The 660-lawyer Drinker Biddle corporate law firm is expanding its New York office and shrinking its Philadelphia headquarters. The firm is doubling its Manhattan space at Silverstein Properties' 1177 Sixth Ave. (Avenue of the Americas) tower to 31,000 sq ft, even as it prepares to downsize its flagship office at Brandywine Property Trust's One Logan Center to 155,000 sq ft next year, from the current 209,000 sq ft.
It's not about price. Drinker signed a 10-year lease at the New York tower, where listed rents run in the high $70s"/sq ft. Brandywine is asking rents in the "mid-to-high $30s"/sq ft for the upper floors at One Logan.
While rents are lower in Philadelphia, the city's business taxes take away much of the advantage over other downtown business districts, notes Jeffrey A. Baker of Cresa Philadelphia, one of the brokers who represented Drinker in the New York deal.
UPDATE: Andy Kassner, executive partner at Drinker, tells why his firm (like some other big Philly-based firms, see Cozen here) is taking more space in some far-off offices, less at headquarters:
"My predecessors, our competitors, used to think we needed extra space to expand. I don't believe I need to build floors of extra space onto our clients' timesheets. They want value and productivity and efficienty. If I am going to expand I can find the space quickly.
"Everybody is shedding space. There is plenty of space to go around...
"We remain a Philadelphia-headquartered firm. We adopted a real estate strategy several years ago, as we saw, coming out of the recession, that there was a need to become more efficient.
"For one thing, we needed to invest heavily in technology. I've been practicing for 30 years. It's a different world. Used to be I would dictate, my secretary would type it up, it would go to word processing, to my client, back to me for revision, then finally I'd send a runner down to court. And a copy to the library.
"The new generation of lawyers writes its own briefs. We don't need word processing, we don't need libraries. We don't even need servers like we used to. So we've put in a strategy to reduce our size needs 30%, firm-wide. That leaves us below 700 square feet per lawyer. While investing heavily in IT.
"We've moved all our servers to datacenters in offsite locations. In our data room now you won't find much besides an empty chair.
"Our new space, we want to feel it's open and collegial. Not big offices and everyone sits behind their doors. It's energizing.
"In Philadelphia we'll have the same number of lawyers" in the smaller space. "Our head count is the same. We love the location next to the Four Seasons, and so do our clients. So we're going to upgrade the space, from its 1980s design, into the future. It's going to be a much better place to be more productive and serve the client. We've invested millions of dollars in IT upgrades so we can practice and communicate with each other much better.
"We are committed to be dominant in the mid-Atlantic. We're about to find a new lease for our North Jersey office in Florham Park. We're reducing our space, and upgrading it, just like here. We did the same thing in Princeton."
By cutting space from its back offices close to home, Drinker can afford more space in high-traffic, high-cost markets: "If you're going to be a national litigation firm you need to be in New York, and in California and Washington. If you're going to be in government relations, you have to be in DC. We have over a hundred lawyers in Washington. We have to go where our clients are. We go where we get the best legal talent.
"Our L.A. office, it's a difficult market, it's been a great success for us. Now I go to New York and, putting aside the fact I'm from NY and I grew up five blocks from Yankee Stadium, it's a great place for top legal talent in areas including restructuring and bankruptcy, along with Wilmington," where Drinker partners Thomas McGonigle and Joseph Schoell were chiefs of staff to Delaware Govs. Markell and Minner, respectively.
"Intellectual property is a big practice in NY. We have a big group for that in New York. And in Washington. There's not a big group of them in Philadelphia. ERISA, insurance, restructuring, litigation, IP, corporate, we need to do in New York. So we took another floor. We're going to continue to grow in NY. And we'll take more space in L.A."