In the Law Firm Services Group: 2018 North America Outlook, we examine how to achieve space efficiency and control costs while attracting the best talent. The North American office market is nearing a potential inflection point while law firms continue to wrestle with implementing new real estate standards. To provide insight into the key real estate trends for law firms to consider, this report highlights the office market characteristics and law firm activity in each of the 24 North American real estate markets covered by Colliers’ Law Firm Services Group.
- Space Efficiency in a Competitive Hiring Environment: Despite differences between markets, the drive for space efficiency and creation of the optimal work environment are still consistent themes. Although law firms, and financial and professional services firms in general, continue to focus on bottom-line costs, they are also competing to attract and retain the best talent, which impacts premises strategy. For the international firms there is also an increased focus on global real estate standards.
- Benefits of Leasing Premium Space: When the opportunity exists, it can make both financial and business sense to lease the best new space, but with a reduced footprint and a configuration that fosters engagement, creativity and collaboration to provide the best client service. Implementation of such a strategy is, in part, dependent upon the availability of new space which is tight in the core office markets.
- Renewals Present Opportunities: Renewals continue to dominate law firm leasing activity, in part because of supply constraints but mostly reflecting the continued drive for cost containment. With investment of sufficient capital, it can also be possible to creatively restructure a firm’s existing space, provided it is not too outmoded to enable efficiency gains.
- Local Market Conditions: While the U.S. office market remains largely healthy, tenants could see some localized easing of market conditions. Rent growth has largely abated and, barring a rebound in demand, there could be upward pressure on vacancy until new construction recedes.
Of the 24 markets that we cover in this report, two are in Canada. Both Toronto and Vancouver are the premier markets in Canada and are both in very strong points in their cycle.