The legal services industry is evolving as workplace arrangements have fundamentally changed since the start of the pandemic. While overall employment in the legal services sector was flat over the past 12-months, approximately 27,500 jobs were added. Further, employment in the sector is still 2.4 percent above pre-pandemic levels. However, this job growth has not translated to additional office space needs for law firms. Over the last decade, law firms have generally shrunk their space per attorney based on working habits and due to the consolidation and digitalization of files reducing space needs. Since the start of pandemic, lease deals are down over 30 percent, while overall leasing volume (total square feet leased) is down more than 25 percent. However, when lease deals were completed, the average square footage leased per deal is similar to pre-pandemic levels.
Office Tenant View
- The bad news for landlords/owners has provided a generational opportunity for occupiers as they seek to negotiate and push for more flexible terms.
- The ability to sublease underutilized space for law firms is difficult as a flood of office sublease space has entered the market.
- The time to secure a lease is being extended as negotiations now may involve not just the owner, but also debt holders.
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