Nov. 3, 2017
Law firms have been driving the preleasing of Houston’s newest developments and capitalizing on excess space released by energy tenants, particularly in the city’s CBD.
Long consumers of Houston’s highest quality space, the red hot competition for talent has made securing the best space top of mind for many firms. But today, law firms are taking space at more efficient rates than ever.
Driven by increased cost pressures, law firms are consolidating and targeting smaller footprints and higher space utilization rates. In Houston, this translates to a future target of 700 to 800 square feet per attorney down from the historic average of 1,200 to 1,400 square feet per attorney. Smaller footprints have contributed to occupancy losses for Greenway Plaza, The Galleria, and Houston’s CBD, the three submarkets that most commonly attract law firms. However, the impact of law firm consolidation still pales in comparison to energy sector givebacks.
Houston’s CBD has been the epicenter of law firm leasing activity because of firms’ affinity for trophy product and high profile new developments. Deals such as Porter Hedges at 1000 Main and Yetter Coleman, Jones Walker, and Thompson & Knight all at 811 Main, are just some of the significant law firm leases completed in the CBD over the last year.
With the exception of the energy giveback phenomenon, what’s occurring in Houston’s office market is representative of broader national and even global law firm trends. Law firms have been some of the most proactive tenants in preleasing space in new developments. Meanwhile, talent shortages across white-collar sectors are creating increased competition for skilled associate-level candidates, making quality workspace an even more important factor. All of this is being balanced against greater workplace utilization rates, the affect of which is slowing CBD Class A net absorption globally.
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