May 2, 2009
By Lindsay Suchow
New Jersey & Company Magazine
For an event with a highly specialized focus, ScheinMedia’s Law & Office Conference on March 11 explored quite a range of topics, from design and architecture to technology and the environment.
Over 100 attendees—contractors, brokers, and real estate attorneys—filled the IDT Building’s Washington Square Conference Center in Newark for a half-day of networking and expert panel discussions on the many facets of law firm tenancy in New Jersey.
“It’s an understatement to say it’s an unusual time in our economy, and to put together this sort of an event, you have to find the right topic,” says ScheinMedia President and CEO Jonathan A. Schein. “We came up with this concept about the law firm as a tenant. Law firms are one of those parts of the industry—whether it’s growing or shrinking or staying the same, they are always active.”
Paul Giannone, managing director at Jones Lang LaSalle, offered a startling preface to the attorney-moderated panels: with an overview of the law firm marketplace in northern and central New Jersey. There, he says, firms comprise 4.5 percent, or 5.5 million square feet, of the region’s 120 million square feet of occupied office space—and that kind of surface area can come at quite a price.
“Law firms tend to lease the most expensive space in our market,” says Giannone, and at approximately 700 square feet per attorney. Bearing these numbers, Giannone calculated the average cost of leased space at about $23,000 per attorney in rent alone. (Improvements, overtime HVAC, and urban parking tack on more than $30,000 more per annum per attorney.) “That’s way more than double the average cost of occupancy for the other industries in the state of New Jersey.”
Nationally, law firms are targeting between 600 and 650 square feet per attorney in an effort to lower operating costs, Giannone says, noting firms should opt for space compression and efficiency rather than relocation.
In fact, the sheer size of law firms and the measures most practices are taking to condense them was a common theme among the first two panels; the Landlord Panel, moderated by Connell Foley partner James Rhatican, echoed Giannone’s penchant for downsizing space.
Michael Allen Seeve, president of Mountain Development Corporation, noted that he has observed neighboring law firms sharing common areas, which “serves the end goal and can be one of the advantages of being a multi-tenanted office building.”
Bryan Banaszynski, vice president of leasing at Advance Realty Group, says partners with spacious corner offices have gone by the wayside. “They took a lot of the personal real estate away from the practicing attorneys and made it public real estate. The days of a partner having a 1,000-square-foot office, I believe, are gone forever.”
Legal subject matter expert Martin Festenstein, a panelist on the Architects Panel, moderated by Wolff Samson partner Mitchell Berkey, also discussed universal offices, as well as technology, as methods for maximizing efficiency.
“The sizes of the attorney offices are shrinking,” Festenstein told the audience, noting that working remotely is a major trend. “Do they need a space dedicated to themselves 100 percent of the time when they’re spending 20 to 30 percent of their week not physically in the office?”
Accommodating generation gaps through technology was a recurring topic among the Architects Panel. Gerard “Guy” Geier, senior partner at FXFOWLE, also noted that new lawyers are concerned about environmental friendliness. “Young attorneys coming out of law school are asking these questions of their employers: how sustainable is my space? What are you doing that’s green?”
The subject of an ecofriendly workplace was examined more deeply by the Green Office panel, moderated by registered architect and LEED Accredited Professional Brad Cronk. Experts asserted that law firms could save significantly on operational costs with green building systems;.Attorneys can especially benefit from energy-efficient lighting and HVAC, the panelists agreed, because of their tendency to work long and late hours.
“The comfort is so important [for] the after-hours work, to be able to come in on a Saturday and your air conditioning comes on very easily,” says Eric Monsen, president of Monsen Engineering Company. “To be really green, you really have to understand how the law firm is going to use the space from a comfort standpoint.”
Matthew Jarmel, president of Jarmel Kizel Architects, says it’s first important for a firm to tailor their own sustainability goals. If the goal is bottom-line dollars, Monsen notes that New Jersey has the “best rebate system in the country” for utilizing clean energy technologies; Jarmel cited the state’s SmartStart Buildings program.
“There are many shades of green,” says Jarmel. “I think a firm or an organization has to define what it means to them, and from that, set objectives.”
The final panel, the Law Firm Panel, answered that question and more: while Steve Delinko of Greenbaum, Rowe, Smith, and Davis asserts that “not being environmentally conscious sends the wrong message,” attorney David Gordon points out that the current economic climate leaves no room for pickiness: “Right now, young lawyers coming out of law school want to go to any law firm that can give them a job.” Gordon and a majority of the panel expressed plans to incorporate green elements into their spaces—Martin Dowd of McCarter and English is aiming for LEED certification in the firm’s next renovation.
It was hardly the first—or last—mention of the current financial crisis. “Many substantial law firms have not just reduced their amount of lawyers, but have closed their doors,” says panelist Shepard Federgreen of Gibbons, adding that “these are unprecedented times in our professions for everyone in this room.”
Moderator Earl Segal, principal at Newmark Knight Frank, opened the floor to questions. When asked how working remotely has changed the overall law firm environment, Richard Abramson, chairman of Cole, Schotz, Meisel, Forman, and Leonard’s real estate department, says with attorneys often working around the clock and on the weekends, technology has transformed firms’ ability to get work done. “Years ago, you’d come into the office on a Saturday or Sunday and it would be crowded,” he says.
When presented with the question of what kinds of changes the panelists would make to their law firms if cost were not an issue, Gordon said he’d “gut (the space),” incorporate more natural light, and “change the lighting systems and energy control systems to be more environmentally friendly,” while Dowd would like to see more “congregation areas” so employees can “get together and interact more,” as well as more open floor space—“not that confined, demised look.”
Conference attendee Mary Beth Sullivan, sales manager for furniture manufacturer Steelcase, says the Law & Office conference offered her valuable insight into exactly what law firms are looking for in their spaces.
“[The discussions about] how the law firms are really going to be evolving in their space were particularly interesting,” says Sullivan.
Attendee Brian Dixon of Commonwealth Land Title Insurance found the Law Firm Panel the most informative: “How they approach the greening of their offices, what they look for in leases—lots of nice tidbits of information.”
With long-term leases, detailed design, and massive surface area, the conference suggests that the business of law firm offices could be a diamond in the rough for the real estate world in uncertain times.
“The success of Law & Office proves that there are pockets of opportunities, regardless of market conditions,” says Schein.