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Elite New York law firm Cravath will abandon its wood-panelled offices in Midtown Manhattan for the up-and-coming Hudson Yards development on the island’s west side on Monday, amid an exodus from the neighbourhood that has long been home to some of the city’s biggest legal names.
The 205-year-old firm’s move follows similar westward shifts from rivals including Cooley, Skadden Arps, and Debevoise & Plimpton, and is a further blow to the area that once formed Manhattan’s corporate core, which is struggling to fill empty skyscrapers. Vacancy rates in Midtown surged to a historic high of almost 23 per cent in the first three months of the year, according to a report by real estate firm Cushman & Wakefield.
“The pandemic has been particularly hard to parts of Midtown,” said Cravath partner David Perkins, who is also co-head of the firm’s private equity practice and helped orchestrate the move. After lockdown ended, “you saw the dearth of activity during the day and the knock-on effects of that lack of activity in terms of restaurants, retail, et cetera,” he added.
Cravath, one of the most prestigious names in American law, made the initial decision to leave Midtown, its home for 35 years, before Covid-19 broke out. Becoming an anchor tenant at Brookfield’s Two Manhattan West, a sleek, 58-floor glass skyscraper built on once-deserted land near New York’s Penn Station, was an opportunity to create a “21st century work environment”, Perkins said, meeting the demands of younger attorneys.
Departures from the so-called white-shoe firm were once a rarity, but Cravath has been facing stiff competition from high-paying, commercially-minded rivals, and has recently lost star performers to Kirkland & Ellis, Paul Weiss and Latham & Watkins, among others. Last year, Cravath overhauled its so-called “lockstep” pay model, creating a non-equity partnership tier that allows it to remunerate more junior staff as they come up.
Some senior partners, who commute from upstate New York to midtown Manhattan’s Grand Central Station, have baulked at their firms’ moves west. But younger lawyers used to working from home need incentives to come into the office, Perkins said, leading the firm to embrace a “modern, open, more collaborative office environment” in an energising locale.
The new space, for which Cravath has signed a 20-year lease, includes an onsite café and “Barista Bar”, a “lactation suite” for mothers and common areas with panoramic views of Manhattan’s skyline and the Hudson River. It will allow the firm to pursue a “hands-on mentorship approach” and “re-establish that human connection” between partners and associates, Perkins said.
Cravath was also attracted to the area by other “marquee blue-chip tenants” including KKR, he added. EY and Amazon are in the vicinity, as are law firms Milbank and Boies Schiller. Clifford Chance is in the process of moving across.
Many white-shoe firms were initially based around Wall Street to facilitate clients in high finance. But they moved to Midtown in the 1980s, lured by the area’s cultural and economic revival. Despite its current woes, several big names have recently committed to the district, with Paul Weiss signing the largest commercial office lease in the country last year, taking more than 18 floors of a refurbished Avenue of the Americas skyscraper.
Cravath’s Perkins is not swayed by such counterweights. “We’re going to be operating in a corner of the city that’s very much new and vibrant,” he said. “While our old neighbourhood is, you know, the opposite.”
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