With technology firms eating up space in older loft-like buildings at a rapid rate, rents in formerly affordable office spaces have been going up, making it difficult for nonprofits and arts organizations to find affordable deals.
In the first quarter of 2014, Manhattan commercial rents rose 7 percent from the corresponding period five years ago, according to Cushman & Wakefield. Meanwhile, rents in Midtown South rose up 29 percent within the same period.
Carlo Altomare, founder of Alchemical Theatre Laboratory, a performance and rehearsal space, said: “landlords want a tech startup that has $20 million in venture-capital money.”
The city’s real estate market is benefiting some nonprofits and arts groups selling long-held properties, though. The three nonprofits that own the United Charities Building at 105 East 22nd Street recently signed on with a broker to sell it. Last December, the Xavier Society for the Blind sold its headquarters at 154 East 23rd Street for $9 million and moved to a sublet at Two Penn Plaza.
The Xavier Society found that it didn’t need the 15,000-square-foot building on East 23rd Street because some of the services it was providing were no longer necessary. Now the organization occupies 2,500 square feet and has a financial cushion.
Still, many nonprofits find they need more space, not less, which is a challenge in today’s New York real estate market. [Crain’s] —TRD