The structure of real estate leasing deals to UK law firms is undergoing a significant shift, according to the latest research from Knight Frank’s Legal Sector report.
Law firms are utilising real estate as a strategic tool to attract talent and drive cultural change, with 80% of the top 20 law firm office deals in 2017 reflecting moves to high quality modern office space in vibrant city centre locations across the UK.
The report indicates that Manchester recorded the highest legal services sector take-up by square footage across the UK regional cities at 155,328 sq ft. 13% of office take-up in Manchester involved law firms, which is higher than any other UK city and more than double the figure for Central London.
Bristol is a leading legal services sector hub, with law firms accounting for 9.4% of total take-up for the city in 2017. Bristol also had the highest year-on-year increase in the proportion of legal sector take-up out of all major UK markets at 5.7%.
In Q1 2018 Leeds has seen an increase in activity, including the announcement of the largest professional services relocation in the city for almost 15 years. Commercial law firm Walker Morris signed a pre-let for 76,000 sq ft at 33 Wellington Street, in the Platform building to accommodate their flagship office, underlining their position as the largest single site law firm outside of London.
Furthermore, market shifts in the legal industry are also fuelling legal services occupier demand across the UK regions. The growing competitive threat from top-tier law firms who have capital to invest in technology, and more agile new market entrants, is forcing mid-tier firms to transform themselves in order to survive and thrive. This has resulted in consolidations as mid-tier firms rapidly acquire peers, with 2017 witnessing the announcement of 40 law firm M&A deals, resulting in multiple regional office locations, increased hiring to accommodate future growth, as well as a stronger focus on regional markets where they can add value and differentiate.
Jennifer Townsend, Associate, Occupier Research, Knight Frank said: “The legal services sector is undergoing a fundamental transformation, as it aligns its real estate strategy to its business objectives. Knight Frank’s monitor of law firm activity over the past 12 months shows an uptick in law firms making significant transformations to the way they operate in the face of a range of disruptive forces. This has fuelled a focus on office location and a shift towards community and collaborative working trends, with real estate being harnessed to change working culture, behaviours and increase innovation.
“Continued law firm growth in the UK has been driven by confidence in continued demand for legal services against a backdrop of ongoing economic and political uncertainty. High quality amenities in city centres such as Manchester, Bristol and Leeds are driving expansion outside of London, as occupiers look for flexibility and access to talent.”
Throughout the UK there was an average deal size of 4,750 sq ft, with the top ten law firm transactions for regional cities by square foot for 2017 highlighting the desirability of these locations.
Top ten legal services office transactions by square foot 2017
1. Manchester, Royal Exchange Clyde & Co: 69,000 sq ft
2. Bristol Aurora, Finzels Reach Simmons & Simmons: 26,985 sq ft
3. Birmingham, The Colmore Building Hogan Lovells: 23,388 sq ft
4. Leeds, 1 Apex View BW Legal: 22,441 sq ft
5. Manchester, No. 1 Spinningfields Weightmans: 17,949 sq ft
6. Sheffield, Courtwood House Graysons: 17,000 sq ft
7. Manchester, 3 Hardman Street JMW: 14,086 sq ft
8. Aberdeen, 28 Albyn Place Stronachs: 13,683 sq ft
9. Bristol, Templeback Jordans Solicitors: 13,671 sq ft
10. Bristol, Aurora, Finzels Reach Mewburn Ellis: 13,326 sq ft
