Los Angeles Legal Sector Leasing Poised for Growth
A study by Cushman & Wakefield shows that Los Angeles is the top market for legal sector office leasing through the first half of 2024 L os Angeles legal leasing activity was up by 60% through the first half of the year compared with the first half of 2023. The legal sector accounted for 11.2% of all office leasing in the Los Angeles market, according to Cushman & Wakefield data. The bulk of that growth came from four individual leases that were signed in the second quarter and ranged in size from 41,000 square feet to 107,000 square feet. Of those four transactions, three were expansions by 74% or more.
“Century City is more expensive in all respects. It has higher rent and lower concessions,” said Luke Raimondo, vice chairman at Cushman & Wakefield who works with legal sector clients in Los Angeles. He noted that relocations are capitalintensive because it’s expensive to move, build out and furnish space.
As a result, many of the largest leases are signed for longer terms.
Nevertheless, there are other driving factors beyond cost that cause firms to relocate from Downtown, including safety concerns and shorter commutes for partners and staff if most employees live on the Westside.
Century City may also be closer in proximity to entertainment and private equity firms, the bulk of which have offices in neighborhoods such as Beverly Hills and Westwood. The trend of law firms moving to higher-rent areas is not specific to Southern California. Nationally, tenants have demonstrated a preference for top-tier space with many amenities such as on-site gyms, restaurants, coffee shops and other retail. “Clients come visit and they want to be in the nicest buildings in the market,” said John McWilliams, a research manager at Cushman & Wakefield who worked on the study.
In addition to Los Angeles, both Dallas-Fort Worth and San Francisco saw significant year-over-year gains in leasing activity by the legal sector. Small and Mid-Sized Firms Many of the largest firms in the country have outposts in Los Angeles, but the area also has a large contingent of small and mid-sized firms that have practice area specialties or niche clientele. The entertainment business is well-known, but there are also tech, financial services, real estate owners and operators and private equity firms that generate litigation and transactional work.
“We have a broad and diverse economy. There’s a lot of strong, local firms working for major businesses that are not to be underestimated,” said Raimondo.
-David Nusbaum