Corporate America discovered a nasty little secret during the dark days of the Great Recession.
It’s a lesson that should make downtown tower owners and suburban office developers alike shudder: Big corner offices and fancy office space just aren’t all that important anymore.
It’s kind of funny how an existential threat helps focus the mind. And as they battled for survival in the dark days of 2008 and 2009, companies quickly figured out what was essential and ditched what wasn’t.
And one thing they learned was that, from payrolls to office space, less is more.
The proof is in the numbers, with some of the biggest lease deals over the past year involving firms that renewed leases, but took less space in the process.
“People are trying to do more with less,” noted Ron Perry, president of Colliers International in Boston. “If you rent 10 percent less space than before you can improve your bottom line.”
Bye Bye, Taj
And it’s downtown Boston law firms, which were hammered during the recession, that are now leading the way when it comes to reinventing how corporate America uses real estate.
Lavish offices have long been seen as important to impress clients – to show you are playing with the big boys (and of course, now girls as well.)
But clients, especially of the big corporate type, are looking more at the final bill these days – and bemoaning all the billable hours – than at whether a firm’s top lawyers have enough antique furniture and law books on display to fill a small library.
In fact, if anything, the traditional trappings of stereotypical law offices may be more of a liability these days. No one wants a client walking out of a meeting, shaking his or her head, and thinking “why am I footing the bill for that Taj Mahal?”
Law firms accounted for six of the ten largest lease transactions last year in downtown Boston, and in all but one case, the firms renewed existing leases for the same or smaller amounts of space, Perry notes. Overall, the law firms took roughly 10 percent less space than they had before.
Of course, many of these firms had to pare back staff as the economy went into a tailspin in late 2008 and early 2009 – and fewer bodies equals less office space.
But this shift is far more than just a reaction to a downturn. Rather, big companies increasingly want office space that is more utilitarian and freer flowing, a trend driven not just by cost pressures but by new technology and changing social norms as well.
“For the law firms, it is more of a structural change,” Perry said. “They are looking at the ways they run their operations and their billable hours. ‘How can we make this whole operation more efficient?’”
And this new dynamic, while it certainly accelerated under the lash of the downturn, was already in motion before the market crashed in the fall of 2008.
Just take a firm like Ropes & Gray, which back in 2007 moved from International Place to a larger suite of offices in the Prudential tower.
While Ropes took more office space, it ditched the old grandfather clocks and other traditional law firm stage props for a sleek, modern workplace.
Ropes went from seven different sizes of offices to two, one for partners and a smaller size for other, less important, bigwigs.
There are lots of break areas on the different floors aimed at encouraging collaboration, as well as a main dining area.
“It’s just very clean, crisp space,” Perry said.
Trend Setters
While law firms are helping push the office market in new directions, they are hardly alone.
In some respects, law firms are taking a page from tech firms, who began redefining office space back in the go-go 90s.
Remember all those zany, space-station-like office layouts and break rooms with ping-pong tables? It all may have seemed like Internet bubble madness at the time, but it helped show what was possible.
Financial services, accounting and consulting firms have also been looking to ruthlessly cut their real estate costs, with hot desks that can be shared by employees jetting around from city to city.
So our local legal eagles were hardly the first on the scene here.
But when tradition-bound fields like white shoe, downtown law firms begin to make these changes, well then it’s pretty clear a paradigm shift is going on here.
In the digital age, firms have realized they don’t need extensive legal libraries lined with old law books. And squadrons of fast-typing secretaries are things of the past, notes Larry DiCara, a top downtown real estate lawyer.
“Many of the young lawyers can type as well as secretaries,” he noted.
There’s another small detail to keep in mind, as well. Law firms are some of the biggest players in the downtown office market, helping make or break various tower owners.
Law firms alone accounted for a million square feet of leasing activity in downtown Boston last year. When law firms start looking around, landlords pay very close attention.
After all, they wield the kind of market power that can take an emerging trend and make it the norm.





