NFP, Public Sector Leasing and Sales Ramp Up

Cushman & Wakefield has provided detail on some of the more significant transactions in this space.

The not-for-profit and public sector registered total transaction activity of 4.4 million square feet in 2015.

NEW YORK CITY—Leasing and investment sales in the not-for-profit and public sector here were up nearly 11% last year and combined to produce the second most activity for those specific industries in the last five years, according to a new report by Cushman  & Wakefield . Paced by lease and purchase deals, particularly Downtown, which accounted for three out of the four largest deals in those sectors, the not-for-profit and public sector registered total transaction activity of 4.4 million square feet in 2015, up 10.6% as compared to the year prior. According to the Cushman & Wakefield report, not-for-profits and public sector concerns closed on 122 lease deals totaling more than 2.3 million square feet. The average size per lease was 19,298 square feet. Cushman & Wakefield managing director Robair Reichenstien authored the report along with other members of the firm’s research department. On the investment side of the ledger, the sectors accounted for 16 transactions involving approximately 2.1 million square feet of activity, however, those numbers were skewed by the purchase of 1.2 million square feet of development rights by Memorial Sloan Kettering and Hunter College at 525 E. 73rd St. Three out of the four total leases over 100,000 square feet signed in 2015 in New York City were located Downtown. The top lease deal of the year was the Teacher’s Retirement System of the City of New York ‘s 191,138-square-foot lease renewal and expansion at 55 Water St., followed by the Associated Press ‘ relocation lease of 172,352 square feet of space at 200 Liberty St. The third largest Downtown lease was the NYC Department of City Planning ‘s 107,282-square-foot relocation lease at 120 Broadway. The only other not-for-profit or public sector deal more than 100,000 square feet here and the only major lease outside of Downtown was NYU Langone ‘s 104,350-square-foot lease that involved a relocation within One Park Ave., in Midtown. The largest building to trade hands in the not-for-profit and public sector was Lighthouse International’ s 200,000-square-foot space at 111 E. 59th St., which traded in the third quarter of last year for $175 million or $875-a-square-foot. Another sizeable deal, which closed in the fourth quarter of 2015, was St. Luke’s-Roosevelt Hospital ‘s nearly 90,000 square feet at 1080 Amsterdam Ave. for $29 million or $324-a-square-foot. Other notable transactions included Planned Parenthood ‘s 70,000 square feet at 434 W. 33rd St., which traded for $35 million ($500-a-square-foot); the Collegiate School ‘s 67,350 square feet of space at 260 West 78 ^th St. for $125 million ($1,856-a-square-foot) and the United Synagogue of Conservative Judaism ‘s 25,300 square feet of space at 820 Second Ave. for $16 million ($632-a-square-foot). Broken down by the type of public sector, not-for-profits led the way in 2015 with 58 transactions totaling more than 1.2 million square feet, followed by the very active medical segment with 29 deals totaling 1.77 million square feet. Government-related entities came in third place at 23 deals totaling 737,690 square feet. Among some of the trends to watch in 2016 according to C&W’s Reichenstein and the firm’s research staff include not-for-profits and public sector organizations relocating out of high-priced space to lower cost areas throughout the city. C&W also believes that Downtown will continue to be the primary, value option for most not-for-profit and public sector organizations. “However, due to dwindling available supply, expect more transactions to occur in locations such as Long Island City and Harlem,” the report notes. The firm also believes that some organizations that supply community-based programs may opt to move closer to their clientele to reduce rent, which would in fact reverse what had been centralization efforts among these types of agencies.