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Law Firm Services Practice Group2016-17 Asia Pacific Outlook Report

% OF CBD MARKET OCCUPIED BY LAW FIRMS

% OF LAW FIRMS IN CORE CBD

AVG. LAW FIRM SIZESQ FT(NET)

2

Asia Pacific Outlook Report | 2016-17 | Law Firm Services Practice Group | Colliers International Asia Pacific Outlook Report | 2016-17 | Law Firm Services Practice Group | Colliers International

93%

13%

8-15%8-15%

36.5

102,500

485

London

Building on the overwhelmingly positive reception of Colliers’ inaugural Asia Pacific Law Firm Outlook Report 2015, we are delighted to share our fully updated and expanded 2016-17 report, produced in conjunction with Gensler.

The Asia Pacific Law Firm Outlook Report 2016-17 expands upon a multitude of meetings with occupiers, both regionally and globally, and provides a concise overview of: legal specific metrics across the region; space usage trends; case studies, and; key statistics on each of the key APAC legal markets.

Disruptors continue to impact the legal industry as firms look to thrive in an ever more competitive environment. Advances in technology, space utilisation, the emergence of new commercial hubs and cost pressures are all driving change; all key themes which are explored throughout this report.

We hope that you find the Asia Pacific Law Firm Outlook Report 2016-17 both valuable and informative, and look forward to being of continued assistance.

94%

7%

12-20%

20,800

79.8

503

Hong Kong

AVG. REAL ESTATE COST PER FEE EARNER USD/ANNUM (‘000)

AVG. SPACE PER FEE EARNERSQ FT(NET)

REAL ESTATE COSTS AS % OF MONTHLY OUTGOINGS

93%

10-12%

2.1%

34.2

18,400

620

Shanghai

96%96%

10-16%

2%

42.0

15,000

630

Beijing

98%

11%

10-16%

46.8

101,000

560

New York

95%

10-15%

2%

27.8

10,000

533

Seoul

95%

8-16%

>1%

48.0

26,000

358

Tokyo

4%

37.5

20,000

490

Singapore

96%

8-12%

9.50%

35.5

45,000

680

Sydney

94%

6.8%

8-10%

31.3

35,000

670

Melbourne

98%

6-12%

4%

18.3

11,000

250

Brisbane

DAVID WOOD

LAW FIRM TRENDS AND OUTLOOK

Asia Pacific Practice Group Leader - Law FirmsDirector – Office Leasing, Hong Kong

SINGAPORE

SHANGHAI

HONG KONG

SYDNEY

TOKYO

SEOUL

BEIJING

BRISBANE

MELBOURNE

LEGEND

Avg. Real Estate cost per fee earner - USD/annum (‘000)

$37.5

20,000

18,400

20,800

45,000

35,000

11,000

490

620

680

Space per fee earner SQ FT

Average law firm size SQ FT

26,000

10,000

15,000

358

$48$27.8

$42

503

533

630

250

670

$34.2

$18.3

$35.5

$31.3

$79.8

3 4

TABLE OFCONTENTS05

15171819202122232425

26

Re Design Law

Market SnapshotSydney

Melbourne

Brisbane

Singapore

Hong Kong

Shanghai

Beijing

Tokyo

Seoul

Our Services

All photos from pages 3 – 16 including the cover visual used in this report are actual projects of law firms by Gensler and are copyrighted material. All rights are reserved.

6

REDESIGNLAW

“The 2015 Law Firms in Transition Survey shows that a large majority of law firm leaders see the profession is changing. The survey also shows a correlation between those firms that are doing more to address these changes and those that are enjoying greater economic success.”

2015 Law Firms in TransitionAn Altman Weil Flash Survey

An overview of Gensler’s law office research by the firm’s global law practice area leaders

Curated by David Frank, Gensler Hong Kong

7 8


Law firms today are operating under increased billing pressures, ownership transitions, an evolving market and intense competition. In response, many firms are reconsidering business models and practices that haven’t changed in decades.

To successfully compete in this new marketplace, law firms are realising they have to change.

Driven by client demand, legal teams are collaborating more. Technology is revolutionising firm business, including activities such as communication, research, e-discovery and compliance. The competition for top law school talent has intensified, with these sought-after young professionals choosing firms that provide the most engaging, flexible environments.

But some traditional legal workplaces are lagging behind the demands of these new ways of working. Law firms ready to embrace the future and a new competitive edge are changing their workplaces to be more efficient and effective.

Gensler has been studying the relationship between people and workplaces since we were founded in 1965. In 2005, we launched a comprehensive research program with the goal of understanding how the design of the workplace can optimize human capital to improve business performance. We turned that focus to the workplaces of 1,300 attorneys and staff working within AMLaw 100 firms who participated in Gensler’s Workplace Performance IndexTM (WPI). Since 2010, we’ve hosted ongoing roundtables of senior members of AMLaw 100 firms to better understand the current and future trajectory of the legal workplace. In 2014 in partnership with the ALA and leading technology, software, and furniture manufacturers we created a “legal innovation lab”. The lab was comprised of a series of vignettes used to share and test ideas for the future legal workplace. At the end of the exhibit, we gave the 600+ attendees an exit survey, and analysed the results of over 250 survey responses on the current state of the legal workplace as well as their firms’ openness to change.

Expectations from clients and attorneys, combined with external market factors, are forcing firms to take a new approach to office spaces, talent development, and how and where they work. We’ve pinpointed five major forces of change driving a fundamental shift in how lawyers practice.

Clients will no longer pay for legal services at any cost; they’re expecting to pay less, often pitting firms against each other to drive down costs.

Collaboration is shifting towards the virtual realm, with an increasing number of participants dialing or logging in, rather than coming to the office. Research is done on computers using smart software.

Firm ownership is transitioning from baby boomers to generations with different expectations for their work and personal lives.

Firms are distributing work to more cost-effective locations and finding ways to operate with reduced overhead and resources.

Firms are evaluating growth more strategically, aggressively expanding into domestic and international markets with the highest likelihood of success.

TRADITION GOT YOU HERE. EVOLUTION WILL PUSH YOU FORWARD.

BRINGING SCIENCE TO THE ART OF LAW FIRM DESIGN.

“ In 2005, Gensler launched a comprehensive research program with the goal of understanding how the design of the workplace can optimize human capital to improve business performance.”

“To successfully compete in this new marketplace, law firms are realising they have to change. ”

WHAT IS DRIVING CHANGE IN LEGAL WORKPLACE DESIGN?Nothing about now is like it used to be.

More Competition

Bigger, Better, Faster Technology

New Attorneys, New Expectations

Rethinking Resources

More Opportunistic Expansion

CENTURY-OLD LAW FIRM MODEL

ECONOMIC IMPLOSION

SHRINKING LEGAL MARKET

INNOVATION AND CHANGE

1

2

3

4Methodology

The insights documented in this paper are the result of a year-long research project conducted by Gensler’s practice area leaders in legal and professional services workplace design. Part of an ongoing series of research investigations, the goal of the project was to gather knowledge and information to better understand the current and future trajectory of the legal workplace. The project began with a high-level roundtable of 10 senior members of Am Law 100 firms, conducted in New York in October 2011. These findings then formed the basis for a series of Gensler charettes with our top thought leaders to identify concepts and opportunities to align the future of the legal workplace with the issues identified by roundtable participants.

