Legislation agency leasing of workplace house accelerated final 12 months and into the primary quarter of 2025, in accordance with Savills’ U.S. Legislation Agency Exercise report. The corporate’s analysis took under consideration commitments of 20,000 sq. ft or extra.
Leasing within the sector surged to three.4 million sq. ft in Q1, double the amount of the identical quarter a 12 months earlier. The leasing momentum began final 12 months, with common quarterly quantity over the previous 12 months reaching 3 million sq. ft, in comparison with a mean of 1.5 million sq. ft per quarter between 2020 and 2023.
Throughout 2024, legislation agency leasing exercise got here in at 10.2 million sq. ft, besting the earlier peak of 8.4 million sq. ft in 2019, amounting to a 20.5 p.c leap. Thus 2024 was essentially the most strong 12 months for legislation corporations in over 5 years, highlighting the authorized sector’s revived demand for workplace house.
“This pattern underscores the sector’s sustained return to pre-pandemic ranges of exercise,” the report famous.
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Nonetheless, provide is comparatively tight and building prices are elevated, producing a surge in lease renewals amongst U.S. legislation corporations. Actually, a large portion of final 12 months’s leases—68.8 p.c—concerned renewals.
Such a method represents a extra sensible and environment friendly selection for a lot of corporations, the report talked about. It is usually a flip from current years, particularly 2022, when 66.1 p.c of lease exercise concerned a relocation or new lease.
Largest Q1 legislation agency lease
New York Metropolis remains to be the hub of the trade. The market accounted for 23 p.c of the full authorized leasing quantity and 17.5 p.c of the variety of lease transactions nationally within the first quarter, in accordance with Savills information.
Certainly, the biggest legislation agency lease of Q1 2025 was Mayer Brown’s 330,662-square-foot renewal and growth at 1221 Avenue of the Americas in Manhattan.
Different giant leases for the quarter included 271,807 sq. ft for Mayer Brown in Chicago—an extension; 183,000 sq. ft for Duane Morris in Philadelphia—a restructuring; and 131,054 sq. ft for Kirkland & Ellis in New York—a brand new lease. Different markets with leases over 100,000 sq. ft in Q1 included San Diego, Boston, San Francisco, Washington, D.C., and Dallas.
As building prices climb and tenant enchancment allowances aren’t maintaining, legislation corporations are turning to longer lease phrases. Whereas concessions stay comparatively sturdy, they not often cowl full build-out bills, pushing corporations to safe longer commitments in change for monetary reduction.
“In tighter markets the place premium house is restricted, corporations are locking in longer phrases to safe high areas, usually negotiating added flexibility into their offers,” the report famous.
“In additional tenant-friendly markets, corporations face comparable price pressures however have extra leverage to construction leases with choices equivalent to extensions, restructures or growth clauses.”
