Law firms' record leasing points to a narrow office recovery

Law firms just gave the office recovery a tenant class lenders can underwrite, signing a record 12.2 million square feet of U.S. office leases in the first half of 2026 — up 17% year over year, per Cushman & Wakefield data first reported by Bisnow. The second quarter alone produced 7.3 million square feet, 23% above the previous quarterly high set in the fourth quarter of 2024.

At that pace, the sector is on track to clear last year's full-year total of 18.8 million square feet, with legal leasing accounting for 14% of demand in the ten largest office markets Cushman tracks. The surge has helped push net U.S. office absorption to positive 14.3 million square feet over the past twelve months, a real chip at a vacancy overhang that remains very large.

The demand is coming from the top of the profession: AmLaw 100 firms signed nine of the ten biggest leases of the quarter, and 43% of the sector's year-to-date deals were expansions, a reversal for a tenant class that spent years cutting space under remote work and digitized libraries. Revenue growth averaged 12.4% in the first half, up from 11.2% a year earlier, per Reuters, and that helps explain why profitable firms add offices rather than cut them. Corporate profits rose 9.1% quarter over quarter, and consumer spending carried annualized GDP growth to 1.5% in the second quarter, per Haver Analytics and BEA data cited by Bisnow.

The geography tells the narrower story. New York, Washington, and Chicago together took 52% of legal leasing in the quarter, with New York alone at 2.2 million square feet, 30% of activity in the report. Demand is spilling out of New York and Chicago into smaller markets, even as the headline volume still concentrates in the three largest metros. Cushman tied the deal count to AI firms' appetite for growth, suggesting the same capital cycle fueling the data center buildout is now writing law-firm leases in the densest downtowns. So the recovery is top-of-market: the highest-rent markets are absorbing the growth while the rest of the stack waits for its buyer.

For lenders, the record is the demand-side shape of the office clearing trade. Office is being priced trade-to-trade now, and the law-firm binge says which buildings are producing income: the towers landing AmLaw leases carry the credit to refinance. That makes the underwrite a portfolio story — buy the buildings with the law-firm lease roll, discount the ones waiting on the broad return. The commodity stack still clears at whatever floor the local, vacancy-tolerant buyer sets, and a 14% share of demand in ten markets, however historic, is not that rescue.