By David Lebenstein
Executive Managing Director, Co-Chair, Not-For-Profit Advisory Group
I’ve been working in the commercial real estate world for more than 30 years, but this isn’t where I began my career. I started my career working for City Hall under Mayor Lindsay (please, don’t do the math), which was a great way to learn the City. I then co-founded a not-for-profit public policy think tank called Interface, which morphed into the Center for an Urban Future. One of the most exciting accomplishments during my time there was organizing the first commercial condominium project for NFP’s in New York City, at 666 Broadway. This was a vacant 12-story building, and I was able to convince an owner to turn six of the floors into condos, each of which were subsequently sold to nonprofits, including Interface. Debt service equated to rental rates, so the deals made sense. After that I spent 20 years at Time Equities, working for an owner and learning every aspect of the commercial real estate industry. Finally in 2005 I joined Cushman & Wakefield (then Cassidy Turley), and brought all of these experiences together by focusing extensively on nonprofits and government commercial real estate. Currently I serve with Carri Lyon as Co-Chair of Cushman & Wakefield’s Not-for-Profit Advisory Group.
Not-For-Profits’ Unique Real Estate Needs
This is important work. These organizations are essential to our society, both because of the missions they serve and because of the role they play in our economy. New York City is home to approximately 27,000 nonprofits, accounting for 20 percent of all jobs in the city. It’s a great honor to serve these clients, and through this work I’ve met some wonderful people. I’ve also come to learn a thing or two about the unique challenges they face in their various real estate needs.
In our practice, when we speak of not-for-profit organizations we break them down into eight groups: education and schools; arts and culture; housing and social services; religious institutions; community; healthcare; government; foundations; and labor and trade unions. Each of these groups have unique needs, missions, financial structures, decision-making processes, etc. Understanding these intricacies is essential for us to provide the expert counsel that our clients seek from us. Cushman & Wakefield understands this, which is why we have dedicated a specialty practice group to the sector.
Not-for-profits aren’t traditional office clients. A school may require special high ceilings for a gymnasium, or space for a cafeteria. A medical center may have special storage needs for medications, extra wide elevators for stretchers, or require special zoning. Sometimes the challenge is just a matter of finding landlords willing to accept our clients as tenants – let’s be honest, not every landlord wants a homeless shelter or an addiction center in their buildings.
Navigating Not-For-Profit Decision Making
One of the biggest challenges we face when advising our clients is the uniqueness of their decision-making structures. Unlike many traditional business clients, where decisions are made by a principal or a core group of executives, a not-for-profit may require buy-in from staff, a board, the foundations who provide sources of funding, government agencies, and others. Our role as advisers is to bring understanding of the complex issues involved and the options available, so that the key people can come to some kind of consensus based on the facts at hand.
Real Estate’s Role in a Not-For-Profit’s Mission
Beyond the structural differences between not-for-profits and typical office clients, the difference that I take most to heart is the fact that these are mission-based organizations. They exist for a singular purpose, to serve some unmet or underserved need in society. They also typically operate with slim margins, constrained budgets, and every dollar spent on operations is a dollar not spent on serving their essential mission. Developing an expertise of, say commercial condominium, or the various tax incentives available for non-profits, or areas that the city has designated for a specific cultural or community use, or unique tax structures that might be available, like leasehold condos, enables us as brokers to provide the kind of counsel that directly impacts the success of the mission.
Recruiting Younger Brokers to Not-For-Profit Work
As a broker, the decision to focus on not-for-profits comes with its own challenges. For one, these transactions frequently take longer to close than a typical office deal, sometimes 2-3 years or longer. The commissions are typically not as large. But the payoffs are much bigger than just our commissions. There is an inexpressible level of fulfillment that comes from providing the expertise that helps an organization better provide the kind of service that strengthens the fabric of our society. This reward cannot be underestimated. Don’t get me wrong, we still make a great living, and just because we’re serving not-for-profits doesn’t mean we work like volunteers. But we aren’t dealing with multi-billion dollar businesses. We’re frequently working with low-margin, short-staffed, underfunded, financially challenged organizations, who nonetheless pour their hearts and souls into serving the people of our city. But it feels good to help them!
Over the years Carri and I have received a tremendous amount of support from Cushman & Wakefield as we and our colleagues have built this advisory group, and we’re proud of what we’ve accomplished so far. It’s my great hope that as our company continues to grow, our younger brokers will recognize the opportunity our group presents, and will join us in serving clients whose work provides invaluable services to our community.
To learn more about Cushman & Wakefield’s Not-for-Profit Practice, click here.
David is Executive Managing Director and Co-Chair of Cushman & Wakefield’s national Not-For-Profit Advisory 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.