Law firms that participated in the Gensler roundtable: Andrews Kurth LLP, Cleary Gottlieb, Cozen O’Connor, Kirkland & Ellis LLP, Orrick, Proskauer Rose LLP, Ropes & Gray LLP, Skadden, Wragge & Co

Speakers: Richard Wrestle from Kraft & Kennedy, Inc. and John Smock from Smock Law Firm Consultants

Gensler’s Professional Services Firms Practice Area Leadership:

Marilyn ArcherGensler, [email protected]

Emma ChangGensler, [email protected]

Simon JacksonGensler, [email protected]

Carlos PosadaGensler, Los [email protected]

Brittany WhitleyGensler, New [email protected]

Todd BaischGensler, [email protected]

Barbara DunnGensler, Los [email protected]

Steve MartinGensler, Washington, [email protected]

Cindy SimpsonGensler, [email protected]

Doug ZuckerGensler, San [email protected]

Edited by the Gensler Research & Communications Team: Christine Barber, Kevin Craft, Pierce Fisher, Kate Kirkpatrick, and Tim Pittman.

Conclusion

The opportunities outlined here seek to leverage the legal workplace as a tool to deliver the employee experience and performance that will help firms look to the future of their practices. Firms will continue to look to the bottom line, investing more heavily in client-facing spaces and pursuing real estate strategies that leverage cheaper rent and talent costs and offer a variety of mobility and quality of life options. But cost is just one motive–technology and new quality of life expectations will drive a work-anywhere attitude while keeping teams connected wherever they are physically located.

Focus and privacy remain key considerations for attorneys. Work will still largely happen in private offices, but these offices will evolve to be more nimble and more virtually connected. As offices become more flexible and multi-purpose, public spaces will become more purposeful in an effort to bring dispersed groups together and foster the impromptu collaboration needed alongside traditional group work.

Getting the work spaces and tools right will provide a suite of competitive advantages for law firms that look to the future. The new networked, nimble law office will be a robust platform to respond to change and adapt to new conditions and realities. Flexible enough to change with the market, but always focused on providing an environment where smart people want to be and can work effectively.

In a profession focused on precedent, few want to be the first to embrace a new office strategy for fear of losing top talent or falling behind the competition. It is becoming increasingly clear, however, that age-old strategies no longer match new-world challenges, and firm leadership is asking for solutions. The firms willing to take a leap and try something new are finding that a break with tradition often pays off.

www.gensler.com

© Gensler 2012. The information contained within this brochure is and shall remain the property of Gensler. This document may not be reproduced without prior consent from Gensler.

Law firms are facing what corporate America has been experiencing for years—finding that to successfully compete, they have to change.The 2008 global recession was a tipping point, bringing unprecedented market pressures and forcing firms to reconsider business models and practices that haven’t changed for years. But the changes firms are grappling with go far beyond the economy, and the opportunities available to those willing to change are far more than cost-cutting. As firms look to the future, how can they convert business models steeped in years of tradition and precedent to embrace a future for which the rules have yet to be written?

To begin this discussion, Gensler held a high-level roundtable discussion with law firm

leaders from across the globe to explore the challenges facing the legal industry and to help firms leverage the power of their work environments as solutions to these new challenges. We see profound and lasting changes taking hold of the legal industry and believe new approaches to designing the legal workplace can help firms transition away from the old ways of doing business and create a sustainable model for the future.

—Marilyn Archer, Barbara Dunn, and Steve Martin, Global Practice Area Leaders, Professional Services Firms

SUBSTANCE OVER STATUS: JUSTIFYING CHANGE

Fried Frank Washington, DC Photo: Eric Laignel

OUR DESIGN STRATEGY

At Gensler all projects commence with a clear understanding of the client’s purpose. In our work we make no assumptions about possible conclusions or outcomes. Our design effort will be grounded in research and strategy.

我们的设计策略

在Gensler所有的项目开始之前，我们都要求自己对于业主需求有清晰认识和深刻理解。在我们的工作过程中，不会有对于结论和成果的预设。我们的设计成果仅来自于研究和策略。

COLLABORATEINNOVATIVE CAPITAL

SOCIALIZESOCIAL CAPITAL

FOCUSPRODUCTIVE CAPITAL

LEARNINTELLECTUAL CAPITAL

Innovative Capital Working with another person or group to achieve a goal.

Top-performing companies collaborate more.

Intellectual Capital Working to acquire new knowledge of a subject or skill through education or experience.

Learning is far more important to top companies.

Social CapitalWork interactions that create common bonds and values, collective identity, collegiality and productive relationships.

Top-performing companies value socializing.

COLLABORATE LEARN SOCIALIZE

Productive CapitalWork involving concentration and attention to a particular task or project.

Top-performing companies spend less time on focus work.

FOCUS专注协作学习社交

12

Gensler 2008 Workplace Survey / United States

FOCUS

WORK INVOLVING CONCENTRATION AND ATTENTION TO A PARTICULAR TASK OR PROJECT

THINKING, REFLECTING, ANALYZING, WRIT SOLVING, QUANTITATIVE ANALYSIS, CREATING, IMAGINING, REVIEWING, ASSESSING PRODUCTIVE CAPITAL

COLLABORATEINNOVATIVE CAPITAL

WORKING WITH ANOTHER PERSON OR GROUP TO ACHIEVE A GOAL

SHARING KNOWLEDGE AND INFORMATION, DISCUSSING, LIST TING, SHOWING, BRAINSTORMING INTERACTIONS MAY BE F T FACE, BY PHONE, VIDEO, OR THROUGH VIRTUAL COMMUNICATION LEARN

INTELLECTUAL CAPITAL

SOCIALIZESOCIAL CAPITAL

WORKING TO ACQUIRE NEW KNOWLEDGE OF A SUBJECT OR SKILL THROUGH EDUCATION OR EXPERIENCE

TRAINING, CONCEPT EXPLORATION AND DEVELOPMENT SOLVING, MEMORIZING, DISCOVERY, TEACHING, REFLECTING, INTEGRATING AND APPLYING KNOWLEDGE

WORK INTERACTIONS THAT CREATE COMMON BONDS AND VALUES, COLLECTIVE IDENTITY, COLLEGIALITY AND PRODUCTIVE RELATIONSHIPS

TALKING, LAUGHING, NETWORKING, TRUST TION, CELEBRATING, INTERACTING, MENTORING, ENHANCING RELATIONSHIPS

46%

6%

32%

7%

WPI

Criticality

Layout Light Air Storage Furniture Privacy/Access

Time Spent Space Effectivenessfor Work Modes

2008 Workplace SurveyAnalysisFour Working Mode 四种主要工作模式

RESEARCH DRIVEN DESIGNrporate Office

高效的设计源于研究

Law firms are ready for change.New design strategies will be required to keep the legal workplace up to pace with shifting work patterns, employee expectations, and market realities. To test opportunities to evolve the legal office, we built a pop-up workplace at the 2014 Association of Legal Administrator’s Conference in Toronto. The exhibit showcased opportunities to create an efficient, high-performance workplace to meet the future of legal work. Responses from a participant survey highlight a strong desire and need for change as law firms look to the future.

