Law firm's space search highlights need for creativity in today's market.

To deal with its space search, law firm Fragomen, Del Rey, Bernsen & Loewy has prepared itself to be flexible. The firm may decide to renew the lease for its existing offices or relocate to a new building, gut its space and build it out from scratch, or simply slap on a new coat of paint and change the car pet, consolidate into a contiguous block of floors or remain scattered.

It's not as if the firm doesn't have its preferences, the question for Fragomen, and the many other firms like it that are seeking space, is how those preferences will conform to what's available in the midtown office market, where vacancy rates have plummeted and rents have risen precipitously. The challenge is especially great for firms whose space needs are more specific than the average tenant's, requiring certain amenities or a particular layout or location because of the role that real estate plays in that company's internal hierarchy or organization. "For a firm like them, it would be ideal if they could build offices specifically for their partners and then have different offices for associate partners and then support staff, have the facility organized in a way that supports the culture and operation of the firm," said Cushman & Wakefield executive director Don Preate, who is representing Fragomen in its search for space.

At the very least, Fragomen is interested in updating its offices at 515 Madison Avenue, the midtown office building where the firm has had space for 40 years. Its offices are spread over a number of floors, not all of them contiguous, and its need for expansion room would likely mean another disconnected floor in the building. Although Preate said the firm is considering a renewal, the building's ability to accommodate its growth will play a key role in determining if the company does in fact stay.

Many growing firms can do with expansion options, which allow the tenant the right to expand at a specific point in the future, but Fragomen needs the extra room immediately if it is to stay at 515 because it would use the space as a temporary home in which to relocate its staff while it renovates its existing offices. After that, it would slowly grow into the new space.

But that's if the firm decides to stay in the building. Perhaps the better route is to search for space in a new location where the firm could unite its floors and carry out a renovation while the space is still vacant. After all, 515's landlord is planning to remeasure the firm's space, which means that Fragomen will have to not only pay higher rents per square foot if it renews its lease, but actually pay for more square feet as well. The extra square footage comes in the way of added lobby and stairwell space that is tacked on to the rentable square footage, a privilege landlords are able to exercise during times when the market is tight. But then, with the market as tight as it is, will Fragomen even be able to find proper replacement space within the company's budget when Class A space now routinely trades at or above $100 per s/f? Such are the looping questions that come up as a result of the increased considerations and evaluations a tenant and its broker need to ponder and the list of contingencies they need to prepare for in a market as complex as the current one.

"It's a great challenge when you have a great firm like Fragomen who are a juncture where they can remake themselves and invigorate the company by putting together new offices, whether it's in their existing building or in a new property," Preate said. "And standing in the way is the high cost of office space now and the limited availabilities. It really requires the broker to be out there in the market and to be as creative as possible to find the right solution."