The April 2010 Issue of DICTA, a monthly publication of the Knoxville Bar Association, featured the following article by Josh Francois & Matt Fentress, NAI Knoxville

Projecting the image of success has always been important to legal industry, but defining that image has changed the layout and location of law offices. As law office space trends and locations evolve, Knoxville’s office market continues to fluctuate to respond the changing nature of the profession. It is important to explore the dynamics of the trends and the market, to maximize the economic benefits of your space and office location.

The most glaring changes in law office space have been in an increased efficiency in space and fixtures and technology. There is much more business-like approach to tenant finish. Jeff Johnson, an architect at McCarty Holsaple McCarty, Inc., recalls a meeting with a number of senior partners of varying ages on the amount of money being spent on the spaces. One younger attorney finally stated “I want more money to go home in my pocket.” Mr. Johnson summarizes that “the three-layered lacquered moldings may not have contributed that much to the bottom line in the first place.”

One of the ways space planning has been more efficient by eliminating the traditional law office library. Legal research is now being done online. Library books may be displayed more for aesthetics in conference rooms, corridors or executive offices. Efficiency is also achieved through a more open office plan especially for support staff. The modern law office is more collaborative than its predecessor. As attorney’s private offices has become smaller, associate’s office furniture has become standardized: the need for smaller conference rooms or “war rooms” has increased. Though a larger conference room off of the reception area is still necessary, these smaller conference rooms allow teams of people to work on multiple projects efficiently. An excellent example is the new Baker Donnelson space at Brookview which has a large main conference room, a large audio visual training room, a computer training room, five smaller conference rooms and a strategy room.

State-of-the art is not a term usually associated with law offices of recent past, but Faris Eid, President of Design Innovation, believes “technology is of the utmost importance.” Many law firms have requested several data outlets in each office to allow flexibility or the additional use of laptops. Also, teleconferencing has become a vital cog of the modern law office. According to Chris Leonard, managing director of the Intellectual Property law firm Merchant & Gould, says that in his new office at Tyson Centre it not uncommon to videoconference with clients or other attorneys for more than two hours per day and web conference, which can be done in private offices for at least one meeting per day. These systems are so technologically advanced that they measure and adapt broadband strength from multiple locations so that reception is maximized across the specific locations.

A successful image is also portrayed by office location. The premier downtown address is not as important as it used to be. Does a law firm need to be downtown? This resounding response seems to be depends on what kind of law you practice. John Waters, a partner at Ragdsale, Long & Waters, calls himself “a downtown lawyer that works out west.”  Mr. Waters moved west to be closer to his clients, but if your firm is firmly entrenched in litigation, chances are you are still located downtown. Despite technological advances to work on-line, traffic, and parking; proximity to the courthouse and the city/county building as well as the traditional downtown dynamic of the legal profession keeps many lawyers downtown.

Amanda Busby and Andrienne Anderson started their own firm, Anderson Busby. Both attorneys live in West Knoxville, but never looked at office space outside of downtown. Ms. Busby says while her law partner needs the proximity to the courthouse and government buildings, if she has a client that does not want to come downtown, she will meet them at their office. Another perspective on being downtown was given by Beth Ann McDowell, an office manager at Paine, Tarwater, Bickers & Tillman who relocated from the First Tennessee Plaza to Riverview Tower in June, 2009. The firm wanted to be downtown for a variety reason including that the employees lived all over the area not just west.

There are some advantages to moving out of downtown. The most obvious advantage is free parking. Locating near freeways with good entrance and egress is a chief concern. Also, the newer buildings have larger footprints which allow firms the ability to locate on a single floor. Most importantly, those law firms that have migrated downtown have not experienced complaints or resistance from their clients. With Knoxville’s continued downtown revitalization and rising rents in West Knoxville, the law office market will continue to evolve.

When it comes to downtown office space, we looked at survey results performed by REIS Inc. for their 4th Quarter survey numbers.  Vacancy rate for downtown, based on buildings surveyed was 18.8 %.  Their survey reflects 2,917,000 SF of office inventory, with negative net absorption of office space and asking rental rates for 2009 being the lowest since 2006.

The overall Knoxville Office Market reflected a vacancy rate of 18.2% as of December, 31, 2009.  The REIS Inc. survey reflects an overall office inventory of 6,476,000 square feet.  Their projects reflect vacancy rates in the overall office market to remain above 18% for the next several years.  The United States office vacancy rate stands at 17%, the highest level since 1994. The higher than normal vacancy rates result in building owners offering strong incentives and lower rental rates to try to fill their vacant space.