Research

It’s time to rethink the legal workplace

Legal Innovation Lab

The Future of Law Firms 01

The whirlwind of law firm mergers and acquisitions is mostly over, and the major law firms are now dealing with issues of culture, operations, and work style, among others. They’re responding not only to external forces like economic uncertainty and the impact of technology and mobility, but also to a more diverse workforce.

THE CHANGING LANDSCAPE OF LEGAL PRACTICE

SignS of change Of the different factors reshaping the major law firms, the over-arching one is globalization, says Doug Zucker, leader of Gensler’s law firm practice in San Francisco. “Global reach means that law firms have to add depth and broaden their practices. It also means having offices in more cities, and often having to bridge major differences in culture, language, and practice.” That’s not unique to law firms, but it has significantly changed the landscape in which many of them operate.

Diversity in the law firm workforce is a close second as a change factor. While today’s law schools graduate more women than men, women are still underrepresented in the legal profession. “That’s one diversity issue that law firms are struggling with,” Zucker says. “Most have initiated programs to recruit and promote women and keep them in the firm.” Another diversity issue is generational differences. “There’s a divergence now in the ways that people work and interact,” Zucker notes. For example, Boomers rely on their own knowledge and skills to produce results, while the next younger generation, Gen Xers, leverage their social networks. “Collaboration is the preferred work style for Gen X,” he says. “Boomers would rather work alone.”

Some other generational differences: Younger lawyers especially look to their firms to have a social conscience, expressed as community involvement and a “green” commitment. The younger generation is also more likely to switch jobs than their older peers. “An amenity-filled workplace is one way to keep them,” says Barbara Dunn, head of Gensler’s law firm practice in Los Angeles. “A sustainable work environment also scores points with today’s associates.” Law firms are embracing LEED-certified buildings and settings, she notes. (LEED is a rating system for sustainable

BY vernon mayS

9 10


The practice of law is undergoing a fundamental transformation and leadership is aware of it — three in four survey respondents noted their firm’s partners are receptive to change. This need for change centre around two central premises: the need to improve real estate efficiency to stay lean and cost-competitive, and; the need to evolve to attract talent and accommodate new ways of working. Space efficiency and reduction trends are confirmed by our respondents. The majority of firms have off-site archives, and one in three have off-site data centers. Off-site administrative functions currently exist only for 17% of respondents, with the most among larger firms.

Despite these initiatives, the majority of respondents reported that their firm continues to lease more space than is necessary. Larger firms are more likely to have excess space on their books. Recently

THE GENSLER RESEARCH RESULTS

designed firms are less likely to have excess space, though even among those, one in three reported their firm still has more space than is necessary.

Respondents noted the adoption of new technology, managing an increasingly multi-generational workforce, and the war for top talent as key trends impacting the legal industry. Approaching these trends proactively is of vital importance for a firm’s long-term survival. Panelists also felt they were lacking a consistent set of best practices by which to adopt these trends successfully.

The design of the future law office must address these rapidly changing influences and align with a fundamental re-engineering of how legal work is, and will be, done.

Q: DOES YOUR FIRM/COMPANY HAVE OFF-SITE FACILITES?Percent responding “yes,” by firm size and by recency of design

Q: DOES YOUR FIRM LEASE MORE SPACE THAN ACTUALLY NEEDED?Percent responding “yes,” by firm size and by recency of design

Q: WHICH OF THE FOLLOWING TRENDS ARE AFFECTING YOUR BUSINESS THE MOST? Percent responding “yes,” by firm size

Off-site archives

Data center

New technologies

Multi-generational workforce

Competition for talent

Shrinking support staff ratio

Ability to retain talent

Fee based on assignment

High associate salaries

Mergers/acquisitions

Administrative functions

80%

KEY: FIRM SIZE(EMPLOYEES)

KEY: RECENCY OF DESIGN

50 OR LESS

WITHIN THE LAST 3 YEARS

51-500

3-5 YEARS AGO

501 OR MORE

6 OR MORE YEARS AGO

19%

12%

74%

71%

54%

56%

47%

45%

23%

23%

35%

43%

4%

36%

91%93%

35%

12%

74%

67%

72%

59%

59%

27%

6%

6%

41%

30%

15%

49%

76%94%

79%

39%

74%

71%

77%

77%

76%

36%

17%

17%

45%

16%

19%

71%

90%87%

36%

17%

74%

69%

65%

60%

57%

36%

17%

42%

39%

34%

11%

57%

87%

average

11 12


WHAT ARE THE WORKPLACE TRENDS IMPACTING LAW FIRM DESIGN?

THE TRENDS OF LAW FIRM DESIGN IN ASIA

Re-evaluating space and implementing space-saving strategies, such as universal office sizes, wall-less offices,

and mobility programs, leads directly to increased real estate efficiency. Firms that have implemented such

measures have been able to reduce their space by 15 to 40 percent while simultaneously increasing head count. More than ever, law firms are open to embracing new workplace

strategies that accommodate attorneys and staff in less rentable square footage while enhancing the quality of life

within the workplace.

Meeting your current needs but creating the flexibility to adjust to the future leads to cost and time savings

when it becomes necessary to adjust to new work styles. Implementing such future-proofing methods typically leads to a 60 percent decrease in reconfiguring costs

compared to traditional construction using modular building components. Simultaneously, these methods

also minimise disruption to business operations and rates of depreciation.

Enabling communication and the building of social capital are key to growing and sustaining client relationships and meaningful personal connections with colleagues, locally and globally. The importance of face-to-face

communication is borne out by the fact that 80 percent of business professionals believe it builds more

meaningful relationships.

Providing a balance of work settings within the office gives employees the choice of when and where to focus,

collaborate, learn, and socialise as needs dictate. The result is a high-performance and more satisfying workplace. On average, an increase in choice and balance produces a 12

percent boost in employee satisfaction.

Enabling employees to communicate, collaborate, access data, and work anywhere is key in a world that is

increasingly mobile. In fact, mobile has already become our default mode; this year, an estimated 61 percent of IT traffic will be generated by wireless devices. Ultimately, technology is both a driver and an enabler of new ways

of working.

Space planning and design are tools for reinforcing your unique culture and brand. A 100 percent change

management program opt-in rate from day one is not only desirable but also achievable.

