London’s office take-up transformed by US law firms

The legal sector has driven office take-up since 2020 in Central London

Since 2020, a large proportion of London’s biggest office leasing deals have been from the legal sector. Over that period, law firms have been particularly active participants in the pre-letting market, accounting for a third of all pre-lets in London. Four of the largest transactions by law firms in that time have been by UK headquartered firms:

• Clifford Chance at 2 Aldermanbury Square, EC2 (319,000 sq ft)
• Linklaters at 22 Ropemaker Street, EC2 (301,700 sq ft)
• Allen & Overy at 1 Broadgate, EC2 (267,400 sq ft)
• Hogan Lovells at Holborn Viaduct, EC1 (266,000 sq ft)

All four of the deals were off-plan pre-lets (let prior to the commencement of construction).

US law firms have been leading the way

Of the 40 legal sector deals over 20,000 sq ft to have transacted since 2020, 19 have been to UK law firms and 21 have been to US law firms. Some of the leasing deals by US law firms have been of a substantial scale, including the largest legal sector deal since 2020: 392,600 sq ft to Kirkland & Ellis at 40 Leadenhall Street, EC3.

The take-up by US law firms is particularly notable because in many cases the deals are office moves, which represent substantial increases in occupational footprint. This growth in occupied space is a clear sign of US law firms’ aggressive expansions into the UK market. We are expecting to see more US law firms expand in the coming years.

Big US law firms have been scaling up in London

London has long been an important base for US-domiciled law firms, and this has progressively increased over time. Of the 100 largest law firms in the world by revenue, 74 are headquartered in the US. Of those, 61 have a London office. The median size of the London office of a US law firm within the global top 100 is 41,100 sq ft.

In total, the globally ranked US law firms occupy 3.7m sq ft in London. By contrast, the main US office of the same firms have a median size of 257,700 sq ft, aggregating to 19.1m sq ft. So, on average, the London office of a US law firm is 16% the size of its main US office.

But the scaling up of operations in London is altering the picture. Kirkland & Ellis are the world’s largest law firm by revenue. Their deal at 40 Leadenhall Street will mean that their London office will be 58% of the size of their main US office. In 2021, Latham & Watkins, the world’s second largest law firm, secured a deal and have recently expanded into a c.200,000 sq ft space at One Leadenhall, which is 54% the size of their main US office. The fourth largest law firm in the world, Baker McKenzie, now occupy 130,600 sq ft at Duo, 280 Bishopsgate, meaning that their London office is 55% the size of their main US office. In total, there are six large US law firms that have a London office at least 50% of the size of their main US office.

There is potential for extra growth

If all the large US firms were to scale up their London offices to 50% of the size of their main US office, this would increase their footprint by 6.1m sq ft, equivalent to c.6 months of total Central London take-up in an average year.

In addition, there are 13 US law firms within the global top 100 that have no presence in London whatsoever. If they were all to acquire an office 50% of the size of their main US office this would imply additional demand of 1.2m sq ft.