Firms rush for City space as bargain rates come to an end
Law firms will need to get their houses in order, quite literally, if they are to cash in on current bumper deals. In particular, the US firms have been making the most of generous terms, and a number of UK firms are looking at the possibility of making an early move. But the good times could be set to change.
“There is no doubt that the end of the downturn in rents is in sight,” said senior director at real estate company CB Richard Ellis Chris Vydra. “That’s typified by some of the middle tier UK legal practices now following in the wake of the US legal fraternities in starting to make decisions on their long-term relocations,” he added.
A host of possible premises has meant that lawyers have, in recent months, been spoilt for choice. For example, 74 per cent of premises on CB Richard Ellis’ books are suitable for legal practices.
The City still represents the most expensive option, averaging around £47.50
per sq ft. That compares favourably with 2000-01, when prime rents were reaching a whopping £65-£70 per sq ft. Midtown is averaging around £12 per sq ft cheaper than space in the City, and Canary Wharf, which has a vacancy rate of around 13 per cent, falls between the two options at an average of around £37.5 per sq ft.
That said, rent is just one factor in getting a good deal. Other considerations include rent-free periods, cash contributions, rates and service charges payable, varying lease terms and different specifications.
The biggest player on the market is Norton Rose, which is looking for around 300,000 sq ft. The short list for its office is believed to include MoorHouse at 119 London Wall, the More London development near Tower Bridge and 201 Bishopsgate. Sources in the property market suggest the latter is the current favourite.
| Canary Wharf: the best place for your firm? |
| There are still significant options available for law firms at Canary Wharf. US firm Kilpatrick Stockton looks set to become the fourth law firm to sign a deal in Canary Wharf, taking over space previously occupied by Skadden Arps Slate Meagher & Flom. Skadden has moved to 40 Bank Street, just round the corner from the new Clifford Chance building. Allen & Overy has also taken around 80,000sq ft there. Although rents can reach as high as £50 per sq ft in the area, the average tends to be slightly less than City rents, but still above average midtown rents. Buildings suitable for law firms in the region include 40 Bank Street, 25 Canada Square and 50 Bank Street, as well as space in Clifford Chance's building at 10 Upper Bank Street. |
| Firm | Situation |
| Norton Rose | Norton Rose is one of the biggest players on the market at the moment. Based in a number of buildings around Liverpool Street, the firm is looking for around 350,000sq ft. 201 Bishopsgate is thought to be a strong contender. |
| SJ Berwin | A deal looks imminent for SJ Berwin, currently based in two buildings on Gray's Inn Road. Key contenders for its new premises include Clifford Chance's former home at 200 Aldersgate, buildings in Chiswell Street or Queen Street Place. |
| Lawrence Graham | Currently based at 190 The Strand, with a little under 100,000sq ft. Lawrence Graham does not have to be out of its current premises until 2007, but has been actively looking for some time for a little more than 100,000sq ft with the option to take up to 150,000sq ft over the next 10 years. |
| Macfarlanes | Early days for Macfarlanes. The firm has to be out of its premises by 2009, but is keeping an eye on the market for a good deal on around 100,000sq ft. |
| White & Case | White & Case is currently based at 7-11 Moorgate, but has negotiated to take 100,000sq ft at Lion Plaza. Delays have threatened the deal, with the firm in recent months considering other options. But unless further delays occur, the move now looks set to go forward. |
| Sidley Austin Brown & Wood | Currently housed in two buildings on Threadneedle and Princes Streets. However, the firm has signed 78,500 sq ft and is believed to be paying £41 per sq ft with 30 months rent-free for a lease with a break just before the tenth year. The Threadneedle and Princes Street premises are now on the market. |
| Dechert | Currently housed in 2 Sergeant's Inn, Dechert has been looking for around 60,000sq ft. The firm has the ability to leave its current premises on a one-year break notice. |
| Orrick Herrington & Sutcliffe | Orrick is based at Tower 42 and is actively seeking around 25,000sq ft. |
| Latham & Watkins | Latham is seeking around 70,000-80,000 sq ft. It is thought be looking at extra space in its current premises at 99 Bishopsgate. |
| Dewey Ballantine | Dewey has around 18,000 sq ft in but is currently in the final throes of signing up for 31,000sq ft at 1 London Wall. |
| O'Melveny & Myers | O'Melveny currently has around 4,000sq ft at 3 Finsbury Square, but is looking for a new space of around 12,000 sq ft. |
| Building | New tenant |
| Lion Plaza | Based at 5 Old Broad Street. Despite delays, it looks set to be White & Case's new home. |
| Woolgate Exchange | New home to Sidley Austin Brown & Wood, which hopes to move in some time next year. It is also the headquarters of WestLB. |
| 1 London Wall | Looks set to be the new home of Dewey Ballantine. Lawrence Graham and Latham & Watkins have also been considering this building. |
| 200 Aldersgate | The former Clifford Chance building and one of the buildings currently being considered by SJ Berwin. |
