Law firms target City offices as demand grows

Demand from law firms for offices in London has surged, with two-thirds of active requirements homing in on the City and Southbank submarkets, according to new data from Knight Frank. Active requirements for London office space from law firms reached 1.35m sq ft in Q1, surging by 37% on the previous quarter. The data also shows that London’s legal sector has more than 12m sq ft of lease expiries between now and the end of 2030, with annual take-up in the coming years expected to exceed the highs seen in 2023 (838,000 sq ft) and 2022 (1.6m sq ft). Some 5.8m sq ft of speculative grade-A office space is under construction in the City and Southbank to be delivered by 2027. Researchers questioned whether there will be sufficient supply to keep pace with law firm demand. Knight Frank added that the “dearth of supply” is already driving early prelets, including the 68,000 sq ft prelet at 1 Liverpool Street, EC2, to Dentons, which it advised on. Legal sector take-up was subdued in Q1, which Knight Frank attributed to the timing of lease events. It added that the first quarter of each year typically witnesses less activity than other quarters. A total of 91,400 sq ft was recorded, including legal services provider Three Crowns taking 15,500 sq ft at the JJ Mack building in Farringdon, EC1, and US firm Cravath, Swaine & Moore taking an assignment on 21,700 sq ft from Goodwin Procter at 100 Cheapside, EC2. Knight Frank advised on The JJ Mack letting to Three Crowns and acted for Goodwin Procter, which moved into their new London offices at the Sancroft building, EC1, at the end of April. Richard Proctor, head of London tenant representation at Knight Frank, said: “We have seen strong demand for best-in-class offices from the legal sector in recent years, driven in part by the expansion of numerous US firms in the London, and also as a result of the recognition by numerous firms of the important strategic role great offices play when it comes to attracting and retaining talent, and increasing collaboration to drive productivity. “While quarterly take-up has softened this quarter due to the timing of lease events and seasonal trends, our data on live requirements and long-term lease events suggests law firms will drive leasing activity in the City, in particular, in the coming years and will be competing for the next generation of office buildings currently under construction. “The continued delivery of new and refurbished prime office space in the City is vital if London is to support the growth of the sector and cement its position as the leading global hub for the legal industry.” Image from FTI Consulting