We have been tracking a fascinating trend in the legal industry in which their employees are returning to the office at substantially higher rates than other businesses. According to the widely-followed Kastle Systems back-to-work barometer, employees at law firms nationwide have approximately 80% average occupancy office attendance as opposed to 45% for all industries, a whopping 35% difference. Incredibly, office attendance in Chicago exceeds 90% at law firms, and it is 68% in New York.
Why is this the case given the pitched battle over hybrid work? As Eric can attest, law is very demanding intellectual work. While aspects of that work can be performed privately in the (virtual) library such as legal research and drafting documents, the best product is also created by extensive brainstorming and exchange of ideas. Further, there is no substitute for watching senior masters of the craft handle all varieties of situations including complex negotiations, dealings with clients and situational responses to unanticipated developments that arise on the fly. In fact, I still draw on what I learned from successful real estate practitioners before I caught the entrepreneurial bug decades ago.
This type of apprenticeship cannot be measured by a statistical metric, but it is invaluable. It will be years before we fully understand the repercussions of work from home and the potential loss in productivity and professionalism. As a corollary, even as performance benchmarks may have been maintained with remote work, the dissipation of distinct company cultures as well as the negative impact on leadership and mentoring with large percentages of employees at home five days a week may not be appreciated for years to come. Law firm management deserves credit for recognizing these potential problems and moving proactively to address them. Further, young professionals in all industries who have been working remotely for over two years may not even realize what they are missing out on.
I was interviewed recently by the publication Legal Management for an article which comprehensively discussed the issues facing law firms in dealing with their office space. Obviously, they are looking to save money on space, just like all other businesses, and have the same intergenerational conflicts regarding the amount of time spent in the office. While the article obviously focused on the legal industry, the excellent practical suggestions it made apply to every kind of professional or other business that is considering next steps regarding their office space. You can click through to read the entire article below.
Two specific areas that I discussed are particularly worth noting for all office tenants, as well as law firms. First, many companies are finding themselves with excess space due to the wide acceptance of remote work. Here’s what I suggested as a creative solution to bring some additional funds into the coffers by subleasing that space in an innovative way:
“ … law firms are looking to sublease to monetize their current larger-than-needed offices. “I’ve come up with an innovative sublease structure where I set up my own de facto coworking hubs, leasing sections of such large office spaces to smaller law firms,” says Colp-Haber. “Both sides appreciate the one-year lease terms. The smaller firms don’t like long-term liabilities, and the larger firms can get their space back if they need it.”
Second, I also discussed several simple nuts and bolts concessions tenants should request in their next lease transaction. Some of those requests are outlined in the excerpt below:
“As mentioned earlier, concessions are a way of life in the current leasing market. Law firms would do well to get a handle on the local market’s current allocations of free rent and build-out expenses. Plus, every lease has some type of escalation clause determining the formula for future operating cost increases. Negotiating favorable terms for billing — things such as electricity — can pay off”…
“Finally, the pandemic has brought home the benefits of preparing for disaster. “I always try to insert a clause that if the city goes into lockdown again, the firm will not have to pay for office space during that time,” adds Colp-Haber.”
These are just a few of the ways we can help. Whatever your industry, please feel free to contact Wharton Property Advisors to tap our expertise if your company is looking for a new office, renegotiating your lease, seeking to dispose of excess space or considering how to best utilize your current space. We represent our clients with creativity, integrity, independence and diligence.