An overheated London property market is leading London based legal firms to reduce overheads and streamline their businesses. The concept of offshoring, northshoring, nearshoring is not new; however as London’s saturation levels reach new highs, firms in the Capital are now giving this concept some serious thought. Post-recession partners and finance directors of firms are looking at how they can better prepare for the future.
So what are the key drivers for North Shoring?
Property prices in London are at an all-time high, office supply in the Capital is low and demand continues to increase. Average rents in Docklands are around the £45per sqft mark and can rise up to £125 per sq foot when you start looking at the Mayfair and St. James area. * source BNP Paribas
Northern cities are in comparison far more affordable. The average rent for Grade A office space in Sheffield city centre is £14 per square foot in comparison to £45 for a typical office space in London’s EC1 postcode. So what does that mean in terms of savings? If you took a 5,000 sqft office space over five years, including business rates and service charges, in London you would pay £1,718,750. Steel City House in Sheffield is currently on the market at £16 per square foot. Over a five year period including rates and service charges this would cost £645,000. This is a saving of just over £1m over five years!
The head counts within law firms are increasing. Combined revenues for the top 200 law firms top £19bn (up 4.37% yr on yr) and net profit for the top 100 firms totalling £5.4bn (up 2.77%) such figures speak of an industry that remains in good health. As law firms grow their need for office space increases.
Many firms have come to the realisation that offshoring to foreign countries does not work for a number of reasons. Northshoring or nearshoring is a process much easier to manage and implement therefore seen as less risky.
Lower wages for similar workers. Again a simple supply and demand equation suggests that recruitment within the legal sector in London becomes more and more problematic.
Northern cities still have a healthy talent pool which is very well supported by high performing universities. In Sheffield the two main universities churn out 20,000 graduates in every year.
As the UK enhances its digital connectivity and capacity the ability to work closer virtually becomes more streamline. Road, rail and most city airports are also enhancing their operations making the UK more connected and reducing travel times.
Sheffield’s strategy for North Shoring is about building long term relationships with law firms, predominantly those in the Magic Circle. If you would like to find out more about North Shoring and discuss how Sheffield’s inward investment team can help you relocate and benefit your business please feel free to get in touch:
T: 0114 223 2353