Professional_London_Final

2015 | Global Research and Consulting
Managing growth: using workplace
strategy to deal with the challenges
of expansion and cost management
Expanding efficiently

CBRE’s standard definition of the professional sector encompasses a
wide range of sub sectors, including accounting services, legal services,
management consultancy, chartered surveyors, architects, engineers, etc.
Within the context of the Central London office market, the most influential,
in terms of take-up are accounting services, legal services and management
consultancy. For the purpose of this report, the term ‘professional services’
refers to these three sectors.

1© 2015, CBRE Inc.
CBRE’s Professional London report
assesses how professional services
firms are responding to today’s crucial
challenges of controlling costs whilst
creating a working environment for
attracting and retaining staff. These
tensions are increasingly significant as
professional services firms plan for
an increase in headcount to meet a
predicted upswing in business volumes.
Cost remains an important issue
for firms
Cost is one of the most important drivers
of workplace strategy with 83% of
respondents to CBRE’s Future of Work in
Professional Services survey citing it as an
important driver. Using space more
flexibly and assigning space for agile
working has become a top priority for
professional services firms trying to
reduce real estate costs. All professional
services firms are using their space more
efficiently no matter what workplace
strategy they employ.
Firms are using workplace
strategy to attract staff
Firms are also using workplace strategy to
achieve other business goals including
attracting and retaining staff. 92% of
respondents to our survey use workplace
strategy to enhance employee satisfaction.
As the competition for staff intensifies,
location, encompassing connectivity
and the wider amenity offer, remains
of paramount importance for attracting
and retaining staff. But other factors
such as technology, the design and
aesthetics of the building and the
workplace are gaining increasing
importance along with the amenities
available on site.
‘Wellness’ will be high on
occupiers’ agenda going forward
Occupiers are placing increasing emphasis
on office environment standards requiring
features such as natural light and fresh air
– this concept deemed ‘wellness’ is being
pioneered by many professional services
firms. Evidence supports the positive
impact of ‘wellness’ on attracting and
retaining talents but also highlights
additional benefits in the form of
employee productivity and overall business
performance. 83% of respondents to CBRE’s
Future of Work in Professional Services survey
cite workplace strategy
as a means of promoting employee
effectiveness. A finding supported by
a recent CBRE staff survey for its new
Downtown LA office showing 83% of
respondents report a positive effect on
employee productivity with 93% of
respondents indicating that the new
space had a positive impact on
business performance.
Space that promotes
collaboration
A key finding of CBRE’s Professional Services
Workshop – the Future of Work was that the
needs of professional services firms vary
considerably across sectors when it comes
to encouraging collaboration and
facilitating new ways of working. Due to the
nature of much of their work, accounting
and management consulting firms require
more dedicated collaborative space – as
high as 70% for some firms. In contrast,
law firms require more quiet space and the
majority have opted for cellular, although,
some have switched to open-plan working to
improve flexibility and accommodate
expansionary growth.
Costs can constrain the
roll-out of technology
Technology is seen by firms as the
enabler for greater collaboration and
flexible working, and as an important
way of attracting talent. However, the
cost of technology is a constraint for
many professional services firms with
aspirations to introduce more flexible
working. Frequently, firms delay plans
until major upgrades of technology are
required. However, most companies
will utilise cost effective solutions such
as cloud technology to facilitate
mobile working.
Outsourcing will remain an
important cost control option
Outsourcing is a well-established
mechanism used by professional services
firms to curb costs. Yet how this has been
implemented has evolved considerably as
off-shoring is replaced by near-shoring
with larger regional cities being the main
beneficiaries. Other options being followed
include using specialist outsourcing firms
or in some instances setting up their own
outsourcing companies.
EXECUTIVE
SUMMARY

2
Professional London
Consolidation and structural
changes will reshape the
professional services sector
Amongst professional services firms,
consolidation has been used as a means of
curbing rising costs, achieving scale, and
accessing new markets. This has resulted
in a spate of merger and acquisition
activity – a trend that will only accelerate
as firms seek to control costs and take
advantage of opportunities in new
markets, particularly overseas.
Structural changes, such as the Legal
Services Act and EU audit reforms, will
only serve to increase competition and
continue to squeeze fees.
Professional services sector
set to benefit from positive
economic outlook
The outlook for the professional services
sector is very positive on the back of a
strong economic outlook. According to
CBRE forecasts, an additional 55,500 new
jobs will be created over the next five years,
largely as a result of very strong growth in
management consultancy, while growth in
legal services and accounting is predicted
to be more moderate, it will still outpace
growth in the general economy.
This growth will be augmented by lease
events with 6.8m sq ft of lease breaks
or expiries scheduled from 2015 to 2021,
largely consisting of legal occupiers. We
anticipate that many of these occupiers
will use these events to consolidate and/or
adopt workplace strategies to allow more
efficient space usage and agile working.
Within London professional
services firms search for value
will open up new locations
Firm’s location costs are determined by
cost, availability of stock, proximity to
clients and deep pools of skilled workers –
both influenced by transport connectivity.
The relative attractiveness of locations
across London to professional occupiers
will change as a result of market dynamics,
new developments and also the arrival of
new infrastructure projects. This will
mean locations such as Battersea,
Shoreditch, Stratford and White City will
become a viable location for professional
services firms, although the benefits of
their current locations will remain a
powerful draw for many occupiers.
Five future trends to monitor
•• Firms will use space more efficiently, resulting in consolidation into fewer London offices.
•• Workspace densities are expected to increase to 1.75 people per desk among accounting and management consulting
firms, but legal occupiers will continue to provide one desk per person.
•• Small satellite touch down offices in key locations, such as Mayfair and Shoreditch, that could be used for internal and
client meetings.
•• More agile working among accountancy and management consulting firms. This includes more hot-desking and remote
working (either at home or at a client’s office).
•• There will be a need for more collaborative space to support agile working, with a greater proportion of a company’s space
assigned to breakout areas and touch down space.

