US law firms make up two thirds of global law firm office leasing activity

New York accounted for a third of all leasing activity globally in the legal sector in the first half of 2024, says Savills, equating to over 1.4 million sq ft of space, out of a total of 4.3 million sq ft across the world’s 15 largest legal markets, reflecting its position as the world’s principal legal hub. Together, US cities accounted for 69 percent of overall H1 law firm office leasing activity in the world’s largest legal markets, reflecting the dominance of American firms in the sector overall, as well as the tendency for US legal offices to have a lower occupancy density and thereby requiring more space, according to Savills.

The international real estate advisor reports that, globally, most legal practices maintained the same size of office space in H1, with just under a quarter increasing space, however the picture does vary regionally: 40 percent of firms in EMEA expanded office space in the first half of the year with Paris, Brussels, and London standing out as expansion hotspots.

The former two cities host important national and international political centres, such as the EU headquarters, which create a clustering effect of top legal practices. The latter continues to attract an influx of US firms, says Savills, which have dominated recent take-up activity and led to salary increases in the sector; many British law firms are looking to cities such as Manchester, Birmingham and Glasgow when considering office growth strategies, where legal talent is more competitively priced. A similar trend driven by talent is emerging in Australia, where some firms are looking to Brisbane and Melbourne to bolster practices, given salary expectations in Sydney are on average 19 percent higher.

Source: Savills Research. Note: Largest legal markets determined by total number of offices of top 25 ranked law firms in Global 200.

Meanwhile, in China, Savills says that while some international firms are increasingly reducing their physical footprints, this is balanced by top domestic counterparts relocating to larger spaces, exemplified by Shanghai, where domestic incumbents accounted for over half H1 volumes. Chinese firms also continue their expansion efforts in European markets, primarily serving China-based clients and working at lower fees then their western rivals.

Sarah Brooks, Associate Director in Savills World Research team, said: “Global law firms are re-adjusting international expansion strategies, while domestic firms navigate various challenges and opportunities in different markets. What unites all is the prioritisation of talent in real estate decisions, balanced against the need to optimise the amount they spend on property.”

Savills report also notes changes in the design of offices taken by legal occupiers, which are adapting to hybrid working patterns with more flexible, tech-enabled office designs, with more multi-purpose shared spaces. The sector, already ahead of other professional service sectors in its adoption of AI, is trending to smart technology that optimises office utilisation and facility management. One example is that firms are moving away from legacy meeting room booking systems, to intelligent solutions that select rooms based on attendance by in-person and remote attendees, easing pressures on meeting rooms.