IREM Global Summit | Chicago | October 10-13

IREM Global Summit | Chicago | October 10-13

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With New Law Firm Leases

With New Law Firm Leases, D.C.'s Office Buildings Are Getting Top-Heavy Bisnow (06/29/2017) Banister, Jon

In Washington, D.C.'s office sector, a trend has developed in which law firms are flocking to the top of trophy buildings, leaving the lower floors vacant. Of seven office buildings currently or soon-to-be under construction in the District of Columbia's core submarket, approximately 1.5 million square feet has been leased in the top stack of the building, with 1.1 million sq. ft. still available on the lower floors, CBRE researchers report. Goodwin Procter, for example, is moving to the top three floors of JBG Smith's 1900 N development, as the developer is still looking to lease the bottom six floors. That project broke ground in April and is slated for a fourth-quarter 2019 delivery.

Meanwhie, the Gottlieb law firm is set to take the top five floors of Skanska's 2112 Pennsylvania Ave. NW tower when it delivers in 2018, as the bottom five floors remain available. "Most of these are law firms, and it's a matter of status and branding that they have a tendency to go to the highest-quality building in the best space," comments CBRE research manager Wei Xie. "Some of them have been in their previous space for years, so this is a chance to upgrade to the latest and greatest space with the best view and branding opportunities." CBRE research shows that tenants who lease the lower floors of these buildings can see as much as a 10 percent discount from the top-floor rent. Because law firms typically do not want to share a building with another law firm, the lower floors tend to attract nonprofits, creative firms, or co-working tenants.