues and real estate conditions for law firms across the region.
“In 2014 we foresee great opportunities on offer to law firms looking to take advantage of tenant-favourable conditions in certain parts of the Eurozone. Such markets include; Milan, Paris, Brussels, Madrid and Warsaw, where higher vacancy rates and better opportunities to negotiate with landlords will favour law firms seeking to improve the quality of their real estate or reduce costs.” Said Tom Carroll, director, EMEA research at Jones Lang LaSalle.
Jones Lang LaSalle report that the split in leverage across the globe will begin to coalesce in the latter part of 2014 and early 2015, when law firms are projected to encounter tighter real estate markets, resulting in heightened landlord confidence and decreased leverage in lease negotiations.
 
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About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $47.7 billion of real estate assets under management. For further information, visit www.jll.com.