Paradigm Breaking: Associations Are Moving South, And Law Firms Are Moving Young

Combined, associations and law firms make up almost half of office occupiers in Washington, DC. And with high-profile moves like the American Psychiatric Association’s lease at The Wharf, their real estate decisions are increasingly critical and relevant.

Yesterday, at Bisnow’s annual Real Estate Strategies for Associations and Law Firms event, Monty Hoffman, the CEO of PN Hoffman and the man behind The Wharf, and APA CEO Saul Levin laid out why that lease was so important when they announced it last year, moving from its current space in Arlington. That's Lincoln Property Co's Kevin Sullivan with Saul, Monty, American Society of Association Executives CEO John Graham and Monument Realty EVP Doug Olson.

“When you’re out around the country and you have Virginia on your badge, it has a different connotation than when you have Washington, DC,” Saul said. Plus, The Wharf is steps from HHS and Capitol Hill. “I think [the property] is a very sound investment over time. It’s only going to escalate.”

Saul pointed at his association's future home, which Monty says is at the gateway of the Wharf, where most of the 15 million expected annual visitors will walk by.

Why is that important? Because the APA is one of two prominent associations to decide to relocate to the waterfront, along with the National Association of Broadcasters enlisting Monument Realty to build its new HQ in the Capitol Riverfront. But no law firms have moved south. Yet.

“The Capitol Riverfront will start to see law firms moving there over time,” Doug said. “The Riverfront has arrived.”

But, not all of the conversation centered on the emerging office markets near the Washington Channel and Anacostia River. Our law firm panel discussed the rapidly changing legal office landscape in Washington, discussing two specific examples: Arnold & Porter’s new space at Boston Properties’ 601 Massachusetts Ave, designed by Catherine Heath of HYL architecture, and Nixon Peabody’s new offices at Brookfield’s 799 9th St NW.

That's Catherine next to Baker Tilly's Bill Apple, Skanska VP Mark Carroll and Nixon Peabody managing partner Jeff Lesk. And Sherry Cushman, the head of the Cushman & Wakefield national legal practice group moderating the panel from the podium. 

Jeff Lesk—whose new offices caused quite a stir last year when they opened—said instead of “waiting to see what our peers were doing,” he decided to leap into the future, with glass everywhere, single-size offices for everyone and a live plant wall next to the stairwell. And guess what? It’s gone over well, even with the Baby Boomers in the executive ranks.

“The world has not come to an end, hell has not frozen over,” he said. “It’s worked out really well. We were going through a firm-wide rebranding. It was a dream to have the opportunity to translate the brand, which is innovation, thought leadership, authenticity, into space.”

But despite the positive vibes now—even the “old farts” are bringing their laptops into the work café, something we’ll call the Full Millennial—he said the hardest part of the whole process was the convincing.

“There were a lot of partner meetings, a lot of town hall meetings,” he said. “The game changer was the financial discussion with the partners. It’s which do you want: a big office or a big house?”

Sherry, not affected by her neck brace at all while moderating the panel, said relocations, like Nixon Peabody’s and Arnold & Porter's, are happening more than ever.

“The high concessions in both free rent and [tenant improvements] have enabled a lot of firms to look at a relocation more seriously because the out-of-pocket costs are less than they were,” Sherry said. “This is happening, and it’s going to happen more often.”

Another trend she pointed out: fewer attorneys at the table in real estate decisions. Skanska VP Mark Carroll, who’s developing 2112 Pennsylvania Ave NW with Cleary Gottlieb as an anchor tenant, said well-designed rooftops, lease flexibility, and gyms that include yoga and trainers are “becoming the expectation.”