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.
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