Professional London
Markets move quickly and
the way an office operates
could change significantly
in five years’ time.”
Real Estate Director, professional services firm
“
4

5© 2015, CBRE Inc.
For this study, CBRE drew on three main strands, including:
In this first edition of the Professional London report, CBRE provides:
The professional services sector is an
important driver of the UK and London
economy. Together, accounting, legal
and management consulting industries
accounted for 4% of UK GDP and
employment respectively in 2013.1
London is home to the world’s second-
largest legal services sector and is a
leading global centre for accounting and
related services, including management
consulting, audit, tax advice, corporate
finance and business recovery services.
Many of the world’s largest professional
services firms have their headquarters
in Central London, with the sector
accounting for 14% of Central London’s
occupier base, employing 260,500 people
in 2014. London is Europe’s fastest
growing city, with GDP forecast to grow
by around 3.5% per annum over the
next five years. During this period, total
employment is forecast to increase
by 203,400 new jobs. The professional
services sector will play a key role in
London’s growth, contributing 55,500
new jobs by 2019.
The professional sector is dynamic, with
firms responding quickly to challenges
and opportunities. These have seen
firms expand both within London and
into emerging markets, such as Asia.
However, the market is becoming more
competitive with firms under pressure
to deliver client services for less. This
has led to consolidation with some firms
merging with a rival to maintain
a competitive edge.
Squeezed fees and rising costs means
that professional services occupiers are
under pressure to reduce overheads, with
many firms rationalising their office
portfolio and exploring strategies to
occupy their space more efficiently.
PROFESSIONAL LONDON
INTRODUCTION
•• An examination of the key drivers affecting the future of the professional
services sector, considering the growth prospects for the sector and
structural changes therein.
•• An assessment of how these factors are affecting the way professional
services occupiers occupy their space, including a review of workplace
trends in the sector and how these will evolve in future.
•• An analysis of how changing attitudes to real estate will affect professional
services sector office demand in Central London.
•• Interviews with senior decision makers at top-tier and mid-level professional
services firms.
•• A survey of occupiers through the Future of Work in Professional Services
Industry survey.
•• Professional Services: the Future of Work workshop.
1. Office for National Statistics
OVER 1/4WITHIN THE PROFESSIONAL SECTOR
203,400
2015
2019
NEW JOBS IN LONDON
55,500Source: CBRE

96%
BUSINESS
CONFIDENCE
BUSINESS
VOLUMES
59%
Professional London
6

7© 2015, CBRE Inc.
BUSINESS GROWTH
LEADING TO EXPANSION
Business confidence surveys report
improving sentiment among professional
services firms, with law firms recording
the highest level of optimism since 2006
and 96% of respondents confident about
the coming year.2
In a separate survey,
43% of respondents expect revenue growth
of between 10% and 20% in 2015.3
Among financial services companies,
an important source of business for the
professional services sector, business
optimism continued to grow across the
board in the most recent CBI/PWC
Financial Services Survey.4
Growth is
expected to accelerate in the second
quarter of the year, driven by a recovery
in businesses serving private individuals.
A net balance of +59% of firms surveyed
expect business volumes to rise in the
next quarter.
According to the CBI Service Sector Survey,
a net balance of +16% of respondents were
optimistic about the business situation.
It also highlights fierce competition in
business and professional services made
it harder for companies to raise prices
and skills shortages were becoming
more of a concern.5
Forecasts for the UK economy as a whole,
reflect strong business confidence and
improving business conditions. These
point to economic growth of 2.5%
for 2015 and also for the following
year. Overall economic and business
conditions seem ripe for robust growth
in the professional services sector.
5. CBI Service Sector Survey, February 2015
2. Smith & Williamson Annual Law Firm Survey, 2014
3. BCL Legal Survey
4. CBI/PwC Financial Services Survey, March 2015
Over the past year, businesses have begun
to feel more confident about economic
prospects, backed up by a run of positive
economic data.
Strong economic growth
to underpin expansion
in the professional
services sector

8
Professional London
Legal revenues rising, but
clients demand more for less
Similarly, fee income amongst the top
100 UK law firms is also rising. In 2014,
revenues increased at the fastest rate
since 2008, with 70% of all firms
recording above inflation revenue
increases.8
However, competitive pressures
on pricing have meant that increasing fees
to boost revenue is not an option. The
drive by clients to curb their expenditure
on legal fees is evident with the top 10
firms reporting an 8% drop in fee income
per chargeable hour. Revenue growth
arises from chargeable hours growing,
backing up the sentiment that workloads
are increasing. Nonetheless, further
revenue growth is predicted in the
coming year, supported by an increase
in global capital flows.
Our business is
expanding across the
board. We have seen
significant growth
in transaction-led
work, driven by the
economic recovery.”
Chief Operating Officer, professional services firm
Management consultancy
revenues double
Revenue growth in the UK management
consultancy sector is expected to reach
double figures in 2014 with 90% of
Management Consultancies Association
(MCA) member firms reporting in
December 2014 that they had met or
exceeded their fee income expectations
for the year.9
The massive shift to a digital
economy has seen digital and technology
services grow to 25% of the market.
Looking forward, three quarters of the
firms surveyed by the MCA anticipate
a rise in consultant numbers in 2015,
with half saying the rise will be marked.
Big Four accountants
dominate market
At the top 100 UK accountancy firms, fee
income grew by 3.6% to reach £11.4bn in
2014.6
Growth was skewed towards the top
of the table with the Big Four7
accountancy
firms accounting for over three-quarters
of the £400m fee increase. Further down
the table, some smaller firms reported
stagnant or falling revenues.
Revenues tend to rise
at twice the rate of GDP.
If you’re predicting
GDP growth of 3.5% per
annum over the next five
years that could roughly
translate to revenue
growth of around 7%
in each year.”
Mark Sherfield, Chief Operating Officer, BDO
The recovery in the economy has
presented the sector with numerous
growth opportunities, with firms in the
Big Four and mid-tier increasing their
consultancy business, while expanding
into new areas such as law and the
digital economy. This is expected to
support continued revenue growth
in 2015 and beyond.
Professional services firms benefit from cyclical bounce
6. Accountancy Age 2014 survey
7. PwC, Deloitte, EY and KPMG 8. PwC 2014 law firms survey
9. Management Consultancies Association, UK Consulting Industry
End of Year Report 2014