1. Less is more

3. Future-proof

5. Connecting the dots

2. Choice/variety/balance

Workplace Strategies

4. Ubiquitous technology

6. One size does not fit all

Our practice shows that law firms in Asia, though still conservative in overall workspace planning, have started exploring new ways of utilizing their office space. The shift from traditional to more progressive work environment can be seen primarily in creating opportunities for collaboration in the public spaces, and in the requirement for more transparent and flexible spaces. Pantries are leveraged as casual meeting spaces, reception areas are converted into collaborative spaces. The meeting rooms are not one-use only, they can be converted from a large training facility to a number of small focus rooms in a matter of minutes. Technology is ubiquitous through the space and a meeting can be conducted in the pantry or partner office alike. Hospitality features are also being introduced to provide a variety in the work space that allows for different work style and focus levels. The current trend is to still maintain the partner office structure, however the rest of the office space is designed to be more collaborative and flexible, thus it’s easily adaptable to future changes in the organisational needs.

Integrating the local context and providing spaces for casual meetings.

Davis Polk & Wardell Beijing

Pantries levaraged as casual meeting spaces, introducing hospitality elements into the workplace.

Davis Polk & Wardell

Opening up the partner offices to allow variety of choice.

Latham Watkins Shanghai

Creating transparent and flexible spaces that can be utilised for multiple purposes and workstyles.

Latham Watkins Shanghai

Levaraging the public spaces as spaces for casual meetings and serendipitous encounters.

Latham Watkins Beijing

MULTIPLEOFFICE SIZES

TWO OFFICE SIZES

INTERIOROFFICE

DOUBLEOFFICE

UNIVERSALOFFICE

OPEN PLAN

OPEN PLANFREE ADDRESS

WORKPLACE StRAtEgiES

iNtERiOR OFFiCES

DOUBLE OFFiCES

inTerior / douBle offiCeConfidenTial laW firm | WashinGton, dc

HOtELiNgtEAMiNg CONCEPt

ACtiVitY BASED

OPEN PLAN

Traditional Progressive

2 StANDARD SiZE OFFiCES

1 SiZE OFFiCE FOR ALL

Interior Offices


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN




2 Standard Size Offices


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN




Teaming Concept


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN




Hoteling

TEAMING- PARTIALOPEN PLAN


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN



1 SiZE OFFiCE FOR ALL1 Size Office For All


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN



1 SiZE OFFiCE FOR ALL Double Offices


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN



1 SiZE OFFiCE FOR ALL Activity Based


iNtERiOR OFFiCES

DOUBLE OFFiCES



ACtiVitY BASED

OPEN PLAN



1 SiZE OFFiCE FOR ALL Open Plan

14

Asia Pacific Outlook Report | 2016-17 | Law Firm Services Practice Group | Colliers International

13

As we refine our thinking around these six key issues, and explore ways to devise designs based on them, we see patterns emerging that have led us to several conclusions about the near future of law firm environments. In particular, we anticipate the law firm of the future to be more efficient, more flexible, more collaborative, more client-focused, and more technology enabled. Such environments will employ workplace qualities associated with business or management consulting firms. Yet we also know that lawyers will continue to have workplace needs specific to the nature of their practice. The new reality is such that ongoing explorations into effective workplace planning and design strategies will be necessary to create environments that support legal work and also speak to the new realities of the profession and market.

For some, such uncertainty may be dismaying. However, we opt for a more positive view: tomorrow’s challenges will yield unprecedented opportunities. Thus, we are on the brink of one of the most exciting times in the legal services industry. What we have before us is nothing short of a chance to affect structural changes that will make the industry more agile, efficient, professionally satisfying, and profitable in the long run. While technology enables us all to work anywhere, the legal workplace of the future should be so compelling and inspiring that given the choice, attorneys will choose the office.

To find out more about Gensler’s explorations into the law firm of the future, visit redesign-law.com. There, you’ll find several videos that explore the issues at hand, including a number in which your peers provide valuable insights and lessons learned. You’ll also find our thought leadership blog and details on a pop-up law firm of the future.

CONCLUSION

Gensler is a global design firm that partners with clients to create more livable cities, smarter workplaces, and more engaging leisure destinations. Our 5,000+ professionals networked across 47 locations believe quality design can transform organizations and improve people’s lives.

Since 1965, we have helped clients achieve measurable business and organizational goals, delivering projects as large as a city and as small as a single desk lamp. We have been at the forefront of sustainable design for tall buildings, workplaces, creative spaces, and much more.

One such high-profile project was the design and completion of the Shanghai Tower, the world’s second tallest building. The landmark design showcases Gensler’s expertise and global reputation as a leader in high rise construction and design. The 632-meter-tall tower’s cutting-edge sustainable strategies set new standards for the green community. By emphasizing the importance of public spaces, the tower redefines the ways people live, work, and play in tall buildings.

Gensler is widely recognized as the world’s leading collaborative design firm, not just the largest. We are team players and believe that a truly successful project results from constant interaction and an exchange of ideas. Our employees are among the best, brightest, and most creative members in the industry. Together, we craft meaningful experiences grounded in a deep understanding of culture, time, and place.

We’re distinguished by our commitment to enhancing our clients’ success through design. Our approach is firmly rooted in research and we bring key industry benchmarking to every project. Our mission is to leverage our firm’s creativity, knowledge, and global reach so that our clients can gain every competitive advantage.

Reach us at: [email protected]

Bangalore

Bangkok

Beijing

Hong Kong

Seoul

Shanghai

Singapore

Sydney

Tokyo

LOCATIONS IN ASIA PACIFIC

16

MARKETSNAPSHOT

Colliers International’s city by city market snapshot provides a quick overview of the law firm office market covering key themes, major transactions, rental forecasts and a list of rankings in terms of supply, vacancy rates and other indicators across markets in the Asia Pacific region.

AVG. Grade A Office Rent USD 59.17 per sq ft per yearAUD 503 per sq m per year

2017 Rental Forecast 27.8%

Grade A Rent Free Period 22%

Grade A Office Rents

Absorption

Vacancy

17 18




Grade A Rent Free Period 28%

Preferred Locations: Large international and domestic law firms continue to remain in the city’s financial hub which runs from Circular Quay to Park Street. However many law firms expanding in Sydney are considering the Western corridor of the CBD. The three new commercial towers in Barangaroo are attracting legal firms seeking larger office spaces with Gilbert & Tobin already occupying in this location. The Martin Place precinct has recently seen either new construction or redevelopment: 20 Martin Place where Hogan Lovells have opened their first Sydney office; Clyde & Co pre-committing to 333 George Street; and the upcoming 60 Martin Place where major legal firms are considering to relocate. Also Ashurst demonstrates its presence with signage rights to 5 Martin Place having relocated to this precinct in 2015. This location has been particularly popular due to being the centre of the CBD, access to investment banks and proximity to the law courts.

Market Outlook: Colliers forecasts vacancy to fall from 5.6% to 5.4% by the end of January 2017. Largely as a result of 9 buildings being withdrawn by the end of 2016, with an additional 2 buildings partially refurbished. With more buildings withdrawn for conversion in the next couple of years, we foresee vacancy falling to 4.1% by January 2018.

Incentives are forecasted to tighten further, in some cases reaching below 20% by the end of 2016, especially given the limited vacancy in A & B Grade assets. Premium Grade recorded a 3% drop in the first quarter of 2016.

