fall 2017 spotlight report - colliers international · house support staff on site can produce low...
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SPOTLIGHTREPORT
North AmericaLAW FIRM SERVICES GROUPFall 2017
Real Estate Trends inthe Legal Industry
In Colliers' annual Law Firm Services Group benchmarking study, we look at the relative efficiencies and costs for the largest 20 firms within select primary and secondary markets in North America. The data reveals interesting trends that present opportunities for law firms to consider.
Houston
Los Angeles
San FranciscoHartford
Milwaukee
Denver
Atlanta
Tampa
South Florida
Nashville
Chicago
San Diego Birmingham
New York
Philadelphia
Vancouver
Toronto
1,282
P2,654
P2,240
A953
A983
A1,011
A890
A766
A960
A930
A830
A767
A493
$61.94
P1,861
$40.39
$46.70 $43.66
P2,136
P2,502
P3,909
PP
1,543
P1,613
A920
P1,415
A1,095
A819
$48.22
Secondary
A779
P1,524
$33.78
Primary
A959
P2,418 $51.94
$22.46
$81.58
$30.30
$70.07
P1,267
SF per (A) Attorney | (P) Partner($) Gross Rent
2,305-3,100$65-$85
0-715$0-$22
716-1,510$22-$42
1,511-2,305$43-$64
2,306-3,909$65-$85
0-715$0-$21
716-1,510$22-$42
1,511-2,305$43-$64
P1,328
1,072
P2,473
$36.02
Dallas$46.25
P2,492
$60.19
P
A906$32.39
A667
P1,387
$53.70
A712
P1,327
$24.63
A756
$24.50
P1,444
$29.65
P2,060
$42.01
A710
$26.46
P2,454
A1,144$36.07
Attorneys still value private offices, but technology is allowing attorneys to work 24/7 and be more mobile.
Law firms with well thought-out real estate strategies are more likely to increase revenues.
Talent remains the largest cost for large
law firms. Your office space needs to help you attract and retain talent.
By 2018, 50% of the workforce will be
millenials and by 2025, 75% of the workforce
will be millenials.
Lawyer
Partner
In many industries, the SF per office worker continues to decline.
Primary Markets
Secondary Markets
Law Firm Averages in SelectNorth American Markets
Large firms in major markets often operate outside of maximum efficiency.
Major market attorneys have an appetite for large private offices, which combined with the need to house support staff on site can
produce low efficiencies in the priciest markets.
Large firm Primary market Large number of support functions*
Higher operating costs
>
>
Many law firms embrace having more choice in the variety of spaces they can work
and connect in.
>
* i.e. Human Resources, Accounting, Marketing, IT, etc.
Near-sourcing is a common strategy to consider where partners and attorneys are separated from support staff, who can be relocated to less expensive real estate. Outsourcing is also on the rise.
While this trend also is true with law firms, national firms in major markets
often buck the trend.
>
>
>
>Houston
Los Angeles
San FranciscoHartford
Milwaukee
Denver
Atlanta
Tampa
South Florida
Nashville
Chicago
San Diego Birmingham
New York
Philadelphia
Vancouver
Toronto
1,282
P2,654
P2,240
A953
A983
A1,011
A890
A766
A960
A930
A830
A767
A493
$61.94
P1,861
$40.39
$46.70 $43.66
P2,136
P2,502
P3,909
PP
1,543
P1,613
A920
P1,415
A1,095
A819
$48.22
Secondary
A779
P1,524
$33.78
Primary
A959
P2,418 $51.94
$22.46
$81.58
$30.30
$70.07
P1,267
SF per (A) Attorney | (P) Partner($) Gross Rent
2,305-3,100$65-$85
0-715$0-$22
716-1,510$22-$42
1,511-2,305$43-$64
2,306-3,909$65-$85
0-715$0-$21
716-1,510$22-$42
1,511-2,305$43-$64
P1,328
1,072
P2,473
$36.02
Dallas$46.25
P2,492
$60.19
P
A906$32.39
A667
P1,387
$53.70
A712
P1,327
$24.63
A756
$24.50
P1,444
$29.65
P2,060
$42.01
A710
$26.46
P2,454
A1,144$36.07
Strategic > > Work that requires
face-to-face interaction, planning or collaboration
Tactical > > Work that can be
accomplished without face-to-face interaction is more process driven
Integrate strategic functions into the fabric of key offices
Near-shoring: Relocate tactical functions to less expensive regional centers
Outsource: Outsource the tactical functions
Off-shoring: Move functions to other countries
Consider these 3 alternatives
LAW FIRM SERVICES CONTACTSDaniel ArendsPrincipal,Office Advisory Group+1 312 612 [email protected]
Colin ScarlettExecutive Vice President,Personal Real Estate Corporation+1 604 661 [email protected]
colliers.com/us/law
Summary
The legal industry is being threatened from all sides and this is causing firms to look at their workplace now more than ever. Leverage models, recruitment/retention, brand strategy, knowledge/client transfer and commoditization are all business challenges that can be positively impacted by space. Reducing a firm’s footprint is one way to deal with the expense side of the business, but there are other ways to make real estate a revenue generating machine. Productivity is the precursor to profitability and all firms should be focused on finding ways their real estate can positively impact productivity.
Successful firms that consistently produce higher revenues:
RESEARCH CONTACTStephen NewboldNational Director,Office Research | USA+1 202 534 [email protected]
Colliers International Law Firm Services Group
We are a global team of enterprising and experienced professionals—including practicing attorneys—who partner with law firm clients to provide strategic expertise tailored to the goals and culture that make each law firm unique. Our clients depend on us for real estate solutions that enhance productivity and control costs, while minimizing capital expenditure and managing future risk for the partnership.
The future state of the workplace depends on the alignment of function and space. If your firm is interested in exploring the ways real estate decisions can drive savings to your bottom line while providing better service to your clients, we’d love to talk with you.Create a more collaborative work environment
while providing their attorneys with better technology so they can be more agile.
Differentiate their brand. They are market leaders that create meaningful gaps in the rates they charge their clients, ultimately increasing the revenue they produce.
Provide quality legal services through running their firms and delivering services efficiently. This allows them to price work competitively, manage collections to get better realization rates and provide a better match between salaries and revenue contribution.
A study of the largest 20 law firms by square footage was completed by our Law Firm Services Group members in a selection of primary and secondary markets in North America. The data was aggregated to create market averages for variables including square footage, gross rent, lease expiration, number of attorneys and number of partners.
Copyright © 2017 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.