Law firms leased over 380,000 sq ft of office space in London in Q3, according to global property adviser Knight Frank, with US firms accounting for 90% of legal sector activity as they expand their presence in the UK capital.
Knight Frank’s latest data reveals that Q3 legal sector take-up in London was 70% higher than Q2 2023 and 52% higher than the same quarter last year, underscoring law firms’ robust demand for premium space in London as they compete for talent. Major deals over the quarter include Kirkland & Ellis exercising 174,000 sq ft 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 sq ft at the newly completed 8 Bishopsgate, EC2.
The City Core submarket remains the top choice for law firms leasing space in London, accounting for 88% of leases over the past quarter. 92% of legal office space leased in the City Core in Q3 was in newly constructed or extensively refurbished buildings, reflecting a focus on higher-quality office space.
The sector is set to continue its high level of London office take-up in the coming quarters. Law firms have a further 1.4 million sq ft of live office requirements in London, 50% of which comes from US firms.
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. In future, this expansion is set to be accelerated by the emergence of new business opportunities related to the advent of AI and associated new technologies, with 81% of respondents to a recent survey foreseeing new services emerging from AI technology in the next five years.
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 transitions toward 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 being ‘office-first’, with US law firms at the forefront of this trend. Notable firms including Ropes & Gray, Skadden, Weil Gotshal & Manges, and Sidley Austin have recently adopted four-day office working weeks.
Jennifer Townsend, Partner at Knight Frank, commented: “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. An increasingly vital component of London office take-up, these firms’ heightened focus on sustainable, flexible, high-amenity space is encouraging landlords, particularly in the high-demand City Core, to reposition their assets with the necessary accreditations and facilities to capitalise on their expansion and relocation.”
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