Legal Sector Activity: The total number of enquiries for 2016 YTD is on track with the first half of 2015 and has nearly doubled since 2014. Many major legal firms have relocated in the last three years using lease events as a catalyst for change as they reposition their businesses and initiate refreshed workplace models.

A new wave of relocation or lease restructuring is coming up within the next 18 months. These firms are exploring agile work places with reduced floor sizes, whilst still considering quality addresses in prime locations that offer attractive benefits when it comes to attracting and retaining future leaders.

* Remarks - landlords provide gross rental incentives as a percentage in this market.


Recent Transactions

2016 2017 2018

Sydney I Australia

Expansion at Gateway 20 Martin Place8,000 sq ft

77 Castlereagh Street70,000 sq ft

333 George Street38,000 sq ft

Pricing and Incentives Forecasting

Millions (sq ft)0 2015 25105

Existing Stock

Absorption 2016+2017

Supply 2016+2017

Current Market Data – Grade A buildings in CBD9.5% I Occupied by Law Firms

4.0% I Vacancy Rate

86.5% I Other

Herbert Smith Freehills CBD ANZ Tower 256,500

Clayton Utz CBD 1 Bligh Street 210,000

King & Wood Mallesons CBD Governor Phillip

Tower 119,000

Allens Linklaters CBD Deutsche Bank Place 110,000

Norton Rose Fulbright CBD Grosvenor Place 98,500

Henry Davis York CBD 44 Martin Place 96,000

Minter Ellison CBD Governor Macquarie Tower 95,000

Major Law Firms in Sydney

Law Firm Building NameDistrict Sizesq ft

Preferred Locations: Law firms in Melbourne have typically occupied Premium or A-Grade quality assets within the CBD’s Western Core, due to its close proximity to Melbourne’s Law Courts. This affinity for proximity to the courts is paradoxical, as a large proportion of staff within several of the larger firms typically do not need to step foot into a court room. The main exception to this is 101 Collins Street, located within the CBD’s Eastern Core, being a prestigious address and commonly regarded as the preeminent Premium Grade building in Melbourne.

Market Outlook: With no new developments completed in the first half of 2016 and those nearing completion being predominantly pre-committed, tenants looking for quality assets (particularly large tranches of contiguous space) over the next three years will have limited options until a new wave of CBD core supply is expected to be delivered in 2019 / 2020. Consequently, the Melbourne office market saw vacancy reducing from 7.8% to 7% during the first half of the year.

On the back of diminishing supply, incentives have been gradually trickling downwards over the past 12 months and this trend is expected to continue, with incentives returning below the 30% range to circa 25% for Premium Grade assets.

Legal Sector Activity: Legal firms understood to be in the market considering their options:• K&L Gates 60,000 sq ft• Piper Alderman 15,000 sq ft• Wisewoulds Mahoney 23,000 sq ft• Hunt & Hunt 20,000 sq ft

With a recent spate of mergers and acquisitions across many of the top tier global firms, we have already witnessed legal firms’ keen focus on attracting and retaining talent in a highly competitive environment, where accommodation strategies are forming an integral role in achieving this objective.

As a result of this, we have seen a flurry of firms out in the market, either completely revamping their current premises, or committing to new premises that can provide modern facilities with first class amenities and ability to bring people together in a premium collaborative working environment.

Melbourne I Australia

Minter Ellison Western Core Rialto525 Collins St 120,000

King & Wood Mallesons Western Core 600 Bourke St 90,000

Ashurst Western Core 181 William St 80,000

Herbert Smith Freehills Eastern Core 101 Collins St 127,000

Allens Linklaters Eastern Core 101 Collins St 130,000


Major Law Firms in Melbourne

6.8% I Occupied by Law Firms

6.1% I Vacancy Rate

87.1% I Other

Current Market Data – Grade A buildings in CBD

Millions (sq ft)0 10 20 255

Existing Stock


Supply 2016+2017

The legal sector has also demonstrated a willingness to think outside the box and break from tradition, with Maddocks Lawyers (a large mid-tier legal firm) relocating from 140 William Street in the traditional Western Core to Tower 2 of the Collins Square mixed-use development in Melbourne’s Docklands; a surprising move to many.

Maddocks Lawyers

Tower 2, Collins Square(Docklands)60,000 sq ft

King & Wood

Mallesons

447 Collins Street(Pre-commitment)

HWL Ebsworth 66,000 sq ft

Maurice Blackburn Lawyers

380 LaTrobe Street80,000 sq ft

Corrs Chambers Westgarth

567 Collins Street80,000 sq ft

Recent Transactions


Absorption

Vacancy

2016 2017 2018Pricing and Incentives Forecasting

SquirePattonBoggs

Clyde& Co

Hogan Lovells

Gadens Lawyers

15

Major legal firms currently in the market looking to renew or relocate:• Baker McKenzie 80,000 – 100,000 sq ft• Clayton Utz 150,000 – 170,000 sq ft• Allens 80,000 – 90,000 sq ft• Henry Davis York 70,000 sq ft • Hickson Lawyers 20,000 sq ft

19 20



Absorption

Vacancy

Preferred Locations: Traditionally the legal precinct in Brisbane has been the North Quarter, situated in close proximity to the Commonwealth and State Law Courts. Whilst the predominance of barristers’ chambers are still located in this precinct, there has been a steady move towards the commercial hub of the city in the Golden Triangle/Eagle Street.

2016 saw a significant movement of international and larger domestic law firms into Brisbane’s newest Premium Grade building 480 Queen St. With this move DLA Piper, HWL Ebsworth, Herbert Smith Freehills & Allens have left significant backfill space available within Premium Grade assets in the Golden Triangle.

Market Outlook: The major story in the Brisbane CBD in the first half of 2016 has been the completion of 480 Queen Street and 180 Brisbane. Adding approximately 1,150,000 sq ft of prime stock to the market has led to a substantial increase in vacancy rates across the entire market, with vacancy rates in Brisbane increased from 14.6 per cent to 16.9 per cent in the half.

With the delivery of the Queensland Government’s head office at 1 William Street in Q4 2016, this will signal the end of the supply cycle and 2 to 3 year gap before any proposed developments can be completed. Vacancy rates are expected to top out Q4 2016 to Q1 2017 at a Premium/Grade A average of circa 18%.

Incentives in the market have been understandably very strong to attract major tenants with good covenants. Rental rates have been curbed over the past 3 years with minimal growth across all asset classes. In the Premium/Grade A market incentives are generally being negotiated at 38 – 42% for 5+ year leases. The effect being that tenants are generally able to completely fitout their space with their incentive and have further incentive to be applied to rent abatement.

It is predicted that H1 2017 will see the turning in the Brisbane CBD market. Firms are urged to investigate renewals and relocations and take advantage of the soft market conditions presently available.

