Real estate costs are typically a law firm’s most significant operating expense aside from payroll. In addition, a lease has meaningful long-term ramifications, impacting firm image, flexibility to grow or contract, operating efficiency and recruiting capabilities. And because of a law firm’s unique structure, occupancy costs can directly affect each partner’s personal bottom line in the form of per-partner profits.
Structuring an office lease is a high-stakes endeavor and the sky-high prices recently paid for Class A or premier San Francisco office buildings have upped the ante considerably. This is particularly true for the city’s law firm tenants, who occupy approximately 15 percent of the total Class A inventory.
