Law firms will see real estate opportunities continue to shift away in the current expanding economic cycle. However, opportunity to optimize real estate costs will remain for firms that focus intently on maximizing the efficiency of their real estate footprint, while enhancing strategies around talent in fringe urban cores where Millennials live and ideally want to work.
Trends to watch:
- Right sizing wave is peaking, but will continue to evolve
- The supply shortage is kicking in, bringing with it higher rents
- Talent, not a premier address, will increasingly influence site selection
- We don’t all have to sit together – firms relocating non-revenue functions
- Despite moves toward efficiency, firms are still wary of aggressively reconfiguring offices
Clustering of specific industries such as technology, life sciences and finance drive San Diego’s law firms to continue to relocate from Downtown to Del Mar Heights and UTC. Additionally, a consistent demand for space in these submarkets is causing asking rents to increase, with Class A asking rents 15 to 30 percent higher than the region overall. With few large blocks of space available, renewals and build-to-suits (BTS) remain the most common solutions for larger law firms.
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