9© 2015, CBRE Inc.
Management consulting
drives employment growth
London is a key market for the professional
services sector, for both domestic and
overseas companies. It is the leading
European city for non-European companies
establishing a base in the continent. This
year, Chicago law firm Jenner Block chose
London (Tower 42, EC2) as the firm’s first
office outside of the US, with a managing
partner saying “We see London as a
gateway to the rest of Europe, the Middle
East and Africa.” The 9,000 sq ft office
suggests the firm will quickly build up its
presence from the initial two partners.
US law firm, and tech specialists, Cooley
opened its first office in London at
69 Old Broad Street, EC2 in January 2015.
During the past five years, professional
services employment has increased
by 20%, adding 42,500 new jobs in
Central London according to government
statistics. All of the senior decision makers
consulted for this report stated that their
firm planned to continue to increase
headcount, citing London’s strong
economic outlook as the principal driver.
According to CBRE forecasts, the
professional services sector will grow
by 55,500 jobs between 2014 and 2019.
The strongest growth will be in the
management consulting sector, with
employment forecast to increase by
33%, adding 37,300 new jobs by 2019.
Employment growth in accounting and
legal services is forecast to increase at a
more conservative rate at 12% over this
period, contributing between 8-10,000
new jobs each.
Source: CBRE Research, BRES
ACCOUNTING
12% GROWTH
LEGAL
12% GROWTH
MANAGEMENT CONSULTING
33% GROWTH
2014
2019
68,000
78,500
114,000
76,500
88,200
151,300
8,500
NEW JOBS
9,700
NEW JOBS
37,300
NEW JOBS

10
Professional London
Mid-tier companies will be targets
for future consolidations
For many professional services firms,
company strategy has shifted from
an internal focus, requiring advice on
restructuring, downsizing and survival
to outwards-looking, business expansion
and growth into new markets. However,
professional services firms have been hit by
their clients cost cutting in the years since
2008, placing pressure on fees. This has
led to a sustained period of consolidation,
with many firms choosing to merge with
a rival to achieve scale.
Among the leading accountancy firms,
MA activity has been driven by a push
into the consultancy market, regaining
ground lost when firms sold their
consulting arms to comply with US
regulations implemented in the wake of
the Enron scandal in 2002. PwC bought
strategy giants Booz in late 2013, followed
by EY acquiring top 10 consultancy, the
Parthenon Group in 2014.
In the mid-tier, Moore Stephens announced
its merger with Chantrey Vellacott in April
2015, creating a firm with combined
revenues of £163m. No personnel will
be shed as part of the deal, with the
new entity retaining the name Moore
Stephens post-merger. The firm will
vacate Chantrey Vellacott’s current
office at Russell Square House, WC1,
consolidating into Moore Stephens’
office at 150 Aldersgate Street, EC1.
BDO’s merger with PKF in April 2013
strengthened its 6th place position in the
UK accountancy ranking. Despite being
the only non-Big Four company to audit
a blue-chip company, the firm is not
expecting to start winning audit mandates
from FTSE 100 companies in the near
future. The deal positions the company
to be a contender when the Competition
Commission’s audit reform shakes
through the market in the medium term.
In the legal sector, the number of
mergers jumped significantly, with a
65% increase in 2013.10
Whilst a few
mergers have been white knight rescues
(Dundas Wilson, Lawrence Graham),
the majority were to deliver greater
profitability and competitiveness.
Charles Russell and Speechly Bircham
merged in November 2014 to create a top
30 law firm with revenues of £135m. The
new entity, Charles Russell Speechlys,
will be a significant player in wealth
management. The rationale behind the
deal aimed to create a market-leading firm
providing business law and private wealth
advice internationally. Meanwhile, Norton
Rose’s merger with US group Fulbright
and Jaworski, created a global top 10
player with revenues of $1.9bn in 2013.
Overcapacity in the mid-level legal,
accounting and management consulting
markets is likely to fuel further
consolidation. There is expected to be
further polarisation with large global
and national players at one end and
more specialist niche firms at the other.
Firms falling between the two camps
are likely to find themselves in an
increasingly cut-throat marketplace.
A merger, not necessarily one of
equals, may offer the best route out.
10. Wilkins Kennedy
IN 2013

