A case study panel gave the inside scoop on Hogan Lovells' extensive search for a new building; the firm narrowed its options to 30 sites before voting to stay in Columbia Square—with a full renovation of its 400k SF space.
Cushman & Wakefield executive director Malcolm Marshall moderated, joined by Hogan Lovells employment partner Bill Flanagan (who's co-chairing the renovation and was at the firm when it first moved into Columbia Square in '87), and two real estate professionals who are working with the firm: Gensler's Kim Sullivan and DAVIS Construction's Meghan Callahan.
Bill says the firm began internal discussions in 2011, five years before the lease was up, and engaged a strategic consulting firm. The partnership "voted overwhelmingly" to stay at 555 Thirteenth St, in part because of a convenient location atop Metro Center. The project should be finished in 2017.
Jones Lang LaSalle VP Scott Homa gave a quick State of the Market:
Though US law firms' average annual revenue growth is around 3% (compared to double-digit growth in the past), the key metric—profits per partner—shows 5% to 6% growth.
86% of law firms have already reset their space needs. Whether they renew or relocate, firms give back about 25% of their space. (Scott's also seen one or two cases of over-correction.)
The legal sector is still down 7,200 attorney and paralegal jobs since 2008 peaks. (On the plus side, DC is in a three-year high for job growth.)
88% of new DC households don't have a vehicle. The District has been the second-fastest-growing jurisdiction nationally over the past four years, without any net increase in automobile registrations. Metro accessibility is a necessity for those new entrants, many of them Millennials. (So if tenants are OK with off-metro locations, they can drive a hard bargain.)
Input from the staff and attorneys has been critical, Bill says. A 50-person team called the "Revision Committee" advises on the renovation, with a core group of 10 meeting once a week for three to four hours.
Since it's a phased renovation, people's feedback can be incorporated into the next project, Kim says, and their insights from living in the space have been helpful. Bill says change furthers a key strategic objectives: the "one team worldwide approach."
Hogan is integrating all of its support staff and professionals onto the 6.5 practice floors with attorneys. Flexible zones around the interior can use removable partitions to make 80 SF offices, 165 SF associate offices, secretarial spaces or huddle rooms.
Since this space is for the next 20-plus years, Kim says, they wanted to make sure it can evolve with changes in the business model or leverage ratio.