03.19 Legal Briefs - LSAG Newsletter

NYC Law Firms Are on the Move BY LAUREN HALE The Manhattan office market is extremely healthy. Employment is at an all-time high, 2018 tenant demand was robust and large corporate users continue to make long-term commitments to the city. New leasing activity hit a record high in 2018 with 35.9 million square feet (msf) transacted. Overall vacancy was up slightly to 9.2% in 2018, as new construction projects were completed. Overall Manhattan asking rents remained relatively flat, but Midtown South and Downtown asking rents reached all-time highs. Midtown overall asking rents finished 2018 at $75.03 per square foot (psf) and are still 11.8% off of all-time highs from 2008. The Manhattan office market is evolving from an influx of new construction as well as a shift in the tenant base. From 2016–2023, over 30.3 msf of new office product will be built, and existing stock will continue to be modernized as landlords compete with the major new developments. The average age of a Class A office building in Manhattan is 53 years old— the market is long overdue for new office buildings. Of the tenants committing to new construction, financial services has committed to 4.7 msf of space, followed by TAMI (technology, advertising, media, information) committing to 2.7 msf, and the legal sector leasing 2.3 msf. The tenants that have committed to new construction are vacating 12.9 msf—3.5 msf of which has already been re-leased. The bulk of the available 9.4 msf is in Class A space throughout Midtown, creating opportunities for many tenants to lease space in high-quality that they may not have been able to afford in the previous height of the market. While many of the tenants are reducing their footprint as they relocate to more efficient buildings, approximately 30% of tenants larger than 100,000 square feet (sf) transact four to eight years in advance of their lease expiration and are taking more space in anticipation of future growth.

The UK and Australia are responsible for some of the most progressive workplaces in the world across all sectors – including law. There is significant value in looking at what is happening outside the US to expand our local thinking and to stretch it to a global world stage. Although there is no crystal ball to tell us exactly what type of optimal work environment will support the actual future practice of law, there are a plethora of emerging trends, market indicators, and successful global precedents to point us in the right direction. ABOUT THE AUTHOR Tara Roscoe works at Woods Bagot New York, leading the North American Workplace group. Tara is a recognized as a design leader in the industry and has substantial experience working with clients to innovate and reinvent their workplace. She works across multiple sectors and with team mates within the global studio on both law firm and non-law firm projects. Tara joined Woods Bagot in 2017. Woods Bagot is recognized as one of the worlds’ most progressive and innovative Architecture firms. It first opened its doors 157 years ago in Adelaide, Australia and has 850 professionals working out of 15 offices globally. The firm completed the design and delivery of both projects referenced in this article: Gilbert & Tobin and Eversheds.

The Manhattan office market is evolving from an influx of new construction as well as a shift in the tenant base.

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