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Chicago Legal Tenants Leverage 3 Key Office Trends

Ari Klein • 10/23/2023
Chicago's legal landscape is shifting with firms seeking modern trophy spaces, exploring flexible lease terms, rightsizing when necessary and, in some cases, looking outside The Loop. 

What three trends are legal occupiers capitalizing on in Chicago?

  1. Chicago legal tenants are actively looking to leave their outdated spaces in favor of top-tier space in trophy buildings as a means of recruitment, retention and bringing people back to the office. .
  2. Law firms are considering areas beyond The Loop. Both Greenberg Traurig and Norton Rose Fulbright have committed to space in the Fulton Market area just west of Downtown Chicago, more firms may follow.
  3. Many firms had more space than they needed; rightsizing is common, and firms are looking for flexibility within their lease in terms of expansion/contraction options and immediate savings.

Flight to quality is a phrase many are familiar with, but what is it called when tenants already in high quality space seek out even better space? It could be called trophy chasing, or more simply put, major law firm behavior in Chicago. Major law firms have traditionally sought out the best office space Chicago has to offer, unwavering in their preferences for the latest and greatest, and they are leaning into that practice even more so today than they have in the past.  

It may appear that Chicago law firms are just chasing new, shiny objects when it comes to their office space, but it’s deeper than that and rooted in strategy. The top tier office space that law firms desire was used as a tool to attract the best talent, and still is, but now it’s being used to bring their best talent back into the office too. Top law firms view high-end office space as a recruitment tool, a retention tool, a way to shape or preserve culture, and a way to entice their people back to the workplace. The fact of the matter is that law is an inherently mentorship-based business that thrives when people are physically with one another. Not only can younger associates gain greater knowledge and practical experience by being present, those that show up are more likely to be promoted and establish themselves within the firm.

Additionally, chance collisions between people in person is an area where a law firm can maximize sales efforts as relationships between attorneys can be leveraged across practice areas and support many needs for an individual client. For major law firms, top tier office space is an investment in its business, its people, its culture, and its future growth. 

In fact, Kirkland & Ellis is leaving a second-generation trophy tower and going to the newest trophy tower in Chicago. Winston and Strawn is leaving a Class A former trophy tower and moving to 300 N. LaSalle which is second-generation, but still a top six building in Chicago. The table below shows more firms who have done or are doing the same—relocating to newer buildings in Chicago.

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Are firms looking outside The Loop? 

Some firms are looking outside of Chicago’s Loop, namely in the extremely sought-after Fulton market which has been legitimized for legal occupiers by Greenberg Traurig’s 92,000 sf and Norton Rose Fulbright’s 17,000 sf commitment in the submarket. Even though it didn’t exist 10 years ago, Fulton Market has been seen as a corporate headquarters and tech hub from its inception. It was able to attract Google, and soon after, McDonald’s, Mondelez International, Kimberly-Clark and Boston Consulting Group. Just as Google spurred a gravitational pull of tenants out of downtown Chicago, it is expected that Greenberg Traurig will have a similar magnetic draw by attracting other law firms to the area.  

Flexibility, rightsizing and legal leasing activity. 

It’s not only high tenant improvement (TI) packages and free rent concessions that are driving legal tenants to act in Chicago’s tenant friendly market. It’s also flexibility, and flexibility is highly coveted by law firms in Chicago right now. Well-capitalized landlords of trophy buildings have been catering to the need of flexibility and immediate savings that legal occupiers desire and it has given them a competitive advantage in the market. Tenants are showing a strong preference to work with landlords who can accommodate various timelines. For example, there are several recent instances of landlords allowing early or delayed occupancy for legal tenants with great credit.  

Rightsizing is becoming very common for legal occupiers in Chicago as many of them have been carrying too much space. From the beginning of the pandemic to now, Chicago law firms that have downsized have decreased by 23% on average. Interestingly, reduced office footprints are not correlated with shrinking headcounts for Chicago law firms. In fact, some of the firms that have recently downsized are growing and have the same number of people returning to the office at the same time. To be able to grow attorney counts and still downsize office space, firms are managing office resources more efficiently and not necessarily building out their space to handle 100% of their people coming in at any given time. Unlike other markets, Chicago law firms are not necessarily shrinking individual office sizes, or placing offices on the interior, they’re adapting to hybrid work schedules and an understanding that it’s unlikely to have 100% of their people in office on a given workday.  

The share of Chicago’s leasing activity being done by law firms has been higher over the past three years, accounting for 9.4% of leasing in 2021 and 7.4% in the first half of 2023. Chicago actually saw the highest amount of legal sector leasing activity (1.4 msf) on record in 2021. This year is on pace to be another strong year, with 426,000 sf of leasing by legal sector occupiers in the first two quarters of 2023. Some of the notable leases signed in 2023 include: Katten Muchin Rosenman LLP (247,000 sf), Burke, Warren, Mackay & Serritella (47,000 sf) and Corboy & Demetrio PC (27,000 sf).

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