11© 2015, CBRE Inc.
Deregulation in legal sector
The Legal Services Act allows firms from
outside of the legal sector to apply for a
licence to become an Alternative Business
Structure (ABS), enabling them to offer
legal services. More than 300 firms have
been awarded licences since the Act
was introduced in 2011. Whilst the high
street end of the legal market has seen
the greatest increase in competition,
accountancy firms are encroaching
on some areas of the larger law firms
by adding legal advice to their service
offering. KPMG, EY and PwC all received
licences in 2014 and have increased lawyer
recruitment to bolster their provision.
Where the economy
is growing, we are
diversifying. We have
plans to double the size
of our global operation
by 2020 – this naturally
translates to the UK
as well. We intend to
grow our core business
areas. But we are also
moving into new
sectors such as law,
where we are building
our legal practice.”
Head of Real Estate, professional services firm
Structural change will help reshape the sector
EU audit reforms approaching
The big accountancy firms are experiencing
their own upheaval from EU reforms to the
audit market, which aim to open up the
market and improve transparency.
Listed companies will be forced to
tender audit contracts every 10 years
and change auditors every 20 years.
The Big Four currently audit over 90%
of the FTSE 350 companies. The reforms
will come into force in 2016.
Expansion into
emerging markets
Planning for future growth in London is at
the forefront of many professional services
firms’ business plans. However, there is
considerable emphasis on identifying
and capturing growth opportunities in
emerging markets in Asia, South America
and Eastern Europe. In addition, there
is added pressure to respond to demand
from international clients, who expect their
advisors to match their global footprint.
EY Law is building its overseas presence,
signing an alliance deal with South
Korean firm Apex Legal. This follows
tie-ups with firms in Singapore and China.
The firm also has plans for legal practices
in Hong Kong and Malaysia. Allen Overy
opened an office in Johannesburg making
it the first top-tier law firm to have a
presence in South Africa in its own right.
UK law firm DWF launched a new office
in Dubai in March 2015 to support its
clients in the Middle East and North
Africa region with a local service rather
than servicing the region from London.
It is the firm’s first move outside of
the UK and follows a string of mergers
(Biggart Baillie, Fishburns, Buller Jeffries
and Cobbetts) which has seen the company
grow from a North-West firm with two
offices to a UK-wide firm.
Meanwhile, Dentons became the world’s
largest law firm by number of lawyers
following its merger with Chinese firm
Dacheng in January 2015. The new firm
will have more than 6,500 lawyers in
50 countries. China’s fourth-largest
law firm, DeHeng Law Offices, is now
considering an international tie-up. The
first Chinese firm to announce a formal
merger was King Wood when in 2012
it tied up with Australia’s Mallesons
Stephen Jacques. The predicted flurry of
similar deals didn’t materialise, but with
China’s economy becoming more global,
commentators are once again expecting
more deals involving Chinese firms.

12
Professional LondonProfessional London
12

13
Escalating costs are a key
challenge facing occupiers
from all sectors, including
professional services.
As a result, many firms are focused on reducing
overheads, with property coming under closer
scrutiny. London occupancy costs are high, with
relocation incurring additional expense. Firms
are under pressure to extract the maximum value
out of their office space. This was highlighted in
CBRE’s Future of Work in the Professional Services
Industry survey, in which 83% of respondents
highlighted cost as a driver of workplace strategy.
Planned expansion in headcount will also place
pressure on office portfolios, with many firms
struggling to accommodate growing staff
numbers. As a consequence, workplace strategy is
also overwhelmingly driven by a desire to improve
productivity, whilst attracting and satisfying
the labour force through design, operation and
management of buildings.
We’re taking four walls and a
blank canvas. Property needs
to be more flexible than it
ever has before.”
Paul C Harrington, Real Estate Director, PwC
WORKPLACE
STRATEGY
83%
EMPLOYEE
EFFECTIVENESS
83%
COST
92%
EMPLOYEE
SATISFACTION
33%
SUSTAINABILITY
50%
ENHANCE REVENUE
FOR THE FIRM
75%
CLIENT SERVICE/
PERCEPTION
25%
RELATIVE POSITION
TO COMPETITORS
67%
BRAND
BUSINESS DRIVERS THAT SHAPE
THE WORKPLACE STRATEGY
Source: CBRE

14
Professional London
With revenues on the rise and business
confidence improving, professional
companies have sought to consolidate
positions in established markets such
as London. However, competition for
the best staff is fierce, from accountancy
firms poaching lawyers to bolster their
own legal offering, to law firms luring
IT specialists away from the tech
companies to run digital services,
to more general recruitment to cope
with increased workflow.
People and buildings
Wellness
The importance attached to attracting and
retaining talent is rising. Environmental
rating standards require features such
as natural light and fresh air in an office
environment. However, occupiers are
placing greater emphasis on ‘wellness’,
in which the physical comfort and
performance of the workforce come
to play a growing role in building
production and management. A ‘well’
building should be designed to support
the work / life balance for staff, creating
a healthy environment to increase
productivity and improve their general
wellbeing. The professional services
sector is a great exponent of ‘wellness’,
frequently going beyond providing a
good air conditioning system and a gym,
by providing drinking fountains, food,
sit / stand work settings, break-out space
and by using light fittings that respond
to circadian rhythms, or engaging in
other activities to reduce stress.
Wellness is a massive
initiative for us in
London, as it makes
our people feel more
productive when
they’re at work.”
Real Estate Director, top-tier management consulting firm
Emerging evidence suggests that firms
that adopt ‘wellbeing’ standards benefit
from more than simply attracting and
retaining talent. A productivity gain is
also evident as workers respond to better
working conditions.
11. The Workplace360 initiative, first introduced at the Downtown
LA corporate headquarters, is a free-address and paperless way of
working, with unassigned seating, supported by enhanced technology
that promotes mobility, flexibility, offering staff a choice of work spaces
based on their changing needs and preferences throughout the day. The
space also places a high importance on employee health and wellness;
with more than 50 wellness features integrated into the workplace.
83%
93%
A productivity gain is supported by
CBRE’s Workplace360 initiative,11
which surveyed the staff of its
new Downtown LA corporate
headquarters a year after the
move. The survey revealed that
83% of employees felt more
productive in the new space,
while 93% stated that the new
space had a positive impact on
their business performance.
EMPLOYEE
PRODUCTIVITY
BUSINESS
PERFORMANCE

15© 2015, CBRE Inc.
Planning for the leaders
of tomorrow
PwC / London Business School’s 2013
NextGen study estimates that by 2016, 80%
of PwC’s global workforce will come from
Generation Y (born between 1980 and
1995), so understanding and meeting this
group’s expectations with regard to the
workplace will be key in securing a
contented workforce. Work-life blend
is regularly cited as the most important
factor for Generation Y, they are less
willing to make their working lives their
sole priority, but are prepared to use
technology to work around other
commitments. They want a work
environment that emphasises teamwork,
favouring open-plan layouts and
communal areas over cellular offices.
Older partners
acknowledge that the
young members of staff
are the future pool of
partners and their
desires ought to be
catered for.”
There is also an acceptance that effective
workplace strategy does not revolve
around the needs of a single generation.
A balance must be struck to maximise
productivity throughout the firm. As
part of a company’s change management
strategy, many companies are engaging
with employees about how to best utilise
different types of space.
Signs of this are already evident in the
features and facilities seen as important
to the labour force, with workplace design
and style attracting 73% and 63% of votes
to our survey. Investment in technology
was also deemed important, accounting
for 91%. Interestingly, the central factor,
highlighted by all respondents, was
location. This plays a peripheral role
in recruitment as a firm’s reputation
and benefits are considered to be more
important in attracting staff. However,
locating in a vibrant area that is easily
accessible for staff has been shown to
improve morale and boost productivity
in the workplace.
ASPECTS THAT ATTRACT
AND RETAIN TALENT
Source: CBRE, Future of Work in Professional Services Industry Survey
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
LOCATIONTECHNOLOGYWORKPLACE
INTERIOR DESIGN
STYLE AND AESTHETICS
OF THE BUILDING
FACILITIES
(E.G. GYM, CANTEEN)

