San Francisco and Los Angeles are seeing a shakeup in law firm leases
Law Firms
San Francisco and Los Angeles are seeing a shakeup in law firm leases
July 17, 2024, 8:00 am CDT
(Image from Shutterstock.)
Law firms in both San Francisco and Los Angeles are increasingly moving their offices out of downtown areas, according to Jones Lang Lasalle’s recent report on law firm commercial leasing.
In San Francisco, 74 Am Law 100 firms occupy 4.8 million square feet, according to Law.com, which published data from the report. However, office vacancies in that city hit a record high of 32.4% through the first quarter of 2024.
And in Los Angeles, which reportedly houses 86 Am Law 100 firms that lease 4.5 million square feet, commercial leasing was down 20% in the last two consecutive quarters.
“We are in a very complicated market,” Kevin Bender, managing director of Jones Lang Lasalle’s Los Angeles office, told Law.com. “Los Angeles, San Francisco and other urban areas like New York, have seen rents agreed to on leases at the highest points in the history of those markets.
“There is a pursuit and certainly a flight to quality by tenants and law firms driving this to where they say, ‘We’re going to get more efficient, but we’re willing to go to nicer buildings, because that’s part of the environment.’”
Bender added that the “flight to quality” is shown in the “migration from Downtown LA to Century City” in Los Angeles and “migration from ‘A buildings’ to ‘trophy buildings’” in San Francisco. He told Law.com this means firms increasingly desire premier commercial real estate.
Jones Lang Lasalle’s report noted that more than 30 million square feet of law firm leases in nine key markets are expiring, according to Law.com. The report also said “virtually no” offices began construction projects in the first quarter of 2024.
