Rapid expansion of Manchester’s legal sector

Manchester’s legal sector is expanding faster than any other regional city and at more than twice the rate of Central London, according to new research by property agent Knight Frank.

The Knight Frank Legal Sector Report found Manchester recorded the highest legal services sector office take-up by square footage across all UK regional cities, at 155,328 sq ft, during 2017.

Some 13% of total office take-up in Manchester involved law firms, which is more than double the figure for Central London.

Experts at Knight Frank believe the boom in Manchester’s legal sector is being driven by a combination of innovative firms using property to drive cultural change and mid-tier mergers.

Mark Bamber, office agency partner at Knight Frank Manchester, said: “Manchester’s law firms are at the forefront of making significant transformations to the way they operate in the face of more disruptive forces.

“This has resulted in many firms using real estate as a strategic tool to attract talent, drive cultural change and increase innovation.

“Manchester has the winning combination of unrivalled city centre amenities and the highest quality office stock, underpinned by the availability of a highly skilled workforce, especially undergraduates from the various universities, that makes it the perfect location of choice for firms wanting to grow their headquarters or expand their regional markets.”

As well as topping the national take-up chart, Manchester also took top spot for the largest legal services office transaction in 2017.

Clyde & Co’s expansion in the Royal Exchange building saw it take an additional 69,000 sq ft, nearly three times the size of the second largest regional transaction, Simmons & Simmons’ 26,985 sq ft deal in Bristol.

Other notable Manchester deals in the top 10 were Weightmans’ new base at No1 Spinningfield (17,949 sq ft) and JMW’s nine-year lease at 3 Hardman Street (14,086 sq ft).

Market shifts in the industry are also leading to an increase in legal sector real estate activity, according to Knight Frank.

Mr Bamber added: “The legal services sector is undergoing unprecedented change with a growing competitive threat from top-tier firms with capital to invest in technology and more agile new market entrants forcing mid-tier firms to transform themselves and consolidate to survive and thrive.

“There were 40 law firm M&A deals in 2017 resulting in multiple regional office locations, which drives the markets in regional cities.

“This is causing firms to consider their short and medium-term property requirements which will inevitably lead to space being acquired, either as an addition to their current office or as a wider wholesale move.

“In addition, we are aware of certain London based practices considering the relocation of certain departments into the Manchester market.

“All is under the backdrop of a very tight market in terms of office supply, hence some firms are considering a move earlier than their current lease predicts in fear of missing out.”

Jennifer Townsend, associate, occupier research, Knight Frank said: “The legal services sector is undergoing a fundamental transformation, as it aligns its real estate strategy to its business objectives.

“Knight Frank’s monitor of law firm activity over the past 12 months shows an uptick in law firms making significant transformations to the way they operate in the face of a range of disruptive forces.

“This has fuelled a focus on office location and a shift towards community and collaborative working trends, with real estate being harnessed to change working culture, behaviours and increase innovation.”

She added: “Continued law firm growth in the UK has been driven by confidence in continued demand for legal services against a backdrop of ongoing economic and political uncertainty.

“High quality amenities in city centres such as Manchester, Bristol and Leeds are driving expansion outside of London, as occupiers look for flexibility and access to talent.”

The top 10 legal services office transactions by square foot in 2017 were: Manchester, Royal Exchange Clyde & Co 69,000 sq ft; Bristol Aurora, Finzels Reach Simmons & Simmons 26,985 sq ft; Birmingham, The Colmore Building Hogan Lovells 23,388 sq ft; Leeds, 1 Apex View BW Legal 22,441 sq ft; Manchester, No 1 Spinningfields Weightmans 17,949 sq ft; Sheffield, Courtwood House Graysons 17,000 sq ft; Manchester, 3 Hardman Street JMW, 14,086 sq ft; Aberdeen, 28 Albyn Place Stronachs 13,683 sq ft; Bristol, Templeback Jordans Solicitors 13,671 sq ft; and Bristol, Aurora, Finzels Reach Mewburn Ellis 13,326 sq ft.