CBRE, the global real estate advisor, today publishes its ‘Law in the Regions’ report which reveals the emergence of a two-tiered hierarchy of UK legal cities outside of London.

The report provides a comprehensive overview of the legal sector in the UK, providing both real estate strategy insight gained from a series of in-depth interviews with some of the country’s top law firms as well as results of a sector benchmarking exercise, revealing key indicators such as top 30 law firm locations, top cities by number of fee earners, average area and rent per fee earner.

Headline findings reveal a simple ranking of UK regional legal cities, measured by the total office floor-space in each city occupied by law firms in the UK Top 100 (as identified by trade magazine ‘Legal Business’). This analysis shows a two-tiered hierarchy of leading regional cities for law firm occupation. The top tier of Bristol, Birmingham and Manchester, each have well over 750,000 sq ft of office space occupied by law firms, well ahead of the second tier cities of Edinburgh, Leeds, Liverpool and Glasgow, with volumes in the 300-500,000 sq ft range.

Particular office space take-up ‘hot spots’ recently have been Manchester, Leeds and Belfast. Noteworthy deals in Manchester include 100,000 sq ft acquired by Slater & Gordon and 44,800 sq ft by DLA Piper. In Leeds, Addleshaw Goddard Limited acquired 51,500 sq ft, Squire Patton Boggs, 33,000 sq ft and DAC Beachcroft 25,000 sq ft, whilst in Belfast, Baker & McKenzie have moved into new offices last year (28,000 sq ft)– following in the footsteps of Allen & Overy and Herbert Smith Freehills. The opportunity to occupy high quality office space, whilst operating at a substantial discount to London is proving a strong attraction.

Within the analysis CBRE identified three core business models in the regions, the most recent emerging over the last four to five years in the form of ‘global legal service centres.’ Many of these occupiers have chosen a UK regional centre after considering a number of worldwide locations from a cost, quality and risk perspective. More broadly the benchmarking analysis has shown that, on average, law firms are paying rents at a significant discount to the prevailing prime headline rent in each city.

James McLean, Senior Director of the CBRE UK Tenant Advisory Group
Law firms are undergoing a period of rapid evolution and transformation, fuelled by rising demand for legal services, increased pressure on fees and intensifying competition from more savvy, innovative competitors as well as freshly merged larger firms

We are seeing a dual focus on cost control and selective investment to drive future business expansion. This has led to a wave of legal office moves or expansions in the UK regional cities, often drawn by opportunities to take high quality, cost effective office space - operating at a substantial discount to London. The message to law firms is clear: evolve or risk being left behind!
James McLean, Senior Director of the CBRE UK Tenant Advisory Group
Emma Jackson, Associate Director in CBRE Research
Key to our findings is that one size does not fit all when it comes to real estate strategy. Different business models and location starting points will require different real estate strategies. One thing is certain however, law firms are becoming increasingly sophisticated in their approach to real estate strategy, and as a result we are seeing a huge variety of different space requirements in UK regional cities and indeed a significant variation in the average area per fee earner.
Emma Jackson, Associate Director in CBRE Research