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Take-up by legal firms in Central London has jumped to 621, 800 sq ft for the first three quarters of 2013, compared to less than half that amount at the end of the third quarter in 2012, just 239,200 sq ft. The dramatic rise was supported by four leasing deals of over 50,000 sq ft, according toLaw in London, a report on the 100 largest law firms in London by CBRE, the global property advisor.
Pick-up follows a record low in 2011 when legal transactions levels accounted for just 397, 100 sq ft in Central London, 46% below the ten-year average, highlighting the impact of the global financial crisis on the legal sector.
Frances Warner Lacey, Senior Director, Central London, CBRE, said: “The improving economic recovery is having an impact on the leasing trends of legal occupiers. Over the last decade occupiers have looked to relocate to the City fringe or Southbank, areas that could satisfy larger requirements at lower cost. However this trend has now been reversed.
“We expect the general pick-up in Central London demand to hasten legal real estate decisions, before favourable market conditions that have underpinned demand in 2013 switch back in favour of landlords.”
Notable deals in the first nine months of 2013 include 140,300 sq ft leased to CMS Cameron McKenna at Cannon Place and 138,300 sq ft leased to Bird & Bird at 12/14 New Fetter Lane.
The number of fee earners in the CBRE Legal 100 has increased by 6% since 2012, with the most significant increase occurring in US and international law firms. In this sector, expansion led growth has increased the average number of fee earners by 12%. This upsurge has led to an increase in office space, with the average group total rising by 11% to 70,200 sq ft.
Frances Warner Lacey continued: “GDP growth has exceeded expectations and business confidence is at its highest level in years, this has helped stimulate demand and improve leasing levels from the record low in 2011. The impact of the economic crisis however has not been forgotten, as firms are looking to use space more intensively and effectively, taking advantage of lease breaks and office relocations to consider the benefits of open-plan versus cellular design.
“Workplace strategies to cut real estate costs are being contemplated by many decision makers. Lawyers are prepared to consider radical changes in how space is used in order to gain maximum value per square foot. Many firms have undertaken in-depth studies into alternative modes of occupation, comparing the traditional cellular based model to the alternative option of open-plan.”
The legal sector is a key component of the Central London office market, with London firmly established as a key global centre for legal services. Since 2003, the sector has accounted for 9% of Central London take-up but in the City and Midtown, regarded as the heartland of the sector, it has accounted for 14% and 16% of take-up respectively.