TORONTO, Nov. 3, 2010 — Jones Lang LaSalle’s new Global Law Firm Office Perspective advises law firms that office space options will thin as demand picks up and that prudent law firms should act now to find the best long-term deals in the market.
“Law firm occupiers are a significant force in real estate absorption, and the sector’s leasing activity may be seen as a barometer for the commercial real estate recovery status,” said Phil Dowd Senior Vice President, Jones Lang LaSalle. “Approximately 4.1 percent of Toronto’s office market is occupied by law firms and of the 640 tracked in the report almost 90 percent are located downtown. The top 25 (occupying more than 50,000 square feet) are located within the financial core.”
Toronto’s office market is still favorable for tenants with average class A asking rents at $23.89 per square foot along with the discounts on sublease space at 40 percent. Tenants can still negotiate sizeable discounts on rental rates and tenant inducements.
“South of the boarder tenants are negotiating some very respectable rental rates. In cities such as Dallas with average rental discounts in the 12-15 percent range or Miami and St Louis at 20 percent. However in Chicago it is more difficult to secure such negotiations where discounts are negligible, as well as Washington D.C where 5 percent is typical,” said Dowd.
Law Firm tenants in Toronto have stepped up their leasing activity over the past year. The recent uptick in leasing coupled with limited new development means that over the next 12 to 18 months there could be limited space options for large users. Current conditions for law firms and other tenants remain favorable across most parts of the continent, but the question is: for how long?
“For the remainder of this year and into 2011, law firms in most North American markets will maintain the upper hand. However, like Toronto the best space in core markets such as Washington D.C and San Francisco is already being leased,” said Richard Haig Senior Vice President, Jones Lang LaSalle. “It makes sense to take advantage of favorable rates while the best space options are still available. In Toronto the competition amongst law firms is less aggressive with only six percent of the law firms actively seeking space. In the last few years many of Toronto’s large law firms have completed lease transactions with substantial investments in leasehold improvements. In many cases they have relocated to contemporary LEED certified buildings.”
The report which looks at law firm hubs across the globe finds that in Washington D.C where the real estate market comprises 73 law firms that occupy more than 50,000 square feet, North America’s largest concentration, comprising 35 percent of the overall market. More than one third of those law firms are actively looking for space. Silicon Valley ranks second where 34.3 percent of market is made up of law firms followed by Miami at 25.6 percent. While New York, Chicago and Boston have the most law firms leasing 50,000 square feet or more, Philadelphia has 25.5 percent of its law firm tenants actively seeking space and Los Angeles has 20 percent.
Jones Lang LaSalle has operated in Canada for the past 10 years. With its Canada headquarters in Toronto, the firm also operates in Mississauga, Montreal and Ottawa. The firm offers Tenant and Landlord Representation, Project and Development Services, Capital Markets, Mobile Engineering Services and Integrated Facilities Management Services to its clients in Canada.
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.6 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $40 billion of assets under management. For further information, visit our website, www.joneslanglasalle.com