Don’t Discount Law Firms in Manhattan Leasing!
The legal sector has always been an important source for office space demand in Manhattan, although over the last several years, the industry has taken a back seat with the emergence of technology, advertising, media and information companies and coworking. However, law firms have been extremely active over the last 18 months with 152 of them having leased or renewed space throughout Manhattan. The total leasing volume for this industry equaled 4.6 million square feet, with nearly 1.8 million square feet of activity in just the first half of 2018. This year, law firms have been trending toward more efficient spaces. Over 46 percent of the leasing activity took place in new construction and redevelopments. From 2014 through 2017, the legal services industry leased an average of 2.7 million square feet. At its current pace, this sector is likely to reach levels last achieved in 2013, when leasing activity totaled 3.5 million square feet, as there are 40 firms in the market with a total requirement of 2.7 million square feet.
Throughout Manhattan, 84.1 percent of the square footage leased by legal services came from firms 20,000 square feet and greater. This percentage was up over the past 18 months, from the 78.4 percent five-year average from 2012 to 2016. Not surprisingly, large law firms leased the bulk of the space. Eleven firms signed leases greater than 100,000 square feet, totaling 2.1 million square feet and 45.7 percent of the sector’s activity. Here is a breakdown by size range:
– Firms taking up 100,000-plus square feet of space have accounted for 11 leases (7.2 percent of transactions), taking 2,099,387 square feet, making up 45.7 percent of the total space leased.
– Firms taking up 50,000 to 100,000 square feet of space have also accounted for 11 leases (7.2 percent of transactions), taking 793,272 square feet, making up 17.3 percent of the total space leased.
– Firms taking up 20,000 to 50,000 square feet of space have also accounted for 30 leases (19.7 percent of transactions), taking 966,866 square feet, making up 21.1 percent of the total space leased.
– Firms taking up 10,000 to 20,000 square feet of space have also accounted for 27 leases (17.8 percent of transactions), taking 413,753 square feet, making up 9 percent of the total space leased.
– Finally, firms taking up less than 10,000 square feet of space have also accounted for 73 leases (48 percent of transactions), taking 317,939 square feet, making up 6.9 percent of the total space leased.
Despite the larger tenants totaling a higher percentage of the total square footage leased, two-thirds of the law firms leased spaces of less than 20,000 square feet.
Law firms also continue to prefer Midtown, as 112 of them leased space in the area over the past 18 months, totaling 4 million square feet. This accounted for 86.7 percent of the 4.6 million square feet of the sector’s leasing activity. Sixth Avenue and Rockefeller Center was the destination of choice for law firms, with 51.5 percent of the Midtown square footage leased occurring in this submarket. Downtown was the second market of choice, with 11.8 percent of the lawfirm deals.