US Law Firms Push Demand For Offices
14 Jun, 2006, London
Office letting activity by the legal sector in the key legal locations of Europe was down 16 per cent in 2005, compared with 2004, with a total take-up of 235,000 sq m compared with 279,000 sq m in 2004, according to Cushman & Wakefield’s Legal Business Briefing, which tracks the office requirements of key law firms in Europe’s top 15 cities for the legal sector.
However, year-on-year performance differed greatly from city to city, with Paris, for example, seeing an increase in take-up of 153 per cent to 43,300 sq m in 2005. Other strong performers included Warsaw, where letting activity almost doubled to 11,300 sq m, as cross-border law firms enter the ‘emerging’ markets of the European Union.
Regarding office space demand by the legal sector across Europe, Mark Pollitt, Head of Cushman & Wakefield’s European Legal Group, comments: “New requirements are being driven by consolidation as leading firms look to make best use of their property requirements, whether in terms of location, occupancy costs, the synergies created from all working under one roof, and also whether the space is compatible with running a practice in today’s global marketplace.”
“In addition,” continues Mark, “what we are seeing in many markets is demand being led by continuing strong mergers & acquisitions activity, and also by demand from US legal firms as they expand across Europe, and in particular in the Paris and Frankfurt markets. These two trends are likely to continue in the short as well as medium term.”
This is being born out by activity registered in the first quarter of 2006, with demand remaining solid in London, with 23,000 sq m of take-up by legal firms in the first quarter of 2006 (Q1 2006), compared with 21,000 sq m in the final quarter of 2005 (Q4 2005). The most significant transaction has been the letting of 7,900 sq m by Lewis Silkin in Chancery Lane, London EC4.
Paris, meanwhile, has seen demand significantly up in Q1 2006 compared with Q4 2005, with take-up at 19,000 sq m, compared with 5,500 sq in Q4. US firms accounted for the most significant deals: corporate law firm Jones Day has taken 7,000 sq m, to be delivered in 2008, in the 8th arrondissement in rue Saint Florentin and Paul Hastings 5,000 sq m in Boulevard Haussman, again in the 8th arrondissement.
In 2005, the legal sector accounted for 3.5 per cent of total office lettings of 6.8 million square metres in the 15 cities monitored. The five key legal centres of London, Paris, Frankfurt, Brussels and Amsterdam accounting for 80 per cent of take-up (200,000 sq m) by law firms, which are the second most active sector after banking.
Europe’s Top Markets For Legal Activity 2005
Source: Cushman & Wakefield
The Top Five Cities for Legal Firms
In London, the level of take-up was almost 40 per cent down on 2004 with the market perceived as having peaked. “The general consensus is that the legal market has peaked, with mor companies concentrating on consolidation and cost-saving measures. However, take-up levels may well increase in the short to medium term as companies anticipate to relocate,” says Mark Pollitt, based in Cushman & Wakefield’s City office.
Geoffroy Doudrich, Head of Cushman & Wakefield’s Legal Group in France, explains the strong increase in take-up in Paris: “The demand is coming from US law firms looking to expand in France, as well as the continued increase in corporate activity, and in particular the privatisation of the French energy sector with the subsequent M&A activity.”
US firms are also expanding in Frankfurt, where demand was down 13 per cent last year. Most notably, for example, Sanders Squire was able to benefit from the break-up of German law firm Haarmann Hemmelrath in order to expand in the German market.
In Brussels, where activity was up 12 per cent, demand is being driven by changes to EU trading law and M&A activity, both Belgian and European.However, in Amsterdam, demand was down by almost 30 per cent. “Although international players do not dominate the legal sector, they have, generally, shown more rapid growth,” says Cushman & Wakefield’s report.
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