UK Legal sector office demand increases

Written By:

Jennifer Townsend, Knight Frank

13 Jun 2022

3 minutes to read

Categories: Property Sector Offices

The level of take-up is in excess of the five-year Q1 average figure of 9%. Only Technology, Media and Telecommunications, and the broader professional services sector, of which the legal sector is a sub-component, acquired more space.

Law firms also accounted for a number of large deals, with six out of the top 20 leasing transactions by square footage deriving from the legal sector. Furthermore, three-quarters of all law firm deals were for Grade A buildings – a clear demonstration of the sectors preference for the best quality space. All law firm deals of over 5,000 sq ft being for Grade A space.

Resurgent legal sector

Whilst not without challenges, the legal sector is in a buoyant mood. This positive sentiment will furnish law firms with greater confidence to press the button on real estate decisions when compared to those sectors harder hit by the lingering effects of Covid-19.

According to the latest “State of the Market” report from Thomson Reuters, the UK legal market is experiencing its highest level of spend optimism in the last five years. Elsewhere demand for the services of those global law firms operating in the UK, represented as the number of hours worked, was up 8.7% year-on-year during 2021.

Sector confidence combined with a need to align to new strategic imperatives are driving real estate decisions. The strategic imperatives include the ESG agenda, the health and wellbeing of staff, the continuing war for talent, upskilling and reskilling, adapting to new ways of working and changing demographics, responding to more complex client needs, and investing in technology and new organisational structures.

This is strongly reflected in the building characteristics and amenities of the space acquired during Q1 2022. Looking at the publicly stated rationales behind the largest law firm deals, they all talked about relocating to buildings that were tailored to new ways of working, offered an appealing and healthy environment for staff and clients and had the strongest environmental credentials.

Of course, activity has most often been underpinned by lease events. Our research shows that the majority of law firms are occupying space that may not be fit for purpose, particularly from an ESG perspective. Currently only 25% of the UK’s top 200 law firm offices are BREEAM rated. Additionally, of the UK’s top 200 law firm offices where we could find an energy performance certificate rating, only 20% would meet the 2030 MEES compliance of a minimum rating of B.

Law firms will either have to relocate or work with landlords to ensure existing office space is to the right specification.

Q1 2022 UK Cities law firm leasing activity in numbers 

1. Ranking of UK cities by law firm take-up

Top five cities ranked by law firm take-up sq ft

Sheffield 44,650
Edinburgh 34,370
Birmingham 29,896
Newcastle 24,630
Bristol 17,158

Top five cities ranked by number of law firm deals

Birmingham 5
Edinburgh 3
Bristol 2
Glasgow 2
Leeds 2

2. Top ten law firm transactions by size of deal

Source: Knight Frank