CBRE judgement on the legal sector in the UK regions
Ladies and gentlemen of the jury, I present to you, after months of careful deliberation and a forensic examination of the evidence, findings from the new CBRE research report ‘Law in the regions’.
Here’s a snapshot…
Exhibit 1 – Benchmarking exercise
Headline findings reveal a simple ranking of UK regional legal cities, measured by the total office floor-space in each city occupied by firms in the UK Legal Top 100. Two leading tiers of regional city locations for law firm occupation outside of London are revealed. In the top tier we see 3 stand-out cities, each with over 750,000 sq ft of legal floorspace and each dominating their wider region: Bristol (South West), Birmingham (Midlands) and Manchester (North of England).
A second tier of cities with legal floorspace of between 300,000-500,000 sq ft consists of: Leeds, Edinburgh, Glasgow and Liverpool.
Exhibit 2 – Why have law firms been taking more space in the regions?
Law firms are on a more positive footing following some tough years during the global financial crisis. Increased profitability and demand for legal services has meant many are now in expansion mode.
However, along with greater demand for services law firms must also contend with increased competition from other firms, some of which are freshly merged and able to achieve larger economies of scale as well as sustained pressure from ever more expectant corporate clients seeking more value for less cost.
These push and pull factors have led many firms to review business models, with a focus on how legal work is managed, where it is conducted and how it is priced, with clear implications for real estate. This might mean extending geographical footprint to locate nearer core clients, setting up ‘global legal service centres’ in lower cost non-‘core’ locations such as Belfast, or ‘nearshoring’ certain back office or legal functions out of London to benefit from high quality, lower cost space.
Clearly one size does not fit all. Different business models and location starting points require different real estate strategies. One thing is certain however, law firms are becoming increasingly sophisticated in their approach to real estate and so we are seeing a huge variety of space requirements in UK regional cities.
Exhibit 3: Quality workspace
Our interviews suggest that although law firms are actively pursuing cost reduction strategies in real estate by achieving greater space economy and by choosing lower cost locations (to London), they are also acutely aware of branding, reputation with clients and ability to attract and retain the best talent. As a result we also see a focus on selective investment in high quality fit-outs to get the right quality of space.
Moving to new office space is often seen as an opportunity to take more modern style, collaborative space with a higher technical specification and environmentally friendly credentials.
For a deeper dive into law firm real estate strategy and workplace trends take a look at the full report:
I rest my case!
Emma Jackson, Associate Director in CBRE Research