Greater Boston Nonprofits Meet to Grapple with High Rents
March 13, 2008 More than 40 Greater Boston nonprofit CEOs, real estate professionals, government officials, and other experts met yesterday to develop solutions to what is described as a looming real estate crisis for nonprofits: being priced out of quality office and meeting space. They agreed that collaborative workspace and multi-tenant centers offer a workable solution.
The meeting was organized by Third Sector New England
(TSNE) and The NonprofitCenters Network
"Nonprofit centers can help support the growth of the nonprofit sector, a key employment sector," explained China Brotsky, NCN executive director, "by addressing the needs of nonprofits to have secure, affordable and desirable office space with stable rents and a collaborative, supportive environment for their work enabling greater community visibility."
TSNE Executive Director Jonathan 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.
Downtown Boston Rents Doubled in Last 24 Months
Neil Ross, vice president at commercial real estate advisory firm The Staubach Company, explained that the commercial market in Boston is becoming increasingly divided, with downtown Boston, Cambridge and the 128/Watham area seeing large increases and costs for 495 to Worcester remaining steadier. He explained that downtown Boston rents are nearly double what they were 24 months ago, with space for new commercial buildings in tight supply, and unceasing demand.
"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 said. "Class B, $30 to $40 per square foot two years ago, is now $50 to $70."
The cost of Class A commercial space in Cambridge has similarly skyrocketed, going from the mid-$40s range per square foot to about $70 per square foot currently, and 128/Waltham has almost doubled from 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.
Multi-tenant Nonprofit Centers Enable Cost Sharing
However, high rents also mean that nonprofits may now find it cost-effective to "own their own" workspace. Multi-tenant nonprofit centers offer opportunities 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 assetsand are some of the most exciting new examples of sustainable "green" building design," said Brotsky.
"With the typical nonprofit spending one-fifth of its cash assets on rent, centers are an important way to guard against programmatic disruption and 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.
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 consand tax implicationsof various management and ownership structures.
ASZ Associates Alan Zimlicki led a discussion on financing, and Jeffrey Brown and Spack addressed the range of design and development issues that arise when managing a facilities project.
Multi-Tenant Nonprofit Centers Defined
Multi-tenant nonprofit centers come in all shapes and sizes and serve many different kinds of nonprofit organizations. All centers, however, share three basic features:
They are composed of multiple (2 or more), primarily not-for-profit, tenant organizations(the smallest on record is comprised of two organizations, the largest of 85)
- They exist as a physical site (one or more buildings). There are approximately 160 around the U.S., housing 1,000 organizations and community groups).
- Provide affordable, stable work environments, build capacity for the nonprofit sector, and support the various missions of its tenant organizations.
- Rents are lower by 33% on average and can be as much as 75% lower.
- Nearly all provide services not offered in commercial rents, such as free meeting space and high-speed internet.
- Allow nonprofits to spend their rent dollars to create long-term assets and much-needed community resources.
- Create hubs of economic activity: office workers are local consumers; residents and clients receive training, services, and support. Some facilities create jobs, others promote new investment and serve as centers for neighborhood.
- Set trends for green design, reclamation, and reuse of historic landmarks, universal access for all regardless of physical ability, etc.