Go South, Nonprofits: A Guide to Grabbing Some of Manhattan’s Cheapest Commercial Space

As the costs for commercial real estate in New York City approach and in some cases eclipse the highs of 2007, nonprofits looking to take additional space or renew leases are often dumbstruck with sticker shock and unsure what to do. If you signed a lease ten years ago at $18 per square foot and your landlord is telling you a renewal will run you $50 or more, you need some Advil and some answers. We can help with the latter.

Nonprofits always have to create a balanced office environment that is nice (in line with the needs of the employees and donors) but not so nice that it appears lavish. Ultimately, everything is driven by the mission and an extra dollar in rent means one less dollar for programming.  So, with respect to office space, the first questions any nonprofit should ask itself are: where should we be and what will it cost?  And the answer is: if you’re a nonprofit in Manhattan and you are not south of Chambers Street, you should be. There are of course a few good reasons to be north of Chambers Street, but not many.

Downtown Manhattan, also known as  the “Financial District” or “Insurance District,” is located East of Broad Street It is where you will find the cheapest rents in Manhattan. Currently rents in this area are in the $30-45 per square foot range. In addition, there are a host of incentive programs specific to Downtown that provide an additional $10 per square foot of cost savings over a five year term.  

Economically, there is no cheaper place to go in Manhattan than Downtown. But it's not just about dollars and cents or we’d all be in Jersey. The question is, do you want to spend your days Downtown? We say yes. Culturally, downtown is on the rise. The mix of tenants choosing downtown has become more dynamic than ever with companies in media and technology and other industries that have traditionally shunned this area going there for the cheaper rents, water views and old buildings with great bones. And with young, hip companies calling downtown home, the quality and variety of retail and food options is getting better and better.  Add to this great transportation options and it’s hard to argue with Downtown as the destination of choice for nonprofits.  

Ok, so maybe you’re sold on Downtown, what’s next? In planning a move it’s important to give yourself enough time. How long does it take? For most, plan for at least 6-9 months. It’s going to take about a month to find space and negotiate basic business terms. Then it’s going to take a month or two to negotiate the lease document. And finally it will take 4-6 months to build space, should the space need to be built from scratch, or a month or two if the scope of construction is paint, carpet and move a few walls. If you have a space you like and just want to renew your lease, you still want to start discussions a year or so before your lease expires. You don’t want to be caught in a position where you realize you didn’t get the deal you wanted and now you don’t have enough time to move.

What else should you know? Depending on the financial strength of the nonprofit, it is likely that you will have to post the equivalent of 4-6 months rent as a security deposit. It should be possible to have some of this “burned down” over the course of the lease. Typically we expect to have a month of security returned after 2-4 years of steady rent payments and perhaps another month returned after another year or two. 

What about real estate taxes? Unfortunately, nonprofits leasing space are typically responsible for their portion of a building’s increases in real estate taxes.  This means that if the taxes this year, for example, are $1000 dollars for the building and they go up $100 in the next year, you will only be responsible for your portion of the increase. So if you have 10% of the building, you’ll pay 10% of the increase, or $10 dollars in real estate taxes in year two of your lease. The only time a nonprofit does not pay real estate taxes is if you own your property or you’re in a building with all nonprofit tenants, but at this point, there are very few buildings that meet this second criteria.

Now if you are lucky enough to own your own space, you may want to consider a sale-lease back deal or a straight out sale of the real estate and move into a leased option. The Girl Scouts did this recently and converted millions of dollars of equity into working capital.

Though Manhattan is far from cheap, it remains a great place to work. If approached the right way, with a broker who knows what they’re doing, nonprofits will continue to thrive in New York City – particularly south of Chambers Street.

 

Jane Brody is the head of Vicus Partners’ Nonprofit Division. She has also done consulting work with Ben & Jerry’s, UNICEF, the American Red Cross, Coca-Cola, and the Special Olympics. Andrew Stein is a founding principal at Vicus Partners, where he has negotiated on behalf of Mount Sinai Hospital, The Leukemia and Lymphoma Society, the World Lung Foundation Children’s Defense Fund, and many others in the New York Metro area.

 
X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.