Law firms leased more than 380,000 square feet of offices in London in the third quarter, reports Knight Frank, with US firms accounting for 90%.
Knight Frank says third-quarter legal sector take-up in London was 70% higher than the second quarter and 52% higher than the same quarter last year, as law firms compete for talent. Major deals over the quarter include Kirkland & Ellis exercising 174,000 square feet of option space at 40 Leadenhall Street, the largest London office deal of the quarter, and Proskauer Rose and King & Spalding taking a combined 99,000 square feet at the newly completed 8 Bishopsgate, EC2, with both deals first tipped by CoStar News.
The City Core submarket remains the top choice for law firms leasing space in London, accounting for 88% of leases over the past quarter. Ninety-two percent of legal office space leased in the City Core in the third quarter was in newly constructed or extensively refurbished buildings, reflecting a focus on higher-quality office space, KF points out.
KF also predicts the sector will continue its high level of London office take-up in the coming quarters, with another 1.4 million square feet of live office requirements in London, 50% from US firms.
The adviser points out that the 50 largest law firms in London have grown revenues from £10 billion in 2019 to £13.4 billion this year which, alongside competitive post-pandemic hiring strategies, is fuelling additional demand as growth is consolidated.
Approximately 100 American law firms now have a presence in the UK, with London serving as the central European hub for most as the sector turns to long-term hybrid working models.
Knight Frank’s recent Global Occupier Survey found that 54% of legal sector respondents view a hybrid model as the most likely workstyle three years from now, while 46% described their future workstyle as "office-first", with US law firms at the forefront of this trend. Firms including Ropes & Gray, Skadden, Sidley Austin and Weil Gotshal & Manges have recently adopted four-day office working weeks.
Jennifer Townsend, partner at Knight Frank, said in a statement: “London remains a top expansionary target for international law firms, with its role as a finance hub and incubator for innovative start-ups driving new business opportunities for firms embracing the advent of AI and emerging technologies. US firms have been driving the market through expansion and seeking prestigious, ‘super-prime’ space, which they intend to use as a tool for talent attraction as well as to make a clear statement about their brand to clients.”
Richard Proctor, head of London tenant representation at Knight Frank, added: “International law firms at the leading edge of the sector’s move toward office-led hybrid working models, increasingly value environmentally sustainable, flexible, and modern workspaces with amenities and services that will be attractive to future graduates."