16
Professional London
Consultants would
rather have 10 different
choices of desk rather
than one.”
Encouraging collaboration and facilitating
new ways of working has become an
important driver in the development of a
real estate strategy. However, requirements
can differ considerably across sectors.
Attendees at CBRE’s Professional Services
Workshop: the Future of Work stated that
companies need to be strategic in their
choice of space as the nature of the work
undertaken will dictate the type and
design of space required.
Accounting and management consulting
firms are engaged with significant amounts
of project work across a range of teams,
which requires flexible, open-plan space.
Indeed, some attendees, particularly from
the consulting sector, highlighted that up
to 70% of their company’s office space
was dedicated to collaborative areas.
When PwC refurbished Embankment Place,
the cellular offices were replaced with a
largely open-plan floorplate, with additional
breakout spaces, drop in centres, meeting
rooms and quiet spaces for uninterrupted
work. At present, around 45% of PwC’s
space is set aside for collaborative, seminar
and restaurant space. The company
operates an unassigned seating policy
that requires employees to pre-book a
desk via a centralised booking system.
As agile working has become more
accepted, employees have indicated that
they view their space as being much more
than just a desk, opening up more of the
building for collaboration. BDO’s London
headquarters on Baker Street is open-plan
with a hotdesking policy that extends to
the managing partner.
A lawyer’s office is seen
by clients as a safe haven,
a confidential place
where they can meet
and do deals without
others listening in.”
John Neville, Head of Facilities, Herbert Smith Freehills
Firms engaged in accounting and
management consulting exhibit higher
levels of agility compared with their legal
counterparts, often working remotely
either at home or in client offices. In
contrast, lawyers tend to require more
quiet space in which to concentrate.
Nonetheless, law firms are heavily
engaged in strategies to improve
workplace efficiencies.
We create space that can
be used for a multitude
of different purposes.”
In particular, there is much debate
around the contrasting merits of cellular
and open-plan working. Opinion remains
divided on whether open-plan working is
more cost effective and actually saves on
space. There are also cultural factors to
consider, with many firms reluctant to
break with tradition. To date, the majority
of the top-tier UK and US law firms have
opted to remain cellular, but still plan
to use their space more efficiently by
increasing densities. However, attitudes
are changing across the sector with more
firms showing a willingness to commit
time and resources to assess the potential
benefits of open-plan working. A number of
firms, such as Pinsent Masons, Fieldfisher
and CMS Cameron McKenna have made
the switch to open-plan working, citing
the improved flexibility to accommodate
expansionary growth as a key driver
behind the change.
Space that promotes collaboration

17© 2015, CBRE Inc.
Technology the enabler
Around 82% of respondents to our survey
cited technology as the enabler for greater
collaboration and flexible working; while
over 90% anticipated that technology
would continue to have a major impact
on how business was conducted in future.
This view was supported by those that
attended our Professional Services
Workshop. In particular, attendees
identified the growing use of mobile
devices and access to virtual desktop
access to assist flexible working, in
addition to attracting the best talent.
Law firm investment in technology has
focused on document management and
billing systems, websites and software. At
DWF’s new offices at 20 Fenchurch Street,
incoming mail is scanned in accordance
with the firm’s increased focus on paperless
working, requiring a much smaller
mailroom. Accountancy firms, meanwhile,
are using new generation technology for
leading edge data analytics to support
audit work. The driver behind investment in
technology is to increase firm’s efficiencies.
At KPMG, £20m of profits were withheld
for investment, primarily in technology.
New business structures are emerging,
such as online only US law firm Rocket
Lawyer which has opened an office in
London’s tech city. Clifford Chance
has acknowledged technological
developments and new market entrants
as key change catalysts in the firm’s new
strategic plan that puts innovation and
change at the centre of its business
plan for future growth.
IMPORTANCE OF SPACE TYPES IN THE OFFICE
Technology can be relatively straightforward in terms of what teams
need when they are working within the space. We’re very much of
the mind-set of keep it simple and make it something that requires
limited human intervention.”
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
To meet and work with
my team members
In which I can think
and focus on getting
my work done
To hold one on one
phone calls
To have a video
conference
To network with
colleagues outside
of the team
To have private face
to face conversations
with colleagues
Source: CBRE

18
Professional London
DensityConsolidation
Firms will use space more efficiently,
resulting in consolidation into fewer
London offices.
Workspace densities are expected to
increase to 1.75 people per desk among
accounting and consulting firms, but
legal occupiers will continue to provide
one desk per person.
5 key future trends
to monitor
THE OFFICE
OF THE FUTURE
18
Professional London

19© 2015, CBRE Inc.
Agility
More agile working among accountancy
and management consulting firms.
This includes more hot-desking and
remote working (either at home or at
a client’s office).
Collaboration
There will be a need for more
collaborative space to support agile
working, with a greater proportion
of a company’s space assigned to
breakout and touch down space.
19© 2015, CBRE Inc.
Small satellite touch down offices in
key locations, such as Mayfair and
Shoreditch, that could be used for
internal and client meetings.
Satellite offices

