Occupier view: Addleshaw Goddard on sticking with the City

When law firm Addleshaw Goddard began its hunt for a new London headquarters three years ago, it entered a location lottery, weighing up sites in parts of the capital as varied as Shoreditch, E1, and Canary Wharf, E14.  Like many corporate occupiers, law firms are taking a more flexible approach to real estate after the pandemic. Gone are the days when a firm’s real estate future is dictated by postcode alone, says Adrian Collins, a real estate partner at the firm, noting that the team was “very open” to various locations, with “timing, ESG, a turnkey solution and location” all influencing the search. “The whole approach to space now is just fundamentally different,” he adds. In a bid to avoid squandering “an opportunity to do something different”, the firm chose to forego a lease re-gear and vacate its current premises at 60 Chiswell Street, EC1. In September, it signed a prelet for Pembroke’s 41 Lothbury, EC2.  The relocation takes the 2,500-person firm, which has 650 staff members in its London office, to the heart of the City and a building that is being refitted specifically for the tenant and its needs. It is one of a long list of around 30 properties that the firm considered, but with space being snapped up quickly and often years ahead of completion, there was no time to waste. “This bit of the City is becoming the legal hub again,” Collins says. “We thought we had better get our skates on.”  He adds: “We did lose some other opportunities that we were really interested in as well – you don’t necessarily always get your first choice when you are planning a move.”  Grade II listed 41 Lothbury, the former home of NatWest Bank, ended up on a shortlist that also included British Land’s Blossom Yard & Studios, now prelet to Reed Smith, CIT Group’s Hylo and 50 Finsbury Square, then owned by GPE – but notably, it was the only scheme that would have allowed Addleshaw Goddard to be the majority tenant. Use your imagination Collins, in conjunction with the in-house office search committee, started viewing “a real mix” of potential options for the new office back in 2019, but “rigid discussions” had begun before that.  “Whenever you are coming up to a lease event for a business like ours, you have to forward-plan,” Collins says. “On balance, we felt that a relocation to a new building was probably a more economic option [than a refurb].”  Chiswell Street was a refurb when the firm moved in, he says, adding: “I swore that we would never do a refurb again, because what happens is the mechanical and electrical is usually reconditioned as opposed to entirely new.”  As the board discussed potential locations and appointed JLL as its adviser, Covid-19 struck. But the hunt continued. The firm used data collected while Covid protocols were in place to monitor the use of its current space and optimise its search. “The way people work has changed massively,” Collins says. “Nobody ever worked from home. They didn’t have VPNs. The whole technology approach has meant that work patterns have changed. What the new space will do is give us the opportunity to replan the whole working environment. And we still think the office environment is absolutely vital, for training people, collaboration and working with clients.” A priority, Collins says, will be the provision of top-class facilities to encourage people into the office.  “A key part – and we are not there yet, we haven’t finished the whole internal design – will be how you create an environment that people want to come into,” he says.  When Laura Ottley, director of marketing and business development and one of the leads on the firm’s office move committee, joined the company two years ago, she surveyed all staff, asking the question: “What does this new building need?”  Regulation plays a bigger role in shaping space requirements for law firms than in other sectors, Ottley says, with privacy, confidentiality and GDPR regulations meaning the sector relies on its office space to operate.  Data showed the average occupancy on any given day in the firm’s current office was 65%, with some teams that were always in the office. “On a peak day this was 70%, so you don’t need that much space,” says Ottley, although she adds that the space the firm does have will be designed to fit specific working needs and encourage collaboration.  “The easiest way to do that is to have large floorplates and create an environment that just makes it super easy for people to have conversations,” she says. This includes the creation of an “imagination lab” for staff, “a dedicated room where the furniture will be completely flexible, with whiteboards and super-interactive elements where clients can come in and we can brainstorm ideas with them”.  Non-negotiables Avoiding a multi-occupancy let was key in the decision to pick 41 Lothbury, which the firm will move into in 2024. For Collins, major plans for the move, which were mapped out before the pandemic, remained relatively unchanged as they had pre-empted major “lessons learnt”.   Addleshaw Goddard moved into its Chiswell Street headquarters 15 years ago. In the years since, the firm has downsized in its building, subletting three floors to trading company ICE Futures Europe and one floor to Similarweb.   As the anchor tenant in the 204,500 sq ft office building, Addleshaw Goddard has maintained a personalised front-of-house experience with a building manager hired from the five-star Shangri-La Hotel. The fact “the whole front-of-office runs like a luxury hotel”, including its catering offering, has become synonymous with the firm’s brand and made a private entrance in its new offices a top priority.  “One of our key drivers was being able to replicate what you get at our front-of-house, because that is a real USP in terms of client experience,” Collins says. “So finding something where we were one of the largest, if not the largest, tenant was important to us.”  Over the past year the firm has seen a 15% partner growth and it plans to continue expanding its talent pool incrementally. To accommodate this in the new building, it built an expansion clause into the lease.  While the firm has downsized its total office space from Chiswell Street where it leases 197,000 sq ft but only occupies 113,000 sq ft, it is opting to size up to 114,000 sq ft on a 15-year lease at 41 Lothbury. “Even though this is our headquarters and we have got a lot of people here, we are not the same size as a Clifford Chance or Linklaters,” Collins says. “It is important to us that we don’t disappear in a building.”   To send feedback, e-mail chante.bohitige@eg.co.uk or tweet @bohitige or @EGPropertyNews Images courtesy of Addleshaw Goddard See which agents are doing the most office deals in the City Core submarket >>