Real Estate Roundup: Latest Leases Cap Busy Year
After personnel, real estate costs generally constitute the second-largest expense faced by many large law firms. Am Law 100 shops such as Mayer Brown and Hughes Hubbard & Reed were reminded of that this week when they inked new leases for their New York offices.
In one of the city’s biggest commercial real estate deals so far this year, Hughes Hubbard renewed a lease for 226,416 square feet of space at its downtown headquarters at One Battery Park Plaza for 20 years, according to sibling publication GlobeSt.
GlobeSt also reports that Mayer Brown is set to move its 200-lawyer New York office late next year from its present home at 1675 Broadway to the McGraw-Hill Building at 1221 Avenue of the Americas. The move will be a massive undertaking for the firm, which in 2005 signed a lease for 200,000 square feet of space at its old home near Times Square (where it has been for more than a decade), as it prepares to transition to 187,000 square feet at its new home.
Robert Flippin, an executive vice president with real estate brokerage CBRE, advised Mayer Brown on its hunt for a new Manhattan location. Flippin, who has worked with the firm on previous real estate matters, declined to comment on how much the firm is paying for the new space, citing confidentiality provisions he signs with all of his clients.
Mayer Brown's impeding move comes amid what a recent study by architectural and consulting firm Gensler—which frequently designs office space for large firms—describes as a trend among many firms away from traditional layouts toward more collaborative “flex” spaces in an effort to cut their “real estate footprint” and, ultimately, costs.
In announcing its new lease, Mayer Brown—the subject of a New Republic feature story this summer—attached itself to that trend by saying that its new office space “will encompass a modern design with the goal of maximizing efficiencies throughout, and will include first-class conference facilities with cutting-edge technology.”
Flippin says Mayer Brown was shopping for a new Manhattan lease for two years, a standard amount of time for a large firm keen on doing new construction, especially in a crowded city like New York.
“Firms are looking to create efficiencies for their space as they look to relocate,” Flippin adds. “There are good opportunities for tenants, but the market is getting stronger.”
Mayer Brown and Hughes Hubbard aren’t the only firms to find new Manhattan space this year. Cahill Gordon & Reindel took on an additional 13,500 square feet at 80 Pine Street—just down the block from The American Lawyer’s own offices—by leasing the entire 26th floor of the 38-story building, according to Real Estate Weekly. (Cahill already has 250,000 square feet across nine floors at its Manhattan headquarters.)
New York’s Patterson Belknap Webb & Tyler, an Am Law 200 firm whose sole office lease was set to expire in December 2014, renewed a 20-year lease for 200,000 square feet of space at 1133 Sixth Avenue earlier this year, according to the Commercial Observer.