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Law Firms Grapple with 50% Surge in Office Construction Costs

Faced with soaring costs to build and operate office space, law firms are searching for ways to manage their budgets while meeting the needs of their practices.

The cost to build a typical law firm space in downtown Washington, D.C., has jumped 50% since 2019, according to Savills USA. At the same time, furniture costs have increased by 30%, and mechanical, electrical and plumbing (MEP) costs have risen by 15%. These substantial increases are not expected to continue, according to Savills' executive director of project management, David Fletcher, whose experience includes building out more than one million square feet of high-end law firm space. “The market is not as volatile as it has been, and, over the last couple of years, post-pandemic conditions have eased demand,” said Fletcher.

Two major factors always drive construction costs: materials and labor, said Fletcher. Materials costs typically rise because of strained supply chains, high demand and shipping logistics, while labor costs move with demand for workers in specialized trades. The growing demand for labor in the data center market might have a ripple effect on other sectors, including law firms, as they may need to offer higher rates to secure contractors for their projects, said Fletcher. For law firm construction projects, the price of steel plays a major role in the extensive framing required for tenant interior work as does copper, which is widely used in electrical wiring, HVAC systems and plumbing. Carpet prices are more impacted by the cost of oil, and materials like wood veneers used in paneling and furniture can experience significant price fluctuations, said Fletcher. As such, design choices become critical in managing construction budgets.

“Materials that are fashionable or limited in supply could end up costing more,” said Fletcher. “Broadening design specifications to include materials with better price points could have a major impact on your budget.”

As an example, he noted many law firms use glass partitions for their office walls, which are offered by several manufacturers and provide different levels of performance. Firms must determine how they need the glass to perform, including whether it should offer basic sound resistance or if they need soundproofing. If specifications are flexible, firms can increase competition among manufacturers and potentially lower their costs, he said.

“It’s also beneficial to leverage design approaches from outside the legal sector as well,” said Fletcher. “By doing so, firms can create flexible, well-designed spaces that can be updated or improved over time.”

Prices are unlikely to come down as products like doors, lights and other materials are manufactured on demand, eliminating surplus inventory that previously led to discounts, Fletcher said.

Reprinted with permission from the Tuesday, 04 February 2025 06:23:26 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.