McDermott Will & Emery's new office near the U.S. Capitol and Covington & Burling's upcoming move east to the new CityCenter DC site are harbingers of things to come, a panel of D.C. real estate experts, lawyers and business community representatives agreed this morning.
The discussion, which was hosted by McDermott, explored the role that law firms play in the local economy, from real estate and jobs to pro bono work and civic engagement. According to data that Bobby Burchfield, co-partner-in-charge of McDermott?s D.C. office, cited from the U.S. Bureau of Economic Analysis in his remarks, the legal industry is the second largest contributor to the city's gross domestic product, second only to the federal government.
Barbara Lang, president and chief executive officer of the D.C. Chamber of Commerce, grouped the legal industry's major contributions to the city into three categories: real estate, taxable income and pro bono work supporting local nonprofits. She noted the "huge impact" law firms have on real estate, but lamented that the city can't tax the income of D.C.-based lawyers who live outside the city.
Law firms have consistently been a big driver of the local real estate industry, said Boston Properties Executive Vice President Raymond Ritchey. He said that developers are increasingly designing specifically for law firms, as opposed to building more generic spaces. Unlike the federal government, which looks for low costs, law firms want value and are willing to pay a premium for it, he said. Ritchey said properties east of downtown, such as McDermott's new office, are increasingly attractive because of their physical proximity to the Capitol.
Law firms occupy about 14.5 million square feet of real estate in Washington, according to Michael Cohen, director of advisory services for CoStar Property & Portfolio Research, making up about 10 percent of rentable building area. Of large leases signed in the past year, he added, law firms accounted for 34 percent of those transactions. Buildings anchored by a law firm are also more attractive to investors, he said, noting that in a survey of class A buildings in Washington with more than 100,000 square feet, properties with a large law firm presence ? more than 15,000 square feet ? sold for an average of $710 per square foot, as opposed to $309 for similar buildings without a large law firm presence.
Law firms are interested in space east of the central business district, said D.C. Bar President Thomas Williamson Jr., but he added that he did not expect a mass exodus all at once. He noted that when his firm, Covington & Burling, decided to move to its current location in the early 1980s, it was considered a pioneer for going east of 14th Street. He said the shift is due in part to the revitalization of downtown as a place for lawyers and other professionals to not only work, but also live and play.
D.C. Councilmember Michael Brown made a push for firms to consider space east of the Anacostia River, saying that he and other local lawmakers are talking with Congress about waiving the city's height restrictions to encourage development there. Brown said he was also interested in talking with law firms and other local industries about regulatory reforms that might make it easier for businesses to operate, grow and profit. "You tell us: What regulations would you like to see gone?" he said.
Williamson noted that while the D.C. Bar is prohibited from lobbying, it does run pro bono programs that connect lawyers with nonprofits and small businesses in need of regulatory and other legal assistance.
On the employment side, Lyles Carr, senior vice president of the McCormick Group, said that, over the years, Washington has only become more attractive for top legal professionals. He said the challenge for law firms is to make sure local residents get the education and training needed to fill nonlegal jobs as law firms expand and need top talent in areas such as marketing or office management. "It's in their interest," he said.
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