Law firms are among the most discerning occupiers in the German office property market. Their focus consistently lies on very good locations and modern, high-quality spaces. For these criteria, they are prepared to pay above-average rents, as a current analysis by JLL shows. The study investigated leasing behaviour in the seven metropolitan areas of Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart and was supplemented by targeted surveys of selected firms.
The analysis proves that the average rents paid by law firms are above the cross-industry market level in all examined markets. Rent premiums vary considerably: in Cologne, they amount to ten percent, while in Munich, they reach up to 55 percent. Düsseldorf registers a premium of 54 percent and Frankfurt 49 percent. In Berlin, the premiums are somewhat more moderate at 16 percent, while in Hamburg they stand at 28 percent.
Strategic Relocation to Central Business Districts
Another significant finding of the JLL analysis is the systematic relocation of leading firms to the historic business centres of the metropolitan areas. In Düsseldorf, moves took place from locations such as Seestern or Grafenberg-Ost to the city centre or Kennedydamm. Frankfurt experienced a movement from peripheral areas like Sachsenhausen or Nord/Ost into the Central Business District (CBD). In Hamburg, the shift occurred from Eimsbüttel or Altona-Ottensen-Bahrenfeld to HafenCity and the city centre.
Similar patterns are evident in Munich, where firms moved from Bogenhausen and Arabellapark to Westend, as well as in Cologne, with a movement from Ehrenfeld/Braunsfeld to Rheinufer-West. In Stuttgart, a relocation took place from Feuerbach and Vaihingen-Möhringen to the CBD. The main driver of this development is the office's transformation from a mere workplace into an "experience space" for personal collaboration and corporate culture. Miguel Rodriguez Thielen, Head of Office Leasing Germany at JLL, comments that today's office must fulfil functions that home office cannot provide: collaboration, culture and spontaneous professional exchange.
Market Bottlenecks and Strategic Planning
In the past three years, some of the largest transactions were concluded by prominent law firms. These include Freshfields on Königsallee in Düsseldorf with 10,500 square metres, White & Case on Bockenheimer Landstraße in Frankfurt with 10,100 square metres, and Hengeler Mueller, also on Düsseldorf's Königsallee, with 9,600 square metres. Internationally active firms such as Milbank, Jones Day and Herbert Smith Freehills have also secured new spaces in central city centre locations in recent years. Mr Rodriguez Thielen notes that the list of new leases reads like a who's who of the legal industry, and all share an address in a prime city centre location, which should be seen as a strategic calculation rather than coincidence.
Given the noticeable decrease in the new construction pipeline in the German office markets and the reduction of speculative projects, law firms are competing for an increasingly smaller market segment. Mr Rodriguez Thielen warns that a lack of forward-thinking planning carries the risk of not finding a suitable space at the end of the contract term. He emphasises that the lead time for location decisions is lengthening, particularly for firms with high quality standards, and periods of three to four years are no longer uncommon.
