Law firms are more likely than other businesses to be back in the office, and that’s boosting leasing activity – Chicago Tribune

Most companies remain hesitant about leasing new office space, but one kind of downtown business seems ready to move forward with new deals. Landlords increasingly rely on law firms, many on the hunt for better amenities and perks, to fill either new offices or ones emptied out by the pandemic.

It’s not that law firms are growing faster than other businesses. But lawyers are more likely to be back in the office, and the legal industry is further along in striking the right balance between work-from-home and in-office strategies. The vast amount of new or renovated space available also means lawyers have more opportunities to occupy digs that will impress new hires, as well as entice even more associates and partners back to the office.

“Law firms are more active right now than many other industries,” said Joe Learner, vice chairman of commercial real estate firm Savills. “The competition for associates is so fierce that they really do need something better than the competition to get an edge.”

Kennedys Law is just the latest to make a move. The global firm agreed to occupy starting in October nearly 10,000 square feet on the 36th floor of the CME Center at 30 S. Wacker Dr. in the West Loop. The firm will relocate from its office at 100 North Riverside Plaza.

Like many downtown landlords, CME Center owner Tishman Speyer recently completed major renovations meant to draw in new tenants, revamping the two-tower building’s lobby and adding amenities such as tenant lounges, a conferencing center and new fitness facilities.

Savills’ Corporate Managing Director Perry Kaplan, along with colleagues Eric Feinberg, John Goodman and Brandon Nasatir, helped Kennedys Law come up with a new real estate plan.

Many other law firms also seized opportunities to upgrade their spaces. Kirkland & Ellis last summer agreed to leave 300 N. LaSalle St. and occupy about 600,000 square feet in Salesforce Tower, a 60-story building rising along the Chicago River slated for completion in 2023. In addition, Chapman and Cutler left 111 W. Monroe St. in the Central Loop for BMO Tower, a new 51-story skyscraper next to Union Station.

The pandemic-related slowdown has made landlords eager to welcome the new tenants. The downtown’s vacancy rate hit 19.7% in the first quarter, a record and up from 16.2% a year earlier, according to Colliers International.

It’s not just Chicago firms that are on the move. Nationwide, law firm employees are returning to the office almost 30% more often than workers from other sectors, according to a 2022 Savills report, citing data from Kastle Systems, a security firm that tracks card swipes.

The need for face-to-face interaction with clients helps bring lawyers back, according to Learner, and partners also don’t want to mentor new associates over Zoom. But even though that leads many firms to be on the lookout for space, it’s not a bonanza for landlords. Savills found nationwide that not a single law firm signed a deal in the first quarter for more than 100,000 square feet.

“Most of the relocations we’re seeing now resulted in the firms taking less space, or taking the same amount of space, but using it to accommodate more attorneys,” Learner said.

The newer, class A buildings preferred by law firms typically have fewer interior columns, allowing for more efficient use of space, according to Margaret Poster, executive managing director of Cushman & Wakefield.

That’s a plus, she added, as it helps continue a big cultural shift underway in the legal world. In the past, partners frequently took the largest offices, in many cases about 1,000 square feet, while associates made do with a fraction.

“That’s no longer the case,” Poster said. “Firms are being much more democratic, and universal office size is now the norm.”

It’s yet another perk for young lawyers, and by taking less space, firms can pay the rents demanded by new amenity-rich properties such as Salesforce Tower and BMO Tower in Chicago, and One Vanderbilt and the Hudson Yards complex in Midtown Manhattan.

“We’re seeing the same thing in all the big markets around the country,” Poster said.

Learner said he expects this heightened level of activity from law firms to continue.

“You would think that, at some point, the fierce competition for talent would take a break, and firms could relax a bit,” he said. “But at this moment there doesn’t seem to be an end in sight.”