With the ongoing pull-back in the office leasing market by federal agencies, and the related cooling effect that has had on office leasing activity by many government contractors, market observers have wondered who might fill the void.
Recently, the other mainstay of Washington’s office market — law firms — has been busy signing some of the biggest leasing deals in the region.
Nearly 2 million square feet of office space in the Washington market has been leased by law firms over the past 12 months. In July, one of the largest law firms in Washington, Arent Fox, moved into its new location at 1000 Connecticut Ave. NW, where it took approximately 230,000 square feet.
More recently, other major law firms have negotiated deals for their offices. Holland & Knight signed a new lease for 146,000 square feet in the new PNC Place building located at 800 17th St. NW. Cooley recently agreed to lease 75,000 square feet in Vornado’s Warner Building at 1299 Pennsylvania Ave. NW.
And in the largest office deal signed so far this year, Covington & Burling has signed a letter of intent to move to Hines’s new 2.5-million-square-foot City Center development currently under construction. The law firm, whose lease expires in 2016, plans to occupy approximately 415,000 square feet in the two office buildings planned in the City Center development.
Other law firms that have signed leases this year include Dechert, Sullivan & Cromwell, and Pillsbury Winthrop Shaw Pittman.
Given the numerous space options available in the market, landlords have worked hard to retain their law firm tenants. Perhaps the best example is Manulife Real Estate, the owner of 1100 New York Ave. NW, which has signed two major renewals with law firms in the past year. The Gilbert law firm renewed its lease for 41,000 square feet and Sterne, Kessler, Goldstein & Fox signed a renewal for 82,000 square feet and expansion into an additional 36,000 square feet to keep the building fully leased.
Meanwhile, some of D.C.’s biggest firms have leases scheduled to expire in the next few years and are weighing whether to renew or to sign a new deal and relocate. Arnold & Porter occupies approximately 375,000 square feet at Manulife’s Thurman Arnold Building under a lease set to expire in 2015. Lathan & Watkins’ lease will also expire in 2016. The firm currently occupies 235,000 square feet in Dweck Properties’ Lincoln Square Building at 555 11th St NW.
Charles Schwieger is a member of CoStar Group’s Washington research team.