Nonprofit Centers Provide Stability Against Soaring Commercial Rents

Briefing Brings Nonprofits, Funders and Real Estate Experts Together
China Brotsky, executive director, The NonprofitCenters Network (NCN) and Third Sector New England (TSNE) Executive Director Jonathan Spack were joined by more than 40 nonprofit CEOs, real estate professionals, foundation staff and government officials today to discuss the commercial real estate crisis looming for nonprofits in Greater Boston. The cross-section of experts, organized by NCN and TSNE, discussed how collaborative workspace and multi-tenant centers are one answer to nonprofit organizations being priced out of quality office and meeting space.

 “Nonprofit centers can help support the growth of the nonprofit sector, a key employment sector,” explained Spack, “by addressing the needs of nonprofits to have secure and affordable office space with stable rents and a collaborative, supportive environment for their work. The result is greater community visibility and, most important, greater community impact.”

Spack led the effort to create the NonProfit Center of Boston, a project of TSNE to provide affordable, safe, high-quality office and meeting space for social change nonprofits in Boston, with much-needed state-of-the-art community meeting space available for nonprofits throughout the New England region.

Neil Ross, vice president at commercial real estate advisory firm The Staubach Company, explained that the commercial market in Greater Boston is becoming increasingly bifurcated. With space for new commercial buildings in tight supply and demand increasing, downtown Boston, Cambridge and the 128/Waltham area are seeing large cost increases.  

“Class A office space in downtown Boston averages between $80 and $100 per square foot compared to 24 months ago when the same space went for $55 to $65,” Ross commented. He added that prime space in Cambridge has similarly skyrocketed from the mid-$40s sq/ft in 2006 to $70, and 128/Waltham has almost doubled from the upper-$20s to $40. 

With commercial rents skyrocketing, nonprofit organizations are increasingly finding themselves forced into substandard space, making it hard to adequately provide services and attract the best staff. Some are being forced out of their service area into areas where the public transportation infrastructure makes it difficult for constituents to reach them.

However, high rents also mean that nonprofits may now find it cost-effective to “own their own” workspace. Today’s briefing by The NonprofitCenters Network and TSNE looked at the opportunities that multi-tenant nonprofit centers offer for multiple organizations to share costs and build joint programs to serve their community.

“Multi-tenant centers are economic development catalysts, important employers, and community assets – and are some of the most exciting new examples of sustainable “green” building design,” stated China Brotsky, executive director of the Nonprofit Centers Network. “With the typical nonprofit spending 20 percent of its income on rent, nonprofit centers are an important way to guard against programmatic disruption and the financial burden of being displaced.”

With sessions on finance, development and design and governance, the nonprofit board members, CEOS and program directors, as well as the funders attending, were provided with a crash course from soup to nuts on how to create nonprofit centers as a viable alternative to the see-saw effects of paying rent.

Brotsky led the briefing and was joined by experts in nonprofit center governance, finance and design. Lauren McKean of the National Park Service discussed strategic considerations in creating and operating a multi-tenant nonprofit center. Bob Cowden of Casner & Edwards shared pros and cons – and tax implications – of various management and ownership structures. ASZ Associates' Alan Zimlicki led a discussion on financing, and Jeffrey Brown and Jonathan Spack addressed the range of design and development issues that arise when managing a facilities project.

This conference was a first for New England, with attendees coming from throughout the East Coast and beyond.