The European legal sector particularly buoyant on the office property market in Europe

14 May, 2007, Paris

The Office Department in Cushman & Wakefield, the international real estate services firm, records a total legal sector take-up, based on 16 major European legal centres, amounting to 302,441 sq. m. in 2006 and up 23% on the 2005 figure.

The five main legal centres – London, Paris, Frankfurt, Brussels and Amsterdam – account for 83% of the total legal sector take-up with 251,407 sq. m. The share of the top 5 increased by 6% on the previous year as firms focused their strategies on their presence in the major centres and away from their regional offices.

London increased its lead even further in 2006, with a total of 1,043,954 sq. m. leased over the year. Geoffroy Doudrich, Head at Cushman & Wakefield comments: “The rude health of the legal market, linked to the phenomenal growth of London’s capital markets in recent years, was the main driver of the lettings market in 2006. London is now wildly seen as the European benchmark market. ‘The Lawyer – Euro 100’ reports that the UK is the most profitable and the largest legal economy in Europe with more than 50% of the firms listed in ‘The Lawyer – Euro 100’ being headquartered in the UK. Freshfields Bruckhaus Deringer, Clifford Chance, Linklaters and Allen & Overy are the top four biggest legal companies in Europe, all UK-based. These companies have all expanded dramatically over the last 5 years, mainly through European and other overseas mergers and acquisitions.

Paris ranks second with a total of 58,334 sq. m. let in annual terms (43,318 sq. m. recorded the previous year). Three trends emerge:

- Prime rents have continued to climb to reach 730€/sq. m/year in the Paris CBD. The deals closed by the legal sector have largely contributed to the increase of the rental values.

- Legal take-up increased over the second half of the year to just under 36,100 sq. m. This represents a 63% increase on the previous half-year.

- Despite the size of the Paris-Ile de France market, legal sector take-up accounts for 10% of the total CBD take-up where most of the deals are closed (the total CBD take-up in 2006 totals 605,457 sq. m.)

Paris legal sector activity remained very buoyant, with demand up by 35%. Paris accounted for a 19% share of the European total. Geoffroy Doudrich continues: “Although not as pre-eminent as the UK companies, US legal firms have been expanding their offices within Paris over the last couple of years. Only London records a better performance”. A wave of UK firms entered the market in the late 1990s following the arrival of Mayer, Brown, Rowe & Maw LLP, Orrick, Herrington & Sutcliffe Weil, Gotshal & Manges and other US firms in 2002/2003. Compared to Anglo-Saxon firms, French firms tend to be smaller and more specialist. US firms such as Winston & Strawn and Fried Frank Harris Shriver & Jacobson have started to expand by structuring themselves along the French model, with specialist litigation and bankruptcy boutiques.

Major deals closed in the last six months by the legal sector in Paris:

- De Pardieu Brocas Maffei rent 4,500 sq. m. located at 57, Avenue d’Iéna (Paris 16th arrondissement)

- Orrick Rambaud Martel rent 6,040 sq. m. located at 31, rue Pierre 1^er de Serbie (Paris 16th)

- Mayer Brown Rowe & Maw rent 3,000 sq. m. located at 18/20, Avenue Hoche (Paris 8th)

- Gide Loyrette Nouel rent 5,600 sq. m. located at 12 Cours Albert 1^er (Paris 8th)

- Paul Hastings rent 5,069 sq. m. located at 96, Boulevard Haussman (Paris 8^th)

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