Canadian Lawyer

OPINION Back Page By Jim Middlemiss A good time for a move C Montreal lacks 'swing space' Montreal is landlord friendly until 2015, when it becomes neutral and moves to tenant friendly by 2016. There is a lack of large blocks of con50 Jan uary 2013 www.CANADIAN sion plans might consider Washington, D.C., one of the most attractive places for firms seeking space. A tenant's market, Washington will start to tighten by 2015. Concessions in Washington have "increased to all-time highs and generous rent-free and tenant improvement allowances have driven net effective rent sharply lower." tiguous space, making it difficult for firms seeking to relocate. Rental rates are rising at a 4.9-per-cent pace and with a low vacancy rate there is little "swing space" available for firms looking to expand. However, two new towers are confirmed, which will benefit law firms whose leases expire after 2014. Toronto tenant friendly Toronto is recognized as "one of the most significant legal markets in the world," the report states. Currently tenant friendly, it will go neutral by 2014, and become landlord friendly by 2016. Class A rents are rising 5.2 per cent annually. The report notes that "several law firms are getting close to their lease expiries, which will spark relocation renewal activity over the next two or three years." Toronto law firms are also looking for ways to reduce their footprint per employee. Vancouver rents rising Vancouver is tenant friendly for 2013, and will be landlord friendly by 2016. Annual class A rents are rising 15 per cent. Nonetheless, firms are active with seven large firms currently in the market and another five recently completing deals. The report notes there are very few expansion or relocation options over 10,000 sq. feet and law firms with leases expiring before the third quarter of 2014 will face "significant logistical challenges if they wish to consider relocating." Washington D.C. 'attractive' Canadian firms with international expan- L a w ye r m a g . c o m Asia and Australia Firms seeking Asian expansion might consider Hong Kong, which is currently tenant neutral, but is expected to tighten over the next couple of years. The report notes that there are some "first-mover opportunities," despite the 3.4-per-cent vacancy rate. Sydney is also tenant friendly until 2016, while Singapore and Tokyo are both neutral. Beijing is expected to remain landlord friendly until 2016. Middle East Dubai and Abu Dhabi are tenant friendly, following the collapse of their real estate markets. There is great space available, with vacancy rates between 30 and 35 per cent. So now would seem to be the time to make a move there! Europe Canadian firms eyeing continental Europe as expansion territory might want to strike now. Rents are bottoming out in key cities, including Brussels, Frankfurt, and Madrid, and slowing in London, Paris, Berlin, Moscow, and Amsterdam. Take Paris, which is tenant friendly. Competition for space is low, lease renewals can be favourably renegotiated and landlords are offering incentives. But it doesn't come cheap —  prime space in Paris rents for 830 euros per square metre, which is greater than London. But who can beat Paris in the springtime? Jim Middlemiss blogs about the legal profession at WebNewsManagement.com. You can follow him on Twitter @JimMiddlemiss. Scott Page anadian law firms looking to expand into Abu Dhabi, Dubai, or Washington might want to act soon, because rents in those markets are bottoming out, according to a survey of commercial real estate conducted by Jones Lang LaSalle. Jones Lang, which operates in 70 countries, specializes in providing real estate advice to law firms around the world. The survey provides insight into the global consolidation currently sweeping the legal profession. "Firms are increasingly looking to Asia for growth opportunities, with the cluster of M&A activity between U.S., U.K. and established Australian firms as international firms seek to grow their presence in Asia," the report states. "Africa is also emerging as a nascent destination for law firms seeking to partner with the growing number of corporate clients growing their businesses in the region." Consolidation is picking up. In November, Norton Rose announced a merger with U.S. firm Fulbright Jaworski, adding the final piece to the global giant's push into North America. That same month, Fraser Milner Casgrain announced it was merging with SNR Denton and Salans; Fasken Martineau announced in late October it was merging with another Johannesburg law firm, Bell Dewar. The report notes law firms "face a tough global operating environment," forcing them to examine how they manage real estate assets to reduce operating costs and improve productivity. "Lease events" are a key driver in mature markets where there is no expansionary demand. In Europe, where markets are soft, law firms have been driving hard bargains in lease renewals. So how does the Canadian market stack up?

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