There were a total of 54 real estate transactions involving nonprofit groups and government agencies in Manhattan during the first half of 2010, according to a report prepared by the brokerage firm Cassidy Turley. In total, the groups signed leases for 1.5 million square feet of space during the period.
The large majority of nonprofit leasing activity was concentrated in high-value Class B and B+ office buildings in Midtown South and Downtown: 11 transaction in the Penn Plaza/Garment Center submarket, 9 transactions each in the Chelsea and Grand Central submarkets, and 10 transactions Downtown.
Significant nonprofit human service provider groups signing leases included:
• Gay Men’s Health Crisis, 167,000 sq. ft. at 450 West 33rd Street
• Bowery Residents’ Committee, 104,000 sq. ft. at 127 West 25th Street
• SKIP of New York, 42,218 sq. ft. at 601 West 26th Street
• Vera Institute of Justice, 27,845 sq. ft. at 233 Broadway
• New York Blood Center, 26,000 sq. ft. at 125 Park Avenue
• The Blue School, 20,078 sq. ft. at 51 Astor Place
• Beth Israel Medical Center, 14,396 sq. ft. at 245 Fifth Avenue
• NFTE, 14,188 sq. ft. at 120 Wall Street
• Chess in Schools, 10,000 sq. ft. at 520 Eighth Avenue
• Susan G. Komen Breast Cancer Foundation, 7,000 sq. ft. at 470-472 Seventh Avenue
Leasing volume was distributed fairly equally between the first and second quarters of 2010. The large majority of groups landed at high-value Class B and B+ office buildings in Midtown South and Downtown. The survey reported 11 transactions in the Penn Plaza/Garment Center submarket, 9 transactions each in the Chelsea and Grand Central submarkets, and 10 transactions Downtown.
"Our feeling is that this was quite a lot of volume," says Robair Reichenstein, Managing Director at Cassidy Turley. He went on to add, however, that "many agencies are in flux right now due to lack of government funding. People are still on the sidelines waiting for a higher level of confidence."
Despite – or perhaps because of -- this uncertainty, there are significant opportunities available for groups currently seeking new space, say the brokers. "Nonprofits tend to be counter-cyclical to the economy," says David Lebenstein, Sr. Managing Director, Principal. "When the market was very hot, before Lehman Brothers, there were not many transactions in the nonprofit world. Now that prices have come down, there are more opportunities."
"The real opportunities may be downtown," says Reichenstein. "There are some very large blocks of space coming back on the market as corporations and governments downsize. That means that prices are going to decrease in Class ‘A’ buildings. It is a waterfall. As a result, Class ‘B’ buildings are going to feel pricing pressures. That helps nonprofits."
The brokers at Cassidy Turley believe that this trend could continue all the way through 2013.