Nonprofits Expand In Real-Estate Market Despite Tough Economy
Nonprofits are expanding despite the tough economy, but that doesn't mean they aren't being frugal about their money.
Twelve percent of nonprofits plan to increase their office space, staff or both in the coming months, according to a new survey of about 300 nonprofits.
But nonprofits are allotting only 343 square feet per employee, according to CB Richard Ellis' annual nonprofit benchmarking survey. That's down from 403 two years ago. Organizations are also squeezing more function out of their facilities.
"The nonprofit sector is strong," particularly the organizations with a service-oriented mission, Manny Fitzgerald, CBRE senior vice president, told The Huffington Post. "They're healthy. They're doing well. They are no longer in a contraction mode."
Cherie Kirschbaum, founder and president of City Projects, which provides real estate consulting and development services to nonprofits, said that her clients that offer human services have seen increased demand, which has led to a need to expand. To offset costs, they'll typically look to acquire existing properties and capitalize on historically low interest rates.
Nonprofits have also leaned on space-saving cubicles as a way to cut expenses.
"They're wise about the way they lay out the space -- fewer private offices, more open area," Fitzgerald said of his nonprofit clients. "It equates to them paying less rent over a period of time. It also increases collaboration. It's more of a collegial work environment than everyone working in silos and offices with their doors closed."
A Wall Street Journal analysis of recent nonprofit leasing transactions revealed similar findings to Kirschbaum's observations. The news outlet found that at least 10 New York-based organizations whose demand for services has increased signed leases for additional space under their expiring leases.
"There is a heightened state of awareness because we are still a country at war," Ryan Downs, Wounded Warrior Project's director of physical infrastructure, told the Journal. "As those [wars] wind down and are not so much on the news, we are still dedicated to raising awareness."
The Wounded Warrior Project, a nonprofit that advocates on behalf of injured veterans, doubled its downtown Manhattan office space to 9,400 square feet.
Even organizations that serve local populations, like The Center, a Denver-based organization providing advocacy and support to the gay, lesbian, bisexual and transgender community, are experiencing exponential growth in the real-estate market.
The Center had been operating out of a 500-square-foot dingy space that Kirschbaum described as an "awful, awful building, almost inhabitable." In 2008, the nonprofit secured a three-story, 15,000-square-foot space that was equipped to house a computer learning center, a large GLBT library and administrative offices. The site also boasts a rooftop garden. The Center moved in just in the spring of 2010.
"It's nothing short of remarkable considering what was going on in the real estate market in 2008," Kirschenbaum noted.
Some organizations sidestepped the recession by capitalizing on industry trends.
The U.S. Green Building Council is one such nonprofit that managed to triple in size while the economy was failing. The near 20-year-old organization, which educates on how to foster environmentally responsible communities, recently moved into a 75,000-square-foot space in Washington, D.C. The nonprofit constantly offers tours of its airy office –- laced with a cascading water wall and wood designs -- to teach companies how to construct cool and efficient green workplaces.
Leveraging its office space as an educational tool is an innovative strategy, but when it came to the layout, USGBC hopped on the typical open-office trend.
"Cement, bricks, mortar and glass aren't inspirational," remarked Rick Fedrizzi, U.S. Green Building Council CEO and HuffPost blogger. "We use [the space] as a showcase for new technology, new materials. It really walks the talk."
CORRECTION: In an earlier version of this story the CEO of U.S. Green Building Council was identified as Rick Cohen. His name is Rick Fedrizzi.WATCH Related Video: