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JLL Research Report
Grand Rapids | 2017
Law Firm Perspective
Grand Rapids
2
• The law firm market here is expanding as two Detroit-based firms, Honigman and Bodman, have penetrated the market in 2017 with intentions of long-term growth here.
• Multiple law firms in Downtown Grand Rapids have moved or are in the process of moving into new and efficient, high-quality spaces in an effort to attract and retain top talent, effectively rendering sublease spaces obsolete for law firms.
• We can expect law firm activity and absorption to slow, as many of the recently executed leases by law firms have been long-term commitments.
• Current construction will lead to new space opportunities downtown, particularly in second-generation space, as Warner Norcross & Judd announced that it will move from 111 Lyon into the new $63.5 million development 150 Ottawa, a year after Miller Johnson moved into the new Arena Place development .
Where are we now? Where are we headed? Square feet and rent per attorney:
Historic:
850-950 s.f. | $17,000
Current:
700-900 s.f. | $16,500
Target:
600-700 s.f. | $15,000
2017
Leverage:
Landlord Landlord Neutral
2018 2019
Law Firm Perspective | JLL | 2017
New development
10 yearsTerm
$28.00Base rent (p.s.f.)
2.5%Annual escalation
$40.00 / 0 TI allowance/free mos.
Renewal
5 yearsTerm
$20.00Base rent (p.s.f.)
2.5%Annual escalation
$5.00 / 0 TI allowance/free mos.
Relocation
10 yearsTerm
$20.00 Base rent (p.s.f.)
3.0%Annual escalation
$25.00 / 0TI allowance/free mos.
Typical lease terms
Sublease
-Term
-Base rent (p.s.f.)
-Annual escalation
-TI allowance/free mos.
Occupancy growth is steadily increasing year-over-year
0
50,000
100,000
150,000
200,000
250,000
300,000
2014 2015 2016 2017(YTD)
Net
abs
orpt
ion
(s.f.
)
Steady occupancy will continue to push down vacancy
10%
11%
12%
13%
14%
15%
16%
17%
2014 2015 2016 2017 (YTD)
Tota
l vac
ancy
(%)
Rent growth will continue to increase as new properties deliver at significant rent premiums
Office developments with commitments from law firms have filled the construction pipeline
$5
$10
$15
$20
$25
2014 2015 2016 2017 (YTD)
Aver
age
aski
ng re
nt ($
p.s.
f.)
Class A Class B
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2016 2017 2018 2019
Com
plet
ions
(s.f.
)
s.f. Available s.f. Preleased
Law firms continue to seek high-quality space, but options are limited and come at rent premiums
© 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
About JLL Law Firm Group
The JLL Law Firm Group provides strategic and innovative real estate solutions tailored to meet the uniqueoperational and financial objectives of law firms. Our multi-disciplinary senior-level team has deep experience working both in and with law firms, and has a proven track record of consensus-building. Our global expertise coupled with local market knowledge enable us to work with firms of all sizes and ensure you are proactively dealing with the ever-changing real estate and economic markets.
About JLL Research
JLL’s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today’s commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions.
Contact:
Harrison WestResearch Analyst+1 248 581 [email protected]
