Guess Who's Calling the Shots in DC Real Estate
"If you're building or buying high-quality office, law firms are the driver of demand." That's Brookfield region chief Greg Meyer (with mic). But you have to give them flexibility," he added at our Bisnow Real Estate Strategies for Law Firms and Associations event last week at the Mayflower. He's flanked by Nixon Peabody managing partner Jeff Lesk and Gilbane's Dave Doherty. Citing a hypothetical negotiation with a tenant at Brookfield's 2001 M St redevelopment, Greg said even if a big law firm didn't offer a big security deposit, or demanded an early termination clause, he would still "absolutely want to do the deal."
Mayor Vincent Gray opened our event by offering his best wishes to the first place Nats, and even telling us that two major league squads scouted him while at DC's Dunbar High School. "Neither of them was Washington," the Mayor quipped. He reported some updates on the city's big five-year economic development strategy, which seeks to add 100,000 new jobs and $1B in new tax revenue: 18,000 new jobs were added in DC in 2013, putting the city on a pace that would just miss the 100,000 target, and $280M in new tax revenue has been achieved thus far.
JLL tenant rep expert Joe Judge (middle) says it's not just law firms driving demand. Associations and non-profits are looking for new and better deals. "The world is the tenant's oyster, and we don't see that changing for the next 10 to 18 months," says Joe, who adds that associations that previously focused on buying space are more actively seeking to lease. Joe was joined by OTJ Architects partner Heather Nevin (right) and National Association of Manufacturers CFO Rick Klein, who just led his org through signing the first lease at Skanska's 733 10th St in East End, illustrating the focus of new, efficient space for law firms, associations, and nonprofits. Skanska has since sold the building to Jamestown.
The challenge to drive profitability is and will continue to be a top priority for law firms, according to Cushman & Wakefield national legal sector advisory group leader Sherry Cushman. Since real estate can be a firm's biggest cost (next to payroll), it's why firms will continue to seek out new, but more efficient spaces, and why 29% of leasing activity in DC was in the legal sector last year. Stay tuned for more event coverage tomorrow.