Brisbane I Australia

Millions (sq ft)0 10 155

Existing Stock


Supply 2016+2017


13.9% I Vacancy Rate

82.1% I Other


Freehills CBD 480 Queen St 47,000

Allens CBD 480 Queen St 40,000

HWL Ebsworth CBD 480 Queen Street 56,000

Clayton Utz CBD Riparian Plaza 60,000

Ashurst CBD Riverside Centre 30,000

Minter Ellison CBD Waterfront Place 80,000

King & Wood Mallesons CBD Waterfront Place 15,000

Major Law Firms in Brisbane


Preferred Locations: Singapore’s core CBD comprises of Raffles Place and the New Downtown which contains the highest volume of law firms in the market. International law firms located in the core CBD make up for 96% of the law firms from the AM100 and UK Top 50 registered in Singapore.

Other key locations for law firms are Suntec City, Tanjong Pagar and Orchard Road, however these accommodate a much smaller headcount and number of law firms, inclusive of local practices.

Market Outlook: The office market has and will continue to have an oversupply of Grade A and Premium office space throughout 2017 into early 2018. A direct result of some 3.8m sq ft of premium space within new developments completing in Q4 2016 and Q1 2017. New developments to the market include Marina One, Guoco Tower and DUO Tower. Existing Premium grade developments continue to illustrate vacancies due to consolidation efforts from major occupiers.

New demand in Singapore is low at present, but is expected to increase in 2H 2017 going into 2018. Currently MNCs are reviewing their real estate footprints and right-sizing to accommodate an uncertain short term future. The global economy and other uncertainties will continue to impact this trend. Average rents are down 15-20% in 2016 and the overall vacancy rate in the CBD is expected to spike.

The “flight to quality’ effect continues to attract occupiers in this tenant market affording the opportunity to enter the Premium and Grade A CBD market at attractive rates developed through incentives from the landlords.

Legal Sector Activity: The Singaporean government continues to drive the city-state to be a leading legal hub and specifically an international centre for dispute resolution and arbitration.

Currently 40 of the Global 100 law firms have offices in Singapore, an increase from 36 in 2015/16. Many of them moved to Singapore during the international firms’ migration to the city in 2012-2013 where they set up premises for long term occupation and accommodating for headcount growth expectations.

There is a heightened level of inter-law alliances and partnerships seen in Singapore recently and this is, in the long run, expected to impact the current landscape of legal occupiers to accommodate for collaborative growth. With a tenant-friendly market forecasted to continue into early

Singapore I Singapore

Major Law Firms in Singapore

Law Firm Building NameDistrict Size

sq ft

4% I Occupied by Law Firms

4.9% I Vacancy Rate

91.1% I Other


Allen & GledhillRaffles

Place/ New Downtown

One Marina Boulevard 110,000

Drew & NapierRaffles

Place/ New Downtown

Ocean Financial Centre 93,000

Rajah & TannRaffles

Place/ New Downtown

Straits Trading Building 90,000


Existing Stock

Supply 2016+2017

AVG. Grade A Office Rent USD 139.86 per sq ft per yearSGD 8.64 per sq ft per month

2017 Rental Forecast -6.8%

Grade A Rent Free Period 2 to 3 months on a 3 year lease

Pricing and Incentives 2016 2017 2018Forecasting

Recent Transactions

Anderson Mori &

TomotsuneRajah &

TannStraits Trading90,000 sq ft

Republic Plaza3,000 sq ft

2018, 2017 looks to be a promising period for legal practices looking to review their real estate footprint. As a result, starting renewal and relocation discussions early remains very advisable.

The significant rise of Singapore’s technology and insurance markets may intensify competition for office space in Raffles Place. That said, new real estate supply will provide ample opportunities for proactive law firms. With a tenant-friendly market forecast, the next few years promise to be very active for legal practices looking to relocate to new developments or renew their existing premises at favourable rates. As a result, starting renewal and relocation discussions early remains very advisable here!



Grade A Rent Free Period 38-42%


Absorption

Vacancy

Recent Transactions

2016 2017 2018

DLA Piper Freehills AllensHWL Ebsworth

480 Queen Street 28,000 sq ft

480 Queen Street47,000 sq ft





Legal Sector Activity: 2016 was a big moving year for the major legal firms and many firms left major lease tails behind. Unsurprisingly the current market activity for major firms is very limited with only Clayton Utz in the market for circa 60,000sq ft.

21 22



Absorption

Vacancy

Preferred Locations: Hong Kong remains the gateway of choice for many international law firms entering and servicing Asia. The legal sector accounts for a large portion of space occupation in the CBD, with 94% of firms being located in the district. Law firms account for approximately 7% of Grade-A CBD space, with 31% of HKLand’s portfolio comprising of law firms. This is primarily a result of the prestige associated with the CDB, and proximity to clients and the courts - essential for heavy litigation practices.

Beyond the Central & Admiralty district, international firms are also located in Wan Chai (Clyde & Co. and Pinsent Masons in Central Plaza) and Causeway Bay, with Cleary Gottlieb being the first firm to move this far east when they relocated to Hysan Place in 2013.

Market Outlook: Hong Kong continues to be the world’s most expensive office leasing market with average core CBD rents equating to US$180 per sq ft per annum. Leasing activity continues to be dominated by PRC entrants, setting record rents, and the advent of numerous co-working providers in the mid-tier market. The chronic lack of new supply, coupled with strong demand across the board, has led to historic low vacancy rates of 2% in the CBD and a further YTD increase in rents of 5.5%. Office rents are forecast to remain firm through 2017.

Legal Sector Activity: The average law firm office in Hong Kong measures 20,000 sq ft with 45 practicing lawyers at a rental cost of HK$52,000 per lawyer a month. Given the rental profile in Hong Kong, where firms spend between 12-20% of outgoings on real estate, there are only 5 international law firms occupying over 50,000 sq ft. A limited number have elected to split operations as they lack sufficient critical mass to warrant a separation. The notable exceptions to this are the likes of Mayer Brown, Sidley Austin and Baker & McKenzie.

While the vast majority of firms are located within the Central &Admiralty district, a recent development is the signing of both BLP and Ince & Co. to Quarry Bay (Dorset House and One Island East respectively). Given the repositioning of both the Causeway Bay and Quarry Bay districts, this trend is likely to continue, albeit Colliers expect this to be limited to law firms with greater exposure to shipping or insurance clients and those with small litigation practices.

Hong Kong I Hong Kong

7% I Occupied by Law Firms

2.1% I Vacancy Rate

90.9% I Other


Rather than to relocating, a number of major law firms in the CBD have restructured their existing leases in order to amortize extensive refurbishments; either to improve the quality of finish for both clients and staff perceptions or to adopt new ways of working. We have also recently seen significant activity within the offshore legal sector, with a number of new entrants and upsizing or upgrading of existing firms in Hong Kong.

Millions (sq ft)0 2010

Existing Stock


Supply 2016+2017

Baker & McKenzie Central Hutchinson House 90,000

Mayer Brown Central Princes Building 85,000

Clifford Chance Central Jardine House 75,000

Deacons Central Alexandra House 70,000

Major Law Firms in Hong Kong


sq ft

AVG. Grade A Office Rent USD 180.03 per sq ft per yearHKD 117.02 per sq ft per month


Grade A Rent Free Period 2 to 3 months for a 3 year lease

Pricing and Incentives


Absorption

Vacancy

2016 2017 2018Forecasting

Recent Transactions

Kirkland & Ellis

Expansion from 40,000-45,000 sq ft within The Landmark

Ince & Co

Relocation to One Island East, Quarry Bay10,000sq ft

BLP

Relocation to Dorset House, Quarry Bay15,000 sq ft

Preferred Locations: Shanghai’s Nanjing West Road area in the Jing’an District continues to have the highest concentration of international law firms with 75% of the legal practices belonging to the AM100 and UK Top 50.

