Prime Midtown and Buckhead office space for law firms is still available at good terms, even as the market slowly tightens up.

“It’s a tenant’s dream,” said Andrew Lechter, executive vice president of real estate brokerage Studley’s local office. “All of this speculative space has been delivered, none of it is pre-leased and, because of the economy, it is being leased very slowly.”

Lechter said ample supply and low rents mean tenants still have lots of options, even as the Class A office space market slowly starts to absorb excess capacity.

“I don’t know that it’s tightened up at all,” was Brad Armstrong, a senior managing director at Jones Lang LaSalle’s assessment of the Class A market. Like Lechter, he handles a lot of law firm leases.

Armstrong said many of the large firms in Midtown and Buckhead still have excess space from downsizing during the recession and because they are using it more efficiently.

“There is still some significantly underutilized space out there, especially in Midtown,” he said.

The vacancy rate in the Midtown and Buckhead submarkets remains high, at 21.5 percent and 21 percent, respectively, according to Studley’s third-quarter report.

Several large firms are assessing their real estate options. According to Jones Lang LaSalle’s third-quarter report on Atlanta office space, Bryan Cave, currently at One Atlantic Center, is seeking 90,000 square feet. Hunton & Williams, located in the Bank of America tower, is in the market for about 70,000 square feet, while Burr & Forman, at 171 17th Street in Atlantic Station, is in the market for 40,000 square feet.

Many large law firm lease deals already have been completed in the last couple of years by firms taking advantage of the favorable rental market.

“There are no big game hunters in the market on par with what was seen in 2010 and 2011,” said the Jones Lang LaSalle report. “A glut of vacant space still plagues the market and the active prospect pipeline is slow.”

As a result, Class A office rent remains flat, averaging $23 per square foot, according to Studley’s research. Midtown is the most expensive submarket, with Class A space averaging $27.71 per square foot, followed by Buckhead at $26.80 per square foot. Class A space downtown averages $25.17 per square foot.

Quite a few large firms have moved to new addresses this year, but many of the leases were signed in 2011 or before.

Two firms, Alston & Bird and Bondurant, Mixson & Elmore, are staying put at One Atlantic Center. Alston has consolidated its offices from across the street at Atlantic Center Plaza with those at One Atlantic for a total of 366,000 square feet. Bondurant renewed its lease this year, for 35,000 square feet.

In other deals:

Paul Hastings moved in October from the Bank of America tower at North Avenue and Peachtree Street to Midtown’s Proscenium building, where the firm has leased 75,000 square feet.

Duane Morris inked a lease for a floor at 12th & Midtown at 1075 Peachtree Street in February and moved there from Atlantic Center Plaza in October.

Greenberg Traurig moved into the top five floors of Buckhead’s Terminus 200 building last spring from its offices at The Forum on Northside Parkway. The firm signed a 10-year lease in May 2010.

Kasowitz, Benson, Torres & Friedman moved in February to a new, 16,320-square-foot office at Two Midtown Plaza at 1349 West Peachtree Street. They had been at 1360 Peachtree Street.

There are 22 AmLaw 100 firms with Atlanta offices and 18 firms occupying more than 50,000 square feet—about two floors of space, according to Jones Lang LaSalle. (A floor of space measures from 20,000 to 25,000 square feet.)

Lechter said firms in the market for a floor or a half-floor will still get a landlord’s attention.

“Tenants that size are in the minority and highly sought after,” he said.

Those seeking one floor rank in the top 10 percent of tenants by size, Lechter said, adding that 67 percent of Atlanta office tenants occupy 5,000 square feet or less.

While there are plenty of lease deals to be had, they are on a building-by-building basis, Armstrong said. “The deals are still there—but not every building is competing in the same manner as two years ago.”

“While there hasn’t been a sea change in the market dynamics, the market is very choppy right now,” he explained. “A lot of how aggressive these landlords are is a building-by-building question.”

A landlord’s willingness to negotiate depends on the building’s vacancy rate, its debt load and whether it has been bought recently or is being positioned to sell, Armstrong said. “Those factors can mean two very similar buildings across the street from each other can have a very different economic situation.”

In a market that is still deleveraging, Armstrong added, some landlords might want to make a deal but don’t have the capital, or the building’s debt amounts to more than it’s worth, so it does not make sense to put more investment into it.

Rental rates and terms

Lechter said the market has tightened somewhat in regard to tenant improvement allowances and free-rent concessions. “Landlords will say that concessions have been reduced,” he said, adding that Studley represents tenants only, not landlords.

“But when they have a chance to do a larger lease with a tenant, most will do what’s necessary to get it done,” Lechter said.

According to Studley’s research, Atlanta landlords are offering from one to 1.5 months’ free rent for every year of a lease and the tenant improvement allowance ranges from $5 to $8 per square foot per lease year.

Even tenants with four or five years left on a lease are in a position to renegotiate, the brokers said, so firms should consider their options well before their current lease is due to expire.

“No landlord wants to run the risk of losing a tenant. It’s very expensive to have to replace that tenant,” Lechter said.

A landlord might extend a lease on more favorable terms to keep a tenant from going out on the market—and if competing buildings in the market know the incumbent landlord is going to be aggressive, he said, “they are likely to sharpen their pencils.”

“A well-positioned firm, in my opinion, should keep all its options open. They shouldn’t say definitely if they are going to stay or going to move. That way they create the most leverage for themselves,” he added.

Armstrong said having the presidential election decided could mean more activity in the market. “The thing decision-makers abhor is uncertainty,” he said.

Whether people like the outcome or not, Armstrong said, “having that behind us will allow a lot of people to move forward and make commitments—even if it’s to downsize.”