20
Professional London
We are moving into
an era of stage
managed space.”
We asked attendees at the Professional
Services: the Future of Work workshop and
interviewees how workplace strategy
would change over the next five years.
The responses by accounting and
management consulting firms all
followed a similar theme: there will be
a need for greater flexibility and more
space assigned for agile working. Across
the professional services sector, there is
a general recognition that as property
becomes more expensive and headcount
starts to exceed capacity, efficient space
utilisation will become a greater priority.
Currently, accounting and management
consulting occupiers occupy on a basis
of around 1.25 people per desk, requiring
c. 108 sq ft per person. In five years’ time,
we expect this to increase to around 1.5
to 1.75 people per desk as workplaces
become more flexible. In some cases,
such as consulting, where fee earners
spend the majority of their time with
clients, occupiers could pursue an even
more aggressive space utilisation
strategy with two people per desk.
Legal occupiers typically provide
assigned seating, with one person
per desk. The CBRE Legal 100,12
which
benchmarks the occupational profile
of the 100 largest legal occupiers in
London by space occupied, shows
that the average area per fee earner is
currently 490 sq ft. The drive for more
flexible working is a clear aspiration for
the legal sector. However it will be less
aggressive compared with accountants
and management consultants. Our
expectation is that by 2019, some legal
occupiers will have moved to a more
flexible mode of occupation, perhaps
even occupying on the basis on 1.25
people per desk. However, the majority
will provide one desk per person.
Technology is going
to have a major role
to play, as it allows
us to work anywhere.”
Unsurprisingly, technology was cited as
an essential component of the evolution
towards more flexible working. There is
an acceptance, however, that for many
professional firms, their technological
aspirations are restricted by their
resources. Specific technology is seldom
compatible between different departments,
meaning that comprehensive upgrades
come as a package rather than a single
piece of technology, thereby adding to the
cost of investment. Furthermore, in most
cases, upgrades must be made within
the limits of the company’s existing IT
infrastructure. As a result, most companies
intend to better utilise mobile technology,
investing in tablets, smart phones and
cloud technology.
ACCOUNTING/
MANAGEMENT
CONSULTING
LEGAL
We considered everything but I think hot-desking is a step too far for a legal
practice. Compared to the big accountancy practices, our lawyers spend more
time in the office than out with clients so there just isn’t the same incentive
to have fewer desks than people.”
Douglas Peniston, Operations Director, Fieldfisher
12. Law in London, CBRE 2015

21© 2015, CBRE Inc.
Some firms raised the possibility of
rationalising their London portfolio into
fewer or a single Central London office,
although in general a London headquarters
was still required as a central strategic hub
to collaborate between teams and service
clients. This would mark the continuation
of a trend seen in recent years. In 2010,
KPMG, consolidated its five London
offices to just two at 8 Salisbury Square
and 15 Canada Square.
I suspect we won’t
have that much more
office space in five
years’ time as we will
use what we’ve got
more effectively. I’d be
very surprised if in 10
years’ time, we weren’t
operating out of one
London office.”
Scott Barnes, Chief Executive Officer, Grant Thornton
In some cases, firms have used a lease
event to downsize into a more efficient
building, as was the case when CMS
Cameron McKenna took 140,000 sq ft
at Cannon Place, EC4 in 2013, relocating
from 190,000 sq ft at Mitre House, EC1.
As part of its relocation, the firm will
move to open-plan working, allowing it
to house 10% more staff. Fieldfisher’s
shift to flexible working was one reason
behind the firm cutting its floorspace by
a third when it moved to new premises
at Swan Lane, EC4.
It was suggested that some firms may opt
to open a small satellite office that would
act as drop in centres for staff to conduct
internal and client meetings. A recent
example saw KPMG lease 37,300 sq ft
at 20 Grosvenor Street, W1. The space is
predominantly client facing, with meeting
rooms, client drop-in space and catering
facilities and is designed to service the
company’s high net worth clients. Other
examples have seen KPMG and Deloitte
acquire small, client facing units in
Shoreditch at 64 Great Eastern Street, EC2
and the Buckley Building, EC1 respectively.
Both offices have been opened to service
the tech start-up community, which is
clustered around Silicon Roundabout.

23© 2015, CBRE Inc.
ASSESSING FUTURE DEMAND
FOR OFFICE SPACE
Since 2008, professional service firms
became more cautious about committing
to real estate decisions, with many
choosing to remain in situ and utilise their
existing space more efficiently. This was
reflected by a sharp fall in the number,
size and volume of deals, with professional
services take-up averaging around 0.8m sq ft
per annum between 2009 and 2012, well
below the 10-year average of 1.3m sq ft.
Leasing levels have improved significantly
during the past two years, with take-up
averaging around 1.2m sq ft in each year,
but have yet to reach the levels last seen
in 2008 (1.3m sq ft). During this period,
the legal sector has been most active,
accounting for 67% of the space let.
The upturn in demand was driven by
structural demand resulting from lease
events. Occupier decisions to relocate
were also underpinned by a significant
improvement in occupier sentiment,
supported by the wider economic recovery.
Take-up during this period was driven
predominantly by consolidation, as was
the case with CMS Cameron McKenna
and Fieldfisher. Another example saw
HowardKennedyFsi, the result of a
merger between law firms Howard
Kennedy and Finers Stephens Innocent,
consolidate three West End offices into
a new 54,600 sq ft headquarters at
1 London Bridge, SE1 in 2014.
There were also several examples of
firms expanding, such as EY, which
pre-let 205,000 sq ft of expansion space
at 25 Churchill Place, E14. The firm plans
to retain the use of its existing office at
Becket House, 1 Lambeth Palace Road, SE1.
Similarly, Mishcon de Reya acquired an
additional 116,400 sq ft at Africa House,
WC2, located within close proximity of
its existing space at Summit House, WC1,
where it occupies 45,500 sq ft. In addition,
KPMG is to move 1,100 staff to the
Docklands, following the acquisition of
205,300 sq ft at 30 North Colonnade, E14
in 2013. The firm will vacate its 119,700
sq ft premises at Salisbury Square, EC4
when its lease expires in 2015.
Demand driven by consolidation
CENTRAL LONDON TAKE-UP BY SECTOR
Source: CBRE
0.1 0.1
0.3
0.8
0.1
2009 2012 2013 2014
0.8m
sq ft
1.2m
sq ft
0.6

