Mid Atlantic Research Reflections 2023 Law Firms

Law firms continue to adapt to economic challenges and space utilization changes, finding new ways to do business more efficiently as demand for legal services remains strong. Real estate continues to play an important role for law firms as they look to draw employees back into the office and attract and retain top talent. While downsizing remains the dominant trend in the sector, some law firms have capitalized on tenant favorable market conditions by expanding to accommodate future growth.

After record-low levels of leasing in 2022, law firms have signed 29 leases across the D.C. metro region for a combined 1.2 million sq. ft. year-to-date. Given that only a handful of Trophy and Class A+ properties have large blocks available, large law firms will likely continue to renew in place as quality options dwindle. Nearly 30% of the renewals in 2023 were larger than 75,000 sq. ft., while only three Trophy buildings have a 75,000 sq. ft. block currently available. Further, some small and mid-sized firms are engaging the market early, so they don’t miss out on what little trophy space remains.

Given its proximity to lawmakers and government leaders, the District attracts the majority of law firm leasing activity in the region. While the sector has recorded 1.3 million sq. ft. of occupancy loss since the start of the pandemic, negative absorption is expected to moderate as just two Am Law 100 firms have yet to reset their office footprint.