Legal Sector Leasing Trends

Legal Sector Sees Unprecedented Office Leasing Surge in 2023, Major Markets Lead the Way 
The legal sector has been a bright spot for office demand in 2023 with an unprecedented level of leasing activity occurring as legal occupiers committed to 16.9 msf. The lion’s share of activity returned to major markets once again, bolstered by New York City’s 4.3 msf of commitments during the year, as well as over 1.0 msf in both Washington, DC and Chicago. 

Average Effective Rents Rise While Landlord Concessions Increase 
Average effective rents increased year-over-year (YOY) but remain below pre-pandemic levels. However, landlords also increased concessions in 2023, as the average tenant improvement (TI) allowance grew by 43.3% YOY for new leases and 27.0% YOY for renewals.  

Leasing behavior varies greatly between firms that relocate and those that renew in place 
A clear dichotomy exists in the leasing behavior between 60% of legal occupiers that chose to relocate their office and the 40% that renewed their lease in place. More than half of the law firms who chose to relocate are expanding the size of their office space when doing so while most law firms that opt to renew are making no meaningful change to the size of their lease.