24
Professional London
The outlook for the professional services
sector is very positive, reflected by robust
employment growth over the next five
years. In total, we anticipate 55,500 new
jobs to be created, led by the management
consulting sector. In theory, this equates
to a potential requirement for 5.1m sq ft,
based on a professional services industry
average of 108 sq ft per person (net of
1.25 people per desk). That professional
services firms are expected to undertake
aggressive strategies to utilise their space
more efficiently, means that this figure
appears somewhat optimistic. The legal
sector, in particular, remains in a period
of transition, with firms placing greater
focus on cutting real estate costs.
Rising occupational costs mean that
where possible, increases in headcount
will be accommodated within a
company’s existing portfolio, with
occupational densities predicted to
rise to 1.75 people per desk at some
accounting and management consulting
firms. Furthermore, technological
improvements and a preference for agile
working, means that consultants are
expected to spend more time working
offsite, either at home or at client offices.
This means that demand for additional
office space will be less than the
employment numbers suggest.
Serviced office space a solution
for short term requirements
Serviced and managed office space is one
option open to professional services firms
requiring short-term overspill space. In
recent years, there has been an upturn in
demand, particularly for serviced offices,
from a wide spectrum of professional
services occupiers. The benefits associated
with this are that it provides added
flexibility without committing occupiers
to a long lease. In some cases, however,
a more permanent solution is required.
Firms to accommodate rising headcount in existing portfolios
ACCOUNTING
LEGAL
MANAGEMENT
CONSULTANCY
Accounting and
consultancy firms
are looking at flexible
working solutions both
in terms of how they
occupy but also the
type of lease structures
they take. Serviced and
managed solutions
provide that flexibility.”
Simon Hempsall, Director, The Instant Group
CENTRAL LONDON
PEOPLE PER DESK:
1.25
1
1.25
1.75
1
1.75

25© 2015, CBRE Inc.
Outsourcing remains a key
option for cost reduction
Cost control was cited as the third most
important route for firms to enhance
profitability in 2015, behind organic
growth and lateral hires, according to
Smith Williamson. One option for
controlling overheads is to move certain
functions to locations where it is possible
to deliver the service at a lower cost
(both people and property).
The initial race for low-cost centres led to
full-scale overseas outsourcing to cheap
locations. This quest for a bargain is now
considered a step too far and firms feel
happier with the near-shoring or north-
shoring option of using a centre located
outside London which offers cheaper
property costs and salaries. The need for
a skilled labour pool has focused location
choice to the larger regional cities, typically
Birmingham, Manchester, Glasgow or
Belfast. Just 6% of respondents of the Smith
Williamson survey had outsourced
functions overseas in 2014, whilst 14%
expect to outsource functions to regional
UK offices in the coming 12 months.
Once suitable functions have been
identified for outsourcing, larger firms
must choose between using a specialist
outsourcing company, such as Axiom or
Integreon or setting up their own back
office service centre. Allen Overy was a
trailblazer back in 2001 when it opened
its Belfast support centre. The centre
continues to grow in size with headcount
planned to increase to 500 by 2019. Belfast
is also home to Baker McKenzie and
Herbert Smith Freehills’ global service
centres, while EY and Deloitte have
also opened support centres recently.
Elsewhere, Freshfields is considering
moving back office workers to a
Manchester service centre which would
house up to 300 employees by 2017.
Ashurst’s low-cost support centre in
Glasgow currently employs 120 people
and is on target to receive £2.4m in public
funding if it reaches 300 staff in five years.
Firms are beginning to widen the remit of
these centres, expanding from back office,
support tasks to fee earning work. Hogan
Lovells is planning to double its lawyer
count in its Birmingham legal service
centre to 40 by the end of 2015. Deloitte’s
centre in Belfast is also a hub for its
analytics and digital services department.
An option pursued by law firms, is to set
up their own flexible resourcing divisions.
These allow firms to meet spikes in
demand for lawyers at peak periods.
Allen Overy’s flexible resourcing arm,
Peerpoint, was established in 2013 and
went international in February 2015 when
it launched in Hong Kong. Pinsent Mason’s
service, Vario, vastly outstripped original
expectations in its first 18 months, leading
the firm to double its fee income target.
We’ve been moving
back office and
support functions
(particularly out of
London) to lower cost
environments such as
Belfast, Northampton
and Southampton.
This is likely to be a
strategy that we will
continue to employ
in future.”
Scott Barnes, Chief Executive Officer, Grant Thornton

26
Professional London
With business sentiment expected to
continue rising, we anticipate a greater
willingness among professional services
occupiers to exercise lease events. There
is 6.8m sq ft of breaks and expiries in
buildings over 10,000 sq ft scheduled
from 2015 to 2021, of which 4.9m sq ft
is made up of legal occupiers. So a large
proportion of the structural demand will
come from the legal occupiers, who for
the past few years, have used lease events
as an opportunity to downsize, and/or
pursue a different mode of occupation
through a relocation.
More efficient use of space means that
many firms will try to accommodate
rising employee numbers within their
existing premises. Firms utilising higher
workplace densities will need to
compensate for the lack of individual
space per employee by providing more
breakout areas to promote agile working,
collaboration and improve morale. This
will inevitably lead to some occupiers
requiring more space. However, the cost
of acquiring additional space means that
many firms will delay decisions to
expand until a break or expiry.
Competition from within the wider
market for a limited supply of quality
space is expected to intensify over the
coming year, leading to further rental
growth across Central London. This is
expected to hasten searches for new
space, whilst market conditions are
more favourable to occupiers.
Relocation driven by lease events
CENTRAL LONDON PROFESSIONAL LEASE EVENTS:
FIRST BREAK / EXPIRY, 2015-2021
ACCOUNTING
0.8M SQ FT
LEGAL
4.9M SQ FT
MANAGEMENT CONSULTANCY
1.1M SQ FT
Source: CBRE

