Report: DFW sees most law firm expansion in 2018 as legal services grows

Dallas-Fort Worth continues to be an established market for the legal services industry, with the Metroplex seeing the most law firm expansion activity in the country in the last year, according to CBRE’s 2019 North American Legal Sector Trends Report.

Fueling this expansion is the growth that DFW has experienced in legal services employment (including lawyers, paralegals and administrative staff). DFW was the fifth fastest-growing legal services market in the nation. From 2016 to 2018, legal services employment in DFW expanded by 5.1%, well above the national average of 1.6%. Phoenix (9.6 %), Austin (9.1%) and Atlanta (8.9%) took the top spots in the nation for legal services employment growth.

“Never in my real estate career have I seen so many of the AM Law 200 companies setting up shop in Dallas that have not previously been here,” said Phil Puckett, vice chairman, CBRE “We are seeing a majority of these firms setting up their offices in Uptown or on the north side of Downtown (Dallas).”

Law firms leased a total of 707,161 square feet of space in Dallas-Fort Worth between Q3 2018 and Q2 2019. A total of 428,426 square feet of this was taken by firms that were expanding in the area. A majority of DFW’s legal real estate leases were concentrated in the Dallas CBD and Uptown submarkets (which includes the Arts District), with 79% of law firm space being transacted in the area.

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“Law firms have zeroed in on Uptown and the north side of Downtown (Dallas) because of the amount of quality buildings along with the amenities to help recruit and retain attorneys,” said Harlan Davis, senior vice president, CBRE. “These areas have become true live, work and play environments where law firms thrive.”

Many of these law firms are expanding or maintaining the same footprint in higher-quality and newer space within the same area. Of these transactions, 64.4% were expansions and 16% were new to market, while 11.9% were contractions and 7.8% percent leased the same amount of square footage they previously occupied.

Many large multi-national law firms continue to relocate or expand in DFW. 44% of the law firm real estate transactions last year were relocations, mainly in Uptown and the northern sector of Downtown which includes the Arts District. Another 39% were renewals and 16% were new transactions.

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Nationwide, the report finds that law firms are shifting recruitment strategies and expanding outside of traditional gateway cities to find new talent in lower-cost markets, often those with large, growing millennial populations, like DFW.

Other report findings include:

• Almost a quarter of AM 200 Law Firms expanded in at least one location the past year, accounting for more than half of the 2.1 million square feet of law firm expansions in the U.S., up from 1.6 million square feet the year prior.

• Dallas saw the most expansion, with 261,301 square feet of net absorption, followed by Los Angeles (210,580 SF) and Manhattan (118,869 SF).

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• Five of the highest growth markets for legal sector employment (Austin, Denver, Orlando, Houston and DFW) are also among the top 10 markets for millennial population growth nationally.

“Law firms continue to grow in markets that have emerged as strong business environments this cycle, which also happen to provide a lower cost of doing business,” said Jamie Georgas, Global Chair of CBRE’s Law Firm Practice Group. “These Millennial-rich environments offer highly skilled workers and are a strong complement to the usual legal centric markets.”