Lujiazui District, across the river in Pudong, is the city’s second most coveted area amongst multinational law firms. Positioned as Shanghai’s financial hub, the area is populated by both international and domestic banking and finance institutions. Other areas of focus in the city with clusters of law firms include Huangpu and Xuhui Districts.

Market Outlook: Four new projects of quality office space were added to the city’s CBD Grade A office leasing market. In combination with widespread retreats from tenants in the peer-to-peer (P2P) sector, overall vacancy rate in the CBD increased to 9.8%.

In response to the retreats of domestic financial institutions, landlords have become more flexible in their rental negotiations and the average rent in Shanghai’s CBD Grade A office market declined by 0.5% QOQ to RMB10.25 psm per day, the first decline in nine quarters. Such effects were most apparent in Puxi, where the average rents declined by 1.3% QOQ.

China’s new VAT tax structure was expanded into the real estate industry in May 2016. Although it is too early to assess the long-term impact for both tenants and landlords, most landlords elected the 5% rate which limited any significant effect on their assets or tenants.

Legal Sector Activity: Fifty-eight of the Global 100 law firms have offices in Shanghai. While domestic law firms have remained steady in upgrading and expanding from their existing facilities, many international law firms have continued to re-adjust their space through size reduction. As international legal practices continue trending towards right-sizing of their office footprint, firms focusing on growth industries such as pharmaceuticals, life sciences and healthcare have continued to expand.

With the evolution of the legal environment in Shanghai, work place solutions are becoming an integral part of office sustainability. International and major domestic law firms have continued adopting new design strategies and concepts and have already begun the move from traditional law firm office design to a shared cellular approach.While the design-driven cellular approach has become accepted as the

contemporary design for legal practices, some firms have already begun further exploring the limitation of such boundaries.

Top UK law firm Pinsent Masons’ most recent adjustment back to an open-plan design workplace is an excellent industry leading example of maximising space efficiency through embracing collaboration and enhanced productivity, while also reducing real estate costs.

Shanghai I China


9.8% I Vacancy Rate

88.1% I Other



Existing Stock


Supply 2016+2017

Baker & Mckenzie

Pudong Lujiazui

Jin Mao Tower 42,800

Linklaters Pudong Lujiazui Mirae Asset 27,392

Ropes & Gray Jing’an NanjingWest Road Park Place 26,884

Hogan Lovells Jing’an NanjingWest Road Park Place 24,748

McDermott Will & Emery

PudongLujiazui

Jin Mao Tower 23,540

Major Law Firms in Shanghai


sq ft

AVG. Grade A Office Rent USD 52.45 per sq ft per yearRMB 10.25 per sq m per day



2016 2017 2018Pricing and Incentives Forecasting

Recent Transactions

Ropes & Gray

Park Place Jing’an Nanjing West Road26,884 sq ft

Orrick, Herrington & Sutcliffe

Park Place Jing’an Nanjing West Road 14,849 sq ft

Pinsent Masons

Park Place Jing’an Nanjing West Road 7,693 sq ft

5 15 25

23 24



Major Law Firms in Beijing


sq ft

Preferred Locations: The bulk of medium to large international law firms can be found in the heart of Chaoyang, Beijing’s Central Business District (CBD). International law firms are predominantly concentrated in buildings such as: China World Trade Center; China Central Place; Kerry Centre; LG Twin Towers. These central and Grade A locations provide highly prioritised features, such as high-end air filtration systems.

Unlike their international counterparts, domestic law firms are evenly dispersed throughout Beijing. However, the top domestic firms can also be found in Beijing’s CBD, in addition to the high-profile Financial Street area and pockets of Dongcheng district.

Market Outlook: With economic growth in China decelerating, many multi-national corporations’ are looking to cut costs by either reducing their office size or relocating to a decentralised business district (DBD). Wangjing is a DBD that is prospering from this shift, due to the development of new Grade A buildings, boasting average rents of RMB 2420 sq ft per month, roughly 1/3 below the CBD’s average. However, international law firms are expected to remain in the CBD due to its location and close proximity to clients.

Beijing’s CBD Grade A office supply will increase by roughly 10,000,000 sq ft between 2017 and 2020, as multiple projects, including China World Trade Center Tower 3B, reach completion. This will cause vacancy rates throughout the CBD (4.7% in Q2 2016) to rise and limit rental rate growth. Such developments will also allow for relocation opportunities and reduce rents for anchor tenants in new buildings.

Legal Sector Activity: Domestic firms have been the main driver of Beijing’s legal sector growth, having set up headquarters in some of CBD’s most prominent buildings. Within the past year, firms such as Zhonglun, Fangda Partners and JunHe have all expanded to over 80,000 sq ft in Grade A CBD buildings.

In the wake of China’s economic slowdown, growth for international practices has been limited as the industry has largely stabilized. Many firms are downsising their offices and turning to flexible layout designs in order to maximise cost savings.


4.7% I Vacancy Rate

93.3% I Other

Dentons CBD Chaoyang Parkview Green 130,000

King Wood & Mallesons

CBD Chaoyang

World Financial Centre 90,000

O’Melveny & Meyers

CBD Chaoyang Yintai Center 36,500

Clifford Chance CBD Chaoyang

China World Tower 1 21,000

Beijing I China


Existing Stock


Supply 2016+2017

AVG. Grade A Office Rent USD 55.68 per sq ft per yearRMB 331.20 per sq m per mont



Pricing and Incentives


Absorption

Vacancy

2016 2017 2018Forecasting

Recent Transactions

Global Law Office (Domestic)

Building

China Central Place Tower 1in CBD, Chaoyang

expanded from 30,000 sq ft to 40,000 sq ft

White & Case


reduced area from 23,000 sq ft to 15,000 sq ft

However, a few firms, such as Clifford Chance, have expanded despite general market trends.

Preferred Locations: Legal firms in Tokyo prefer to be located in close proximity to major banking and financial institutions. Marunouchi Otemachi in Chiyoda-ku remain the favoured destinations for international law firms for such reasons as the proximity to the district courts located in Kasumigaseki. Minato-ku, just south of the central Chiyoda-ku, is also heavily coveted with Kamiyacho/Toranomon, Akasaka and Roppongi having an abundant international and domestic law presence.

Market Outlook: Current conditions continue to support a landlord-friendly narrative for Tokyo’s prime office space. However low vacancy rates and a leveling of domestic economic sentiment are signs of short term sustainability. Furthermore demand appears strong, with approximately 65% of new supply committed to by the end of Q2. Conversely 2017 forecasts imply that the pre-commitment levels do not appear to support a fundamental increase in demand, with just 5% of the new supply committed to.

