During the summer months I spent much of my time visiting the offices of solicitors and barristers around the UK, interviewing JLL’s property agents in the Big Six UK cities and knee-deep in data to produce an article and 20,000 word data-rich, benchmarking report for the second The Lawyer UK 200 Workspace report which is sponsored by property giants JLL. http://www.jll.co.uk/united-kingdom/en-gb/services/property-sectors/law-firms
This year there was real estate and office data from over 100 firms across the UK – between them generating over £4.4bn in revenues, employing over 34,000 staff and spending £258m on 7m sq ft in the UK, a third of which is in London. JLL provided data and commentaries on the London, regional and European real estate markets.
I explored trends such as agile working and co-working that will impact law firm offices in the future and looked at the need to balance efficiency, productivity and wellness with more flexible workspaces.
Some of the key findings
- Across the sample, firms occupied an average of 68,742 sq ft at an average cost of £2.7m pa
- The average rent is £41 psf – This is the same as the average last year so rents appear to have stabilised. However, the majority of firms (57%) are paying less than £40 psf.
- Firms are generating an average of £645 revenue psf – which is higher than last year’s figure of £590 so firms are making their real estate work harder for them.
- The average cost per person is £7.5K and the average space per person is 187 sq ft.
- On average, firms are paying 6.6% of their annual fee income on real estate. 40% of the sample is spending between 5% and 7%, while 8% of firms are paying over 9% of their revenue on real estate each year.
- Across those firms where we have four years’ data, the average cost per sq ft at £38.93 is 1% higher than £38.63 in 2015. This compares with the 6% increase from £26.71 in 2014. So there is a slowdown in the rate of growth of costs.
- The average space per person across the sample is 187 sq ft but the firm providing the most had 340 sq ft per person
Regional comparisons
- Prime rents in London City are £70 psf and in London’s West End reach a staggering £120 psf, Vacancy rates are around 3.5% in both areas
- Prime rents in the regions range from £24 psf in Cardiff to £34 in Manchester. The lowest vacancy rates are in Leeds (4.1%) and Edinburgh (4.6%)
- London and the majority of UK cities – along with many German cities – are seeing rental growth slowing. Rental growth is accelerating in Spanish, Dutch, French, Belgian and Italian cities.
Insights
For me, the most interesting aspect was the shift from a focus on financial issues and space efficiency towards lawyer productivity and wellness through flexible use of space – a rethinking of the previous relentless drive towards open plan configurations. Another interesting trend is that law firms – particularly in London – are often using less space but more efficiently.
Also, whilst lawyer and support staff accommodation is still important, there is a much greater focus on the use of real estate to enhance the client experience which is driving the evolution of client suites, lounges and other services – including the provision of dedicated space on a long term basis for clients.
Firms are involving their legal and support staff much more in the consultation and design process during real estate strategy development and throughout the selection and fit-out projects and re-engineering of workspace for their new buildings. This indicates the greater awareness of the need to balance human resource issues with financial drivers. What is also apparent is that how lawyers use office space is still changing – so many firms are building in flexibility to their buildings.
Thanks
News and views of many firms are included in the report but I would like to thank particularly the following law firms for allowing me to interview them and/or visit their offices:
London
- Atkins Chambers barristers in Gray’s Inn
- Bird & Bird’s imminent move into 12 Fetter Lane
- Brahams Dutt Badrick French (BDBF) new offices in Monument
- Fieldfisher in Riverside House
- Mishcon de Reya’s client lounge at Africa House
- US firm Rope & Gray at its new City HQ
Regions
- Flint Bishop in Derby
- Kuits client suite in Manchester
- Squire Patton Boggs (SPB) imminent move to Spinningfields in Manchester
International
- Trowers and Hamlins’ Middle and Far East strategy
Details of the report are included in this article by Matt Byrne in The Lawyer (12 Sep 2016) https://www.thelawyer.com/wp-trends-news-1/?nocache=true&adfesuccess=1 and the feature article is here https://www.thelawyer.com/issues/12-september-2016/main-feature-12-sept-uk-200-workspace-trends-2016/ (premium content) The full report costs £900
Blog post about the 2015 The Lawyer UK 200 Workspace report http://kimtasso.com/real-estate-costs-in-law-firms-the-lawyer-uk-200-report/