Global Law Firm
Situation & Objective
This legal client acquired another major law firm 2015. The acquisition had the following impact on our client’s real estate portfolio:
- Increased office location count from 15 to 29
- Annual real estate spend up from $30.0M to $65.0M
- Real Estate square footage leased increased from 700,000 RSF to 1.2M RSF
- Dual operations in 5 cities
- Increased firm occupancy from 800 RSF/attorney to over 1,000 RSF/attorney
Having advised confidentially on the pre-acquisition real estate strategy, the team working with the client developed a real estate plan that was ready for implementation upon acquisition. The new real estate strategy set out to achieve the following benchmarks within 3-4 years post acquisition:
- Reduction to 20-22 offices
- Annual Real Estate Spend of $45.0-$50.0M ($15M-$20M reduction)
- Consolidate all markets with dual redundancy
- Firm-wide occupancy density of 700-800 RSF/attorney
The team abstracted all leases and amendments, aggregated remaining obligations for all locations, performed occupancy evaluations at all under performing and redundant locations and completed in-depth research on each market. We then identified the immediate, moderate and long-term action items and began implementation city by city starting in Q1 2016 which led to the following;
- Eliminated all 5 redundant locations by way of consolidation, early termination, sublease, assignment and buyout. The 5 redundant cities together comprised 500,000 RSF. Post implementation, no redundancies remained and occupancy in the 5 cities was reduced to 250,000 RSF.
- By way of assignment or early termination disposed of 4 additional sites and any excess space at sites the firm was maintaining. Impact on occupancy was a reduction of 150,000 RSF.
- Completed lease restructures and extensions at 5 locations that were targeted as long-term strategic markets, and the firm was either paying an over market rent or long on real estate. Impact on occupancy was reduction of 100,000 RSF and $5.0M in per annum real estate spend.
This approach has achieved the following for the client post acquisition:
- Total office count of 20 - reduction from 29
- Annual RE spend of $45.0M - reduction from $65.0M
- No markets with dual redundancies - reduction from 5
- Firm wide occupancy density of 750 RSF/attorney - reduction from 1,000+ RSF/attorney