27© 2015, CBRE Inc.
Identifying the next
professional services locations
A firm’s choice of location is dictated
predominantly by cost, availability of
suitable stock, proximity to clients and
staff, proximity to both local and
international transport hubs. Accounting
and legal occupiers’ preference for lower
cost locations near banking and corporate
clients has seen them gravitate towards
the City, Holborn and non-core areas in
the West End. In contrast, management
consulting firms have demonstrated a
greater willingness to acquire space in
high cost locations, such as Mayfair and
St James’s, in order to locate near their
hedge fund, private equity and oil
company clients.
The relative cost position of these
markets is becoming more dynamic as
new infrastructure projects, public realm
initiatives, a spate of new development
and a greater willingness from occupiers
to relocate re-defines the London
office market.
As a result, occupiers in lower cost locations
will find their occupational outgoings
increase as rental growth accelerates and
the effect of the rating revaluation comes
into effect in 2017. For example, average
grade A occupational costs in locations
such as Farringdon and Shoreditch are
forecast to increase by 45% from 2014 to
2018 to around £92.50-£104.50 per sq ft,
compared with 23% in areas like the
City core (£100.00 per sq ft).
Historically, legal and management
consulting occupiers have paid higher
rents than their accounting counterparts.
This trend has continued during the past
two years, with legal services paying on
average £55.00 per sq ft and management
consultancies £52.00 per sq ft compared
with £48.50 per sq ft by accounting firms.13
For some cost conscious professional
services occupiers, it may make some
previously affordable locations too
expensive, displacing demand into
new areas. Evidence of this displacement
is already apparent, with the relocation of
law firms HowardKennedyFsi and Boodle
Hatfield from the West End to Southbank.
Location and quality
of the building are
important because
you want people to be
proud of where they
work. Buildings are
also important tools for
interacting with clients.”
Paul C Harrington, Real Estate Director, PwC
Connectivity will also play a key role,
consolidating mature locations such as
Canary Wharf, while establishing new
locations such as Stratford, which will
benefit from the introduction of Crossrail
in 2018. Business growth into new sectors,
such as technology, means that some
professional services occupiers might
relocate to previously fringe areas, such
as Shoreditch to be near their new client
base. New development around silicon
roundabout would provide high
specification office space that would
promote flexible working, in close
proximity to a large cluster of
creative industries.
On the other hand, the inherent
advantages of certain locations, offering
excellent transport links, a range and
diversity of amenities and uses, and the
proximity of similar companies means
that for some occupiers the benefits far
outweigh any potential cost increases.
Our expectation is that the latter will
prevail, with the majority of professional
services firms choosing to remain in
and around their current location.
13. KPMG paid £125.00 per sq ft for 37,300 sq ft of pre-let space at
20 Grosvenor Street in Q2 2014, however this deal marks an exception
rather than the norm.

28
Professional London
Strong demand for office space by
professional services occupiers over the
next five years will be driven by robust
employment growth and a large volume
of forthcoming lease events. An
anticipated wave of consolidations within
the sector will also create the potential
for additional demand.
As firms expand and also contend with
increased competition, the issue of cost
control will remain of critical importance.
However, the recruitment and retention of
staff is perhaps even more critical.
Fortunately for occupiers, the appropriate
workplace strategy can serve to fulfil
these goals simultaneously.
92% of respondents to CBRE’s survey on the
Future of Work in the Professional Services
Industry use workplace strategy to enhance
employee satisfaction, and 83% of firms
use it as a means to control costs. As part of
their strategies, professional services firms
are placing an increasing emphasis on a
new concept defined as ‘wellness’.
Evidence suggests that adoption of
‘wellness’ standards have a positive
impact on employee productivity and
business performance.
Professional services firms have been
at the vanguard of deploying new and
innovative workplace strategy. Faced with
new challenges, we believe that five key
trends will shape the sector going forward.
•• Professional services firms in Central
London will consolidate into fewer
offices – merger and acquisition
activity within the sector will
accelerate this trend.
•• As workplaces become more flexible,
accounting and consulting firms will
move to 1.75 from 1.25 people per
desk. In contrast, legal occupiers will
continue to provide one desk per person.
•• Agile working will become more
common among accountancy and
management consulting firms. This
includes more hot-desking and remote
working. Firms will need to make the
appropriate investment in technology
to facilitate this new style of working.
Although in some instances, high costs
of adopting the required technology
may well be a constraint.
•• There will be a need for more
collaborative space to support agile
working, with a greater proportion
of a company’s space assigned to
breakout and touch down space.
•• Professional services firms will use
small satellite offices in key core
locations for internal and client
meetings. For firms following this
option, it will be accompanied by a
re-location to a lower cost location
providing a similar level of amenities,
transport connectivity and quality of
office accommodation. This strategy
will go hand in hand with outsourcing
– with the recent focus around near-
shoring in key UK regional cities
rather than abroad.
There is not a one-size fits all workplace
strategy to cover the whole professional
services sector. Instead the strategy
needs to be decided on a case-by-case
basis. However, it is clear that
professional services firm are pioneering
new workplace strategies as they respond
to the changing business environment,
and also make choices on real estate to
attract and retain staff.
CONCLUSION

CONTACTS
Central London
Robin Wickham
t: +44 20 7182 2718
e: robin.wickham@cbre.com
John Kent
t: +44 20 7182 2419
e: john.kent@cbre.com
Strategic Consulting EMEA,
Professional Services
Lisa Shaforostova
t: +44 74 6344 8974
e: lisa.shaforostova@cbre.com
Research
Kevin McCauley
t: +44 20 7182 3620
e: kevin.mccauley@cbre.com

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