Law firms will remain among the most demanding tenants in the German office space market in 2024. The latest study ‘Law Firms – Trends and Leasing Behaviour 2024’ by Cushman & Wakefield shows that the sector continues to favour central, prestigious locations. However, it must increasingly address new challenges such as ESG standards and technological change. These requirements not only shape their choice of location but also influence rental price trends and relocation behaviour. Cushman & Wakefield had already previously published its first ‘Law Firms Report’ in 2021.
New Challenges: ESG, Digitalisation and the Battle for Talent
The growing demands for sustainability and modern working concepts present significant challenges for law firms. Building certifications such as LEED or DGNB are becoming increasingly important as ESG standards have become a key factor for many clients and employees. At the same time, digitalisation is driving the need for flexible spatial concepts and hybrid working models, which require modern technical infrastructures. These developments not only influence location decisions but also the office structure: single and double offices continue to dominate, as they ensure confidentiality and reflect the hierarchical structures of law firms. The competition for talent is increases the pressure on firms to choose exclusive and centrally located office spaces that offer both prestige and a pleasant working environment.
Central Locations Remain Unchallenged
‘The location preferences of law firms reveal a clear trend. 56 percent of all new lease agreements take place in the central business districts of Germany's top 5 office markets, with a further 35 percent in neighbouring inner-city areas. This means that, as noted in the 2021 study, around 90 per cent of law firm in central, high-end locations,’ says Helge Zahrnt, Head of Research & Insight at Cushman & Wakefield Germany. In the other sectors, this proportion currently stands at around 60 per cent, marking a ten-percentage-point increase compared to the previous survey.
Law Firms Pay for Prestige — Düsseldorf with Highest Rental Growth
Rental prices for law firms in Germany’s top five markets (Berlin, Düsseldorf, Frankfurt, Hamburg, Munich) have increased significantly since 2021. As of the end of Q3 2024, the average rental price for law firms across these markets stands at €33.85/m², up from €30.60/m² at the end of 2020. Munich leads with an average monthly rent of €35.90/m² for law firms (end of 2020: €28.20/m²), closely followed by Düsseldorf at €35.80/m² (end of 2020: €18.60/m²), where rents have nearly doubled since late 2020. The most affordable markets on average are Berlin at €31.00/m² (end of 2020: €29.00/m²) and Hamburg at €27.15/m² (end of 2020: €26.60/m²).
Compared to the office market in the top 5 markets across all industries, where the average monthly rent for office space is €24.67/m², law firms pay a significantly higher rent of €33.85/m². On average, the rents paid by law firms are approximately 37 per cent above the market level.
Office Take-Up: A Strong Comeback
The average annual office space take-up by law firms in the top five markets between 2013 and 2023 stands at approximately 93,000 m². Following a decline in 2020, when only around 70,000 m² was leased, there was a significant recovery began in 2021. In the following years, take-up reached 86,000 m² in 2021, 95,000 m² in 2022 and around 88,000 m² in 2023. By the end of the third quarter of 2024, 60,000 m² had already been leased by this sector.
Law firms are increasingly opting for bespoke new builds that meet both technical and sustainability requirements. Overall, law firms account for around 4 per cent of total office space take-up in the top 5 markets, positioning them as a significant yet specialised niche player.Markets in Detail: From Berlin to Munich
A closer look at the cities reveals that Munich is the most expensive location for law firms, with an average monthly rent of €35.90/m² and peak rates reaching €52.00/m². In comparison, the general office market in Munich averages €25.35/m². In Düsseldorf, law firms are prepared to pay an average of €35.80/m², with top rents reaching €43.50/m², while the average office rent stands at €19.65/m². Frankfurt also offers law firms exclusive options with an average of €33.70/m² and peak prices of €48.50/m², compared to an average office rent of €25.10/m².In Berlin, the average rental cost for law firms is €31.00/m², with peak rates reaching €45.00/m², while the general market is lower at €28.65/m². Hamburg is the most affordable option among the top markets for law firms at €27.15/m², while the market’s peak rent reaches €34.50/m². The overall office market in Hamburg averages a significantly lower €21.20/m².
Relocation Trends: Flexibility Remains Key
The relocation behaviour of law firms shows a clear preference for central locations. Between 2020 and the 3rd quarter of 2024, a total of 56 relocations of 1,000 m² or more were recorded, with 60 per cent occurring within the same location category Notably, relocations to peripheral or secondary locations are virtually non-existent. At the same time, the demand for high-quality working environments is reflected in an increased focus on CBD and inner-city locations.
‘The combination of rising rental prices, increasing demand for ESG-compliant space and the ongoing competition for talent will continue to shape the office real estate market for law firms in the coming years. With their preference for exclusive, centrally located spaces, law firms will remain one of the most influential sectors and continue to set trends in the premium segment,’ says Pierre Nolte, Head of Offices & Leasing Germany and Head of Tenant Representation EMEA at Cushman & Wakefield.
