The Firms

November 11, 2011 7:27 PM

Baker, Pillsbury Ink New Office Leases on Opposite Coasts

Posted by Sara Randazzo

Bucking a 2011 trend that has seen most law firms with expiring leases renew rather than relocate, both Baker & McKenzie and Pillsbury Winthrop Shaw Pittman are taking over more than 100,000 square feet of space at new addresses in key cities.

For its part, Baker has committed to a 15-year lease at 452 Fifth Avenue, an IDB Group–owned building overlooking Bryant Park in midtown Manhattan, according to an IDB statement. The firm's New York office will occupy 105,803 square feet across six-and-a-half floors, making it the building's second-largest tenant after HSBC.

Mitchell Steir, chairman and CEO of commercial real estate services firm Studley, worked with Baker on identifying the space and negotiating the lease. Steir says the search began about 15 months ago. While Baker didn't necessarily set out to move from its current New York home at 1114 Avenue of the Americas, Steir says that favorable deal terms—which he declined to detail—drew the the firm to the new location. Steir says he expects the firm to move in by the fourth quarter of 2012 after remodeling the space.

On the other side of the country, Pillsbury has solidified plans to relocate its San Francisco office in late 2012. The San Francisco Business Times reports that the firm signed a 12-year lease for 108,000 square feet in Four Embarcadero Center, a building owned by Boston Properties. Firm spokesman Tom Resau said via e-mail Friday that the lease comes after a two-year search spearheaded by the firm's San Francisco managing partner, Bruce Ericson.

As big as the two spaces are, both Baker and Pillsbury are actually moving into smaller quarters—something that Steir and Resau say reflects the fact that law firms are able to do more in less square footage these days.

"Everything is trending toward greater efficiencies," says Steir, pointing to higher lawyer-to-secretary ratios, smaller libraries, and more flexible use of interior space.

"Our attorneys wanted more density, more collaborative space,” said Resau. “Square footage is just a number."

Pillsbury's lease signing coincides with the firm's recent announcement that it plans to open a Nashville office to house support functions by fall 2012. Resau says that the decision to launch the Nashville operation, which is expected to result in some staff positions being eliminated in current Pillsbury offices, was only partially influenced by the looming expiration of current office leases.

The two firms' office moves come during a year when more law firms nationwide have opted to renew current leases rather than relocate, according to a new report by commercial real estate services firm Jones Lang LaSalle. Sibling publication covered the key news contained in the 44-page report (PDF) earlier this week, noting that in 2011 two-thirds of all law firms nationwide with leases expiring decided to stay in their current location.

The largest law firm real estate deal by size in 2011 was a 402,445-square-foot lease renewal signed by Skadden, Arps, Slate, Meagher & Flom for its Washington, D.C., office, according to Jones Lang LaSalle. The largest relocation so far this year: Wilmer Cutler Pickering Hale and Dorr's signing of a lease for more than 210,000 square feet at 7 World Trade Center in Manhattan.

One other notable nugget from the Jones Lang LaSalle report: In Washington, D.C., law firms occupy 42 percent of all commercial real estate, the highest proportion in any major market. By comparison, law firms in New York take up 13 percent of all commercial real estate; Los Angeles firms occupy 16 percent; and Chicago firms inhabit 17 percent.

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