Law firms are renting more space in cities like Austin, Phoenix, Dallas, Houston, St. Louis, and Orlando, with booming tech sectors and growing millennial populations, according to a new trends report by real estate and investment firm CBRE.
Legal services tend to follow businesses, and are growing fastest in these secondary market cities.
“There is clearly still growth in major gateway markets but the markets increasing their share are in secondary markets,” CBRE researcher Julie Whelan told Bloomberg Law via email.
Austin, Texas, has seen the biggest legal services growth. Several AmLaw 200 firms have entered or expanded there in the past year, according to the report. It was one of only three markets where law firm commercial space use increased over the past 12 months.
Overall, legal services employment in Austin has gone up 11.1 percent and lawyer employment has gone up 10.6 percent since 2015.
Mid-sized markets like these are well-suited to growth because they have established labor forces, but are less expensive than traditional legal centers like Washington and New York, according to CBRE. In Austin, asking rent per square foot of class A office space tends to be around $42.04, whereas in Manhattan, it’s $72.20, according to the report.
Atlanta and Kansas City, Mo., also saw double-digit growth in lawyer employment since 2015, according to the report.
Whelan said she expects the coming years to bring similar news.
“Texas will likely remain strong, as will cities with growing tech clusters,” she said. “As long as the economy stays strong, we do not foresee any major contraction activity over and above the rightsizing efforts in gateway markets that have become standard as large leases come up for expiration.”
Of course, some law firms have reduced their office space, shrinking square footage in favor of state-of-the art working spaces. Nearly one in four AmLaw 100 firms reduced their office space in the last year, according to CBRE.