Law firms light up London’s leasing leagues

Professional services firms have taken a record share of central London office take-up so far in 2022, with deals from legal giants Clifford Chance and Reed Smith keeping momentum going as the year heads to a close. Clifford Chance this week handed GPE its largest leasing ever, preletting the entirety of 2 Aldermanbury Square, EC2 (pictured). Reed Smith has prelet Blossom Yard and Studios at British Land’s Norton Folgate scheme. A wave of lettings in the legal sector have bolstered the London office leasing market during a period of relative uncertainty from other sectors, said Patrick Scanlon, director of insight and innovation at Avison Young. “Professional services firms have accounted for almost a third of all office take-up in central London so far in 2022, the greatest share on record,” he said. “In the City, that share of the pie increases to almost 45%, which is considerably higher than anything we have ever seen in the past; much of this demand has been driven by law firms.” Scanlon said activity is being driven by London’s standing “at the forefront of global expansion strategies for US law firms”, as well as firms already at home in the capital “upgrading their office space to ensure they attract and retain the best talent”. That demand is “removing new speculative space from the development pipeline”, Scanlon said, which will “further reduce the choice for firms looking to acquire space in London over the next few years and help keep upward pressure on prime headline rents”. British Land chief executive Simon Carter told EG the letting to Reed Smith underlined law firms’ desire for “well located, best in class space with really good amenities and sustainability credentials”, adding that the sector had been “a good pool of demand” for net lettings. At JLL – which advised both Reed Smith and British Land on the Norton Folgate deal – head of City office and central London strategy and growth Jeremy Attfield said the legal sector has been “incredibly active” within the City market for the past three years. He added that law firms have taken some 3.5 m sq ft over that period and drove “the most significant transaction” of each quarter this year. Those include Hogan Lovells taking a prelet of 280,000 sq ft at 21 Holborn Viaduct, EC1; Kirkland & Ellis’s relocation to 215,000 sq ft at 40 Leadenhall, EC3; Addleshaw Goddard’s deal to take 114,000 sq ft at 41 Lothbury, EC2; and now Clifford Chance’s letting from GPE. Moves may now level out, Attfield said, but there are still deals to be done. “Most ‘magic circle’ and elite US law firms have now completed their stay versus go strategies,” he said. “But there remain some significant active requirements which will not dampen 2023 take-up.” What will remain, he added, is the legal sector’s desire to acquire best in class offices which are sustainable and efficient. “Their workspace is evolving at pace but consistently they require sustainable, amenity rich environments enabling them to collaborate and thrive.” View office deals and comparables in London >> To send feedback, e-mail chante.bohitige@eg.co.uk or tweet @bohitige Image courtesy of GPE