Commercial real estate market in Europe: Legal firms move to new office space development projects
Reputable legal firms are still willing to pay the highest rents on the market. The firms are going to lease the best office buildings being developed in centres of European cities. This is the conclusion of the recent study LAW IN EUROPE published by CBRE. The study covered European markets and the conclusions and trends revealed in the study have practical international relevance. This means that they apply to the Czech Republic as well.
“With the improving economic situation and the market recovery, we can see an increasing number of companies demanding leases in newly developed office projects. In buildings, which are modern, friendly to the environment and which enable their cost-effectiveness to be improved together with a reduction of the total necessary floor area,” Katarina Wojtusiak, Head of Office Agency, Tenant Representation & GCS, CBRE.
Although the vast majority of law firms continue to work in existing buildings they do try to reconfigure the available working environment (in many cases the offices are situated in representative historical buildings). However, the big market players are looking for projects offering more than that. They are interested in a configuration of space and utilities resulting in more effective use of office space.
“A good example is the two largest law firms in the Czech Republic that have moved from historical buildings to newly developed offices. For example, Havel & Holásek have moved to Florentinum and White & Case moved to the newly developed commercial and office centre Na Příkopě 14. We expect that in the future in particularly larger law firms and offices will look for the best commercial properties available on the market and will be willing to pay higher rents for such space,“ adds Katarina Wojtusiak.
According to the LAW IN EUROPE study, more than 50% of law firms pay above average rents - on average they pay approx. 10% more compared to the customary market rents. In addition, there is a noticeable difference between the rent paid by multinational firms and national firms in their respective markets. For example, in France the multinational firms pay on average 11% higher rents compared to domestic firms. The multinational firms in Paris require an exclusive addresses, high quality buildings and sufficient floor area (the study says that the multinational firms have 25% larger floor area compared to domestic firms). The vacancy rate in a number of European countries is rather high - about 15%. However, this figure also includes poor-quality commercial properties located in suburban districts. The multinational firms are not interested much in such properties. On the other hand, the vacancy rate in high-quality commercial properties and spaces is minimal.