Clifford Chance, Freshfields Bruckhaus Deringer and Baker & McKenzie’s mammoth European office moves topped the lettings market for largest deals during the first six months of 2005.
Exclusive research by property services company Cushman & Wakefield Healey & Baker (C&W/H&B) for The Lawyer reveals that Clifford Chance’s 13,000 sq m pre-let in Place Vendôme, Paris was the largest in the first half of the year.
The pre-let is part of a slew of moves being undertaken globally by Clifford Chance – the largest ever implemented by a global law firm. At least four other new premises are planned in Dubai, Düsseldorf, Prague and Singapore.
Freshfields’ 12,200 sq m pre-let in Frankfurt and Baker & McKenzie’s letting of 9,500 sq m in Amsterdam also topped the list of largest lettings. Meanwhile, Hogan & Hartson’s letting of 3,020 sq m of office space in Juxon House was the largest deal in London during the same period, ranking fifth largest in Europe.
But despite such mammoth lettings, analysis by C&W/H&B suggests the lettings market for law firms has peaked. Total lettings to the London legal sector fell by a half in the first six months, as did those in Brussels and Madrid.
One City-based letting agent says most of the City’s largest firms have relocated or taken up overflow space, such as Clifford Chance’s move to Canary Wharf and Herbert Smith’s letting of 90,000 sq ft in City Gate House, reducing demand for large amounts of space.
“Lawyers occupy about 8 per cent of the City market but in the past year they have represented 23 per cent of active demand,” says the agent. “That is disproportionate so demand must decrease.”
But William Beardmore-Gray, head of City at agency Knight Frank, claims improvement in the legal market should boost take-up in the short to medium term, especially in the City and mid-town markets.
“I don’t see any reason why uptake by law firms shouldn’t remain consistent,” he says. “There are a number of firms looking at the moment. And quite a few are splitting off their insurance practices into separate office space in EC3.”
Those searching for premises include Taylor Wessing and Addleshaw Goddard. Both require between 14,000 and 19,000 sq m of space, although neither is required to relocate under its current lease agreements.
Pinsent Masons is also searching for a new mid-town location, if it can negotiate a surrender clause on its current leases, while Milbank Tweed Hadley & McCloy is understood to be considering space at 10 Gresham Street.
London was the most active market of the 15 European cities in the study, with law firms taking up a total 30,600 sq m of space in the first six months. The average office size is 2,800 sq m.
Overall, law firms accounted for 135,000 sq m of office take-up across the 15 cities for the same period. Meanwhile, total office space occupied by firms in Belgium, France, Germany, Italy, the Netherlands, Spain and the UK is now about 10 million sq m – equivalent to Madrid’s total office stock.
James Young, head of C&W/H&B’s European law firm practice group, claims firms are capitalising on softer office market conditions to identify buildings and fix future real estate costs.
“They are increasingly looking at their property portfolios and asking themselves, does this space work for our business?” he says. “This is why we are seeing law firms across Europe consolidate their property requirements into one functional, flexible building to help them be more productive and cost-efficient. That’s what is driving demand.”
Other recent lettings include Reynolds Porter Chamberlain‘s move to K2, and McClay Murray & Spens, which is taking 25,000 sq ft in One London Wall alongside DLA Piper Rudnick Gray Cary, which is taking 2,300 sq m of overflow space in the building.
Bingham McCutchen and Baker Botts are becoming neighbours in 41 Lothbury, next to the Bank of England.
Dechert is one of the frenzy of firms on the move. The US firm officially relocated to its new premises at 160 Queen Victoria Street over the weekend.
Dechert London managing partner Steven Fogel says by moving while the market is soft, “you can afford to give something extra to your staff, and you can take the opportunity to re-engineer aspects of the business”.
|Key deals January-June 2005|
|City||Tenant||Address||Size (square metres)|
|Paris||Clifford Chance||9 Place Vendôme||13,000|
|Frankfurt||Freshfields Bruckhaus Deringer||DZ Hochhaus, Bockenheimer Anlage 46||12,200|
|Amsterdam||Baker & McKenzie||Mahler IV – Michael Graves, Gustav Mahlerlaan||9,500|
|London||Hogan & Hartson||Juxon House, 100 St Paul’s Churchyard||3,020|
|Milan||Biscozzi e Associati||Corso Europa 2||3,000|
|London||Kirkpatrick & Lockhart Nicholson Graham||110 Cannon Street||2,990|
|Brussels||Lontings & Partners||Tour & Taxis building, Avenue du Port 86c||2,400|
|Paris||Denton Wilde Sapte||5-7, Avenue Percier||2,300|
|Madrid||Albiñana y Suárez de Lezo||Calle Génova, 27||2,200|
|Source: Cushman & Wakefield Healey & Baker|
|Take-up in Europe’s key cities|
|Position in terms of take-up||City||Take-up January-June 2005|
|Source: Cushman & Wakefield Healey & Baker|