Landlords often rent law firms lots of space. After all, why wouldn’t they want to do so? The real estate market is still tough in a lot of places. For a landlord to fill up their space is certainly a good thing on just about every level.
For law firms, most do not want to rent space with the idea that they will have to move and get larger space later. And with landlords trying to persuade law firms into taking as much space as possible, many law firms ultimately sign the lease on space that is larger than they actually need.
The idea is that they will grow into the space. If they do not grow into the space, many law firms will consider renting much of their space out to other sole practitioners, small law firms or other professionals in order to pay the rent.
While this might seem good on the surface, this can put law firms in a tough financial spot. In addition to having to worry about running their law firm, managing employees and doing solid legal work, now they have to worry about being a landlord or feeling over-extended with the amount of space they took.
Instead of taking on that large space that you do not need, singing a long-term lease and a personal guaranty, for many law firms, they should consider shorter term leases, with options to renew, and small space where there might be expansion opportunities in the building if additional space is actually needed.
But for most law firms, it’s a wise decision not to take more space than you need. If you have any thoughts, feel free to share them below.