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April 20, 2014; Crain’s New York

NPQ has written a number of newswires on the fact that many nonprofits with their own buildings are selling them for high prices in a commercial real estate market that is over the roof. Unfortunately, the same dynamic is creating a rent crunch for many other organizations.

The Touro College and University System has been looking for new space for two years, and it has only three more months to find 300,000 square feet of space in Manhattan at a price they can afford. Dr. Alan Kadish, president and chief executive of the nonprofit school, said that rents have gone up significantly, due in part to new technology firms that are competing for space in loftlike buildings and driving up rents.

Suzanne Sunshine, president of S. Sunshine & Associates, a real estate brokerage firm that specializes in nonprofits, says that the digital boom has created a new reality for them. Carlo Altomare, founder of Alchemical Theatre Laboratory, agrees. “What landlords want is a tech startup that has $20 million in venture-capital money,” he said. He recently went through a 14-month search before finding space; he said that one landlord did offer reasonable rent, but only on the condition that the organization would renovate the space, complete with asbestos removal.

“I was at the end of my rope,” he said. Even now, they only have a three-year lease on the space the theater finally settled on.

In addition to having a less desirable budget, some nonprofits must search for a landlord who appreciates what they do. One group, Publicolor, runs a variety of educational and youth-development programs. It’s financially healthy and it wants to double its space to 7,000 square feet so it will not need to turn away children due to lack of space. However, it must be near public transportation, needs a landlord comfortable with a child-centered enterprise, and its budget means it can’t spend more than $40 per square foot. This makes the search far more complicated.—Ruth McCambridge