Law firms are snapping up space in the Square Mile as the war on talent intensifies and in an attempt to tempt staff back to the office, according to H1 2023 data from BNP Paribas Real Estate.
Over the last six months, office take-up in the City totalled 4.14m sq ft, with law firms accounting for 508,000 sq ft of activity. Key deals included Goodwin Procter signing for 89,645 sq ft at Christchurch Court at a rent of £82.50/sq ft – the largest City deal to complete in Q2; Latham & Watkins pre-letting a further 77,000 sq ft at One Leadenhall at £82.50/sq ft bringing the firm’s total space commitment to 280,000 sq ft; and Dentons pre-letting 67,482 sq ft at One Liverpool Street at £87.50/sq ft.
Supply in Q2 fell to 11.1m sq ft – down 14.1% year on year – and at the end of the quarter, the vacancy rate in the city reached 10.38% – the fourth consecutive quarterly fall and below the 10-year average. Prime rents across the City remain at £72.50/sq ft, increasing to £85/sq ft for City towers.
James Strevens, head of City leasing at BNP Paribas Real Estate, said: “The legal sector is emerging as the dominate player in the City market, spurred on by deals from firms such as Clifford Chance and Reed Smith to name but a few. Establishing brand identity is the order of the day as they seek out sustainable, size appropriate spaces in the form of best in class amenity-rich office buildings. They recognise the importance of the office more than ever now, and seek to provide more interesting and collaborative spaces for staff and clients alike.”
Mhairi Thomson, associate director, office research at BNP Paribas Real Estate, added: “Lease events are coming up for a wide range of law firms with a number of expiries scheduled for the rest of 2023, equating to 225,000 sq ft of the wider professional services tenant sector. On this basis, we anticipate a flurry of interest to pour in from law firms. With constrained Grade A supply, this is likely to push average prime rents in the City up.”
