Law firms are driving demand for “super-prime” office space in Central London, amid fierce competition to recruit and retain legal talent.
Law firms took up more than a quarter (27 per cent) of all office space in the City of London last year, according to figures from Knight Frank.
Intense competition between law firms to recruit and keep hold of staff is driving demand in the legal sector for “best-in-class” offices.
Efforts to boost sustainability, in line with plans for net zero, are also driving demand among law firms for green, sustainable offices.
“Alongside expansion, the growth in leasing activity is being driven by a combination of a focus on talent attraction and employee wellbeing and a need to align their real estate with post-pandemic workplace strategies and sustainability commitments,” Knight Frank said.
The estate agent noted that only a quarter (25 per cent) of offices occupied by the UK’s top 200 law firms are rated as sustainable.
Meanwhile, 48 per cent of law firms have set out plans to reach net zero, while all UK listed companies will be required to set out their plans for carbon neutrality by 2023.
Looking forwards, Knight Frank said law firms will continue to drive demand for luxury office space in Central London as they continue in their efforts to attract the best staff and reduce their carbon footprints.
All in all, law firms took up 658,000 square foot of office space in Central London last year – more than at any other time in the last five years.
The figures mark a 51 per cent increase on office space uptake in 2020 and an 85 per cent increase on uptake in 2019.
Last year, Los Angeles law firm Latham & Watkins leased 250,000 square feet at 1 Leadenhall, Magic Circle law firm Allen & Overy rented 270,951 square feet at 1&2 Broadgate, and Travers Smith leased 160,000 square feet at Stonecutters Court.
Knight Frank noted that US law firms accounted for 42 per cent of all office space take up in 2021, in line with the US expansion into London.
Knight Frank executive Richard Proctor said: “As talent attraction and retention are so critical to law firms, we are seeing firms choosing their real estate to give them an edge over the competition.”
“The pandemic and the renewed focus of US firms on London has seen firms seeking buildings that offer superb amenities, particularly for physical and mental wellbeing, and make a bold statement about their ESG values.”
Knight Frank partner Jennifer Townsend added: “Looking at the drivers of leasing transactions in 2021, there were common themes of sustainability, health and wellbeing, and the flight to quality, with occupiers investing in amenity-rich, highly connected spaces.”
Law firms are creating workplaces with new ways of working in mind, centred around collaboration, innovation, client-centricity and learning and development.”