Since 2014 premier central office rental rates have increased between 5-15% and through a landlords optimistic perspective, this will continue to increase from the close of 2016 to 2019. The rates however will eventually stabilise due to 18 million sq.ft of new supply, predominantly situated Marunouchi and Otemachi.

As such, landlords will push to increase rents for the remainder of 2016. It is critical for tenants to refute/mitigate these increases in preparation for the new supply and the relief that accompanies it.

Legal Sector Activity: The legal sector in Tokyo is well established amongst multinational legal firms – 40 of the Global 100 have a physical presence in Tokyo. Much like the rest of Asia, international law firms have been rather inactive in the market and have preferred to contract or renew. Japanese legal firms have been the most active in previous years with two choosing to relocate before anticipated rental increases. Both Nishimura & Asahi and Nagashima Ohno & Tsunematsu recently relocated to newer, more centralised buildings in Otemachi and Marunouchi respectively, closing out the movement of large legal occupiers.

The rising costs of fitting-out premises in Tokyo may be a deterrent for relocating, especially when a full build-out is required. Renewals are expected as the preferred strategy over the next year until supply relief arrives.


4.0% I Vacancy Rate

95.0% I Other

Tokyo I Japan

Nishimura & Asahi Otemachi Otemachi 1-1 Project Building A

Nagashima Ohno & Tsunematsu Marunouchi JP Tower

Mori Hamada & Matsumoto Marunouchi Marunouchi Park

Building

TMI Associates Roppongi Roppongi Hills Mori Tower

Anderson Mori & Tomotsune Akasaka Akasaka K-Tower

Major Law Firms in Tokyo

Law Firm Building NameDistrict


Millions (sq ft)0 20 40 60 80

Existing Stock


Supply 20156+2017

AVG. Grade A Office Rent USD 106.87 per sq ft per yearYen 32,547 per tsubo per month


Grade A Rent Free Period 6 months for a 3 to 5 year lease


Absorption

Vacancy

2016 2017 2018Pricing and Incentives ForecastingHogan Lovells


expanded 1,350 sq ft to 24,000 sq ft

25 26


AVG. Grade A Office Rent USD 24.17 per sq ft per yearWon 24,974 per sq m per month




Absorption

Vacancy

DLA Piper CBD Center1

Linklaters CBD Center1

Clifford Chance CBD Ferrum Tower

Squire Patton Boggs CBD Ferrum Tower

Kim and Chang CBD Ferrum Tower

Preferred Locations: International law firms in Seoul have a preference for the CBD due to the high concentration of major financial institutions within the district. There are roughly 30 major international and domestic law firms in Seoul, with more than 1/3 of these firms being located in the CBD.

Market Outlook: As a result of the slowing global economy, many international and domestic legal sector tenants’ are looking to mitigate costs. This macro factor is considerable when tenants are seeking to relocate or renew their lease.

The current downward trend of rental rates and increasing vacancy rate are affording occupiers the ability to execute cost saving procedures. The vacancy rate is projected to tighten by the end of 2016 due to decreasing new supply entering the market in 2017 and 2018. Therefore occupiers are encouraged to take advantage of the current market conditions.

With more opportunities being available in the current market, the key strategy for landlords is to attract and retain tenants in their current portfolios. With vacancy rates set to decrease, landlords are likely to hold a bullish stance towards achievable rents.

Legal Sector Activity: The presence of international law firms within Seoul is relatively new, with the first establishing 3 to 4 years ago when the market deregulated. Out of about 30 international and domestic law firms, 6 are located in one building, Center 1 (CBD). Ferrum Tower, which is right next to Center 1, is also home to 3 international law firms. The most recent transaction took place in August of 2015; White and Case LLP launched its Seoul office at One IFC, located in the Yeovido Business District.



11.0% I Vacancy Rate

87.0% I Other

Recent Transactions


Major Law Firms in Seoul

Law Firm Building NameDistrict

2016 2017 2018

Seoul I Korea

Existing Stock


Supply 2016+2017

CBD

Relocation, Finnegan, Henderson,Farabow, Garrett & Dunner, Center 1

4,269 sqft

YBD

Relocation,White and Case LLP, One IFC

4,300 sqft

CBD

Renewal,Herbert Smith Freehills, Center 1

4,981 sqft


At Colliers we always strive to look beyond actual leasing transactions, in order to see how the real estate involved can support our legal clients’ business. For us, each commercial property is a working asset that increases tenants’ productivity, profitability and – equally important for law firms – the ability to recruit and retain key talent.

In working with legal practices we pay close attention to global and regional trends, studying the dynamics that cause changes within individual law firms as well as industry-wide shifts. By understanding how such trends impact our clients’ business our Law Firm Services Group stays ahead of the market as a strategic and reliable source.

Many of the workplace strategies that the legal profession now deploys without a second thought would never have been considered five or ten years ago. Today our expert professionals do their utmost to work closely with clients, easing them into the flexible office configurations best suited to their unique needs, whilst maximising space utilisation and minimising costs.

With a proven 15-year track record of serving legal clients, we understand not only law firms’ real estate needs but also the operational implications of making more dramatic changes. To this end, we will guide your firm through a process designed to lead you to a real estate transaction that will improve your people’s performance and wellbeing. In doing so, we never forget that “one size” concepts rarely ever fit all. With each law firm having its own unique culture, we do all we can to be a partner, in helping firms to find and deploy their optimal real estate mix and fit.

The impressive end result is a real estate business solution that will accelerate your firm’s enhanced productivity and increased long-term profitability in today’s increasingly competitive Asian legal industry.

COLLIERS LAW FIRM SERVICES PRACTICE GROUP

Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry leading global real estate services company with more than 16,000 skilled professionals operating in 66 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more than any other real estate services firm.

For the latest news from Colliers International in Asia, visit www.colliers.com/asia, or follow us at www.linkedin.com/company/colliers-international-asia, twitter.com/ColliersAsia, http://www.youtube.com/ColliersIntlAsia

ABOUT COLLIERS INTERNATIONAL

http://www.colliers.com/asia

http://www.linkedin.com/company/colliers-international-asia

http://twitter.com/ColliersAsia

http://www.youtube.com/ColliersIntlAsia

Our Specialistsin the Region

Enna SeahAssociate Director+65 6531 [email protected]

Simon CrouchNational Director+61 2 9257 [email protected]

Ash SharmaDirector+61 2 9249 [email protected]

John SuzukiSenior Tenant Representative+81 3 5563 [email protected]

Jinyoung KangManager+82 2 3775 [email protected]

This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. This publication is the copyrighted property of Colliers International and/or its licensor(s). ©2016. All rights reserved.

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Boyd KildeyDirector+61 7 3026 [email protected]

David Wood MRICSDirector+852 2822 [email protected]

Sam Gourlay MRICSAssociate Director+852 2822 [email protected] Wright MRICSAssociate Director+852 2822 [email protected]

Tim FarleyNational Director+61 3 9612 [email protected]

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