By David Lebenstein and Carri Lyon, Co-Heads, Not-For-Profit Practice Group
Cushman & Wakefield recently released its Not-for-Profit & Public Sector Year-in-Review for 2016. This annual report report examines the commercial real estate leasing and investment trends in New York City related to these sectors, and this year found some interesting results. In 2016, these sectors experienced their most active year during the current expansion cycle following the recent recession, based on both number of transactions completed and total square footage. Lease transactions were the primary driver of the increased activity. In 2016 there were 155 lease transactions in the not-for-profit and public sectors, a 27.1% increase from 2015. Cushman & Wakefield accounted for 53 of those transactions.
Unsurprisingly, the medical and healthcare sectors were particularly active. This is partly because as consolidation continues and healthcare systems become more and more massive, in order to better serve patients they frequently move towards a community center model, where multiple specialists and healthcare professionals reside within a single building, not unlike a retail model. Indicative of the activity of healthcare is the fact that the top three lease transactions in New York were from this sector: NYU Langone Medical Center leased 389,892 SF at 222 East 41st Street; Visiting Nurse Service of NY leased 308,000 SF at 220 East 42nd Street; and the Department of Health leased 204,835 SF at 90 Church Street.
The education sector, particularly public and private primary and secondary education, have also been active, with 33 transactions totaling more than 1 MSF. This is due in part for the need to modernize facilities. Schools are unique space users, as they typically require amenities such as a gym, auditorium, cafeteria, etc.
Investment sales for the not-for-profit and public sectors was also strong in 2016, completing 48 transactions, comprising 2.3 MSF and totaling more than $1.2 billion.
One area of uncertainty in the not-for-profit and public sector is the high activity of new construction, particularly construction in Brooklyn and Queens that has been designated for community use. These designated spaces are restricted for usage by sectors such as arts & culture, social services, and other community-benefit services. The ability to successfully lease these spaces will be a key trend to watch in 2017 and beyond.
To read a full analysis of the not-for-profit and public sectors, download our latest report here.
Cushman & Wakefield’s Not-for-Practice Group represents the following sectors:
- Arts & Culture
- Community, Civic, and Advocacy
- Education and Children
- Labor Unions/Trade Associations
- Religious Organizations
To learn more about Cushman & Wakefield’s Not-for-Profit Practice, click here.
David is Executive Managing Director and Co-Head of Cushman & Wakefield’s national Not-For-Profit Practice Group and has closed hundreds of transactions during his real estate career, which began in 1985. Previously, he served as an executive at Time Equities, Inc. and was co-founder of Interface, a public policy group. He also worked for Mayor John V. Lindsay’s administration.
As a broker, attorney and site selection specialist, Carri has over 30 years of broad-based real estate experience. She currently serves as Executive Managing Director and Co-Head of Cushman & Wakefield’s national Not-For-Practice Group and is regarded as one of the leading nonprofit brokers in New York City.