• Major developments such as China’s Belt and Road Initiative - once called "One Belt, One Road” - will likely raise economic activity, strengthening demand for legal services in the region
• Law firms in Singapore enjoy relatively attractive average real estate cost among eight key cities tracked in the report; but rents are projected to rise in 2018
• Battle for talent and evolving work culture encourage law firms to implement more flexible working initiatives
Singapore, 10 April 2018 – Colliers International (NASDAQ and TSX: CIGI), a global leader in commercial real estate services is pleased to announce the launch of its latest Law Firm Trends and Outlook Report 2018 APAC, aimed at helping both Occupiers and Landlords understand the emerging trends in the legal sector and guide them on their real estate strategies.
The study, which assesses office leasing and occupancy trends as well as human resources needs among law firms in eight key cities in Asia Pacific, was undertaken jointly by Colliers and leading recruitment agency Michael Page.
Across the region, the legal industry is evolving at an unprecedented pace amid the advent of new technologies and increasingly competitive business landscape. Broader factors like China’s economic rise and the expectations of a new generation of legal professionals also compel law firms to rethink the way they source, retain and structure their teams.
Globally, law firm mergers continue to reshape the legal landscape as firms seek to expand their reach and ability to service clients internationally. These trends will have implications for the real estate sector as well as the legal industry in key Asia Pacific cities where law firms make up a sizeable portion of the occupier base.
Mr. Duncan White, Executive Director and Head of Offices Services at Colliers International, says, “Many law firms with global aspirations have ventured to Asia in the past decades in pursuit of growth opportunities and to continue to service their clients who had expanded into the region. With major developments including China’s Belt and Road Initiative, the ASEAN Economic Community, and the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade pact recently, we expect economic activity to pick up substantially which will in turn create higher demand for legal services. Singapore, in particular, can serve as a conduit to Southeast Asian markets.”
Ms. Ng Lay Hoon, Associate Director of Michael Page Singapore, observes, “In order to work across the regional Chinese markets, and in organisations with strong establishments in Greater China, Mandarin speaking skills have grown increasingly important for legal professionals. This demand from companies has grown so intense in the recent years that we have seen more non-Chinese native speaking professionals, such as South Asian or Western lawyers, being more aggressive in improving their Mandarin skills by attending language competency lessons.”
Legal sector activity & real estate: Singapore
The city-state continues to be a leading legal hub, specifically an international centre for dispute resolution, arbitration and intellectual property. Currently, 48 of the Global 100 law firms have offices in Singapore, an increase from 40 in 2016/17 and 36 in 2015/16, according to the report.
A lion’s share of the international law firms - about 94% - are located in the core central business district (CBD). Colliers’ data showed that they occupy about 4.5% of Grade A buildings in the CBD. Recent office leasing transactions included: Reed Smith which took up 15,000 sq ft of space at Ocean Financial Centre; 9,000 sq ft of space at UIC Building by Ince & Co.; and 7,449 sq ft of space at Marina One by CMS Cameron McKenna Nabarro Olswang (Singapore) LLP.
Interestingly, a comparison of rentals across the eight cities tracked by Colliers found that law firms in Singapore enjoy one of the lowest average real estate costs per fee earner at USD 30,500 per annum. This was markedly lower than USD84,000 in Hong Kong, USD50,800 in Shanghai, and USD50,000 in Tokyo – the three that topped the chart in the Colliers-Michael Page study.
Mr. White adds, “Prime office rents in Singapore have been soft in the last couple of years, but we saw the market started to bottom out towards the end of 2017, and rents are on their way up owing to firmer economic growth and more positive business sentiment, as well as tighter supply of space. We expect CBD Premium & Grade A rents to rise at a much faster clip - by about 10 to 12% - this year, up from the 2.3% growth in 2017. As the market adjusts, early negotiation initiatives should be adopted by occupiers.”
The rapid rise in new technologies could disrupt the legal sector, with some implications on the physical premises firms occupy and the way they use their occupied space. Like many industries, talent attraction and retention will continue to be a key consideration for law firms.
Talent trends in legal: An Asia Pacific perspective
The study found that talent is most in demand in sectors and specialisations including: Mandarin language skills; real estate investment proficiency; aircraft financing and structured finance; as well as property, project and construction expertise.
However, law firms will have to innovate working practices and spaces to attract the best and the brightest talent. Work-life balance and a sense of purpose are a growing priority for many legal professionals, who are gravitating towards firms that offer a degree of flexibility on working hours or locations. Physical space is also an important consideration, with many candidates now expecting eye-catching designs and amenities at the workplace. These include: a well-stocked pantry, games room, as well as office buildings that offer a multitude of amenities and interactive or shared areas.
To address talent shortage and skills gap, law firms can offer existing staff the opportunity to transfer into areas of need, supported by appropriate training and guidance. Setting a clear career path and communicating the vision for progression to potential candidates will also help law firms stay competitive in the talent hunt race.
“Sometimes legal firms think they’re the ones having their pick of legal candidates. Increasingly though, it’s also the candidates choosing the firm. If these candidates are experts in a highly demanded specialisation, they do have options. To attract talent, today’s law firms must not only consider their overall proposition to prospective candidates, they also need to think about investing in their talent. Legal professionals want their potential employers to have a view on career progression, global mobility and flexibility,” explains Ms. Ng.
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