He talks about advising nonprofits on real estate strategy
Blanca Commercial Real Estate’s David Valdez began his professional real estate advisory services career in Miami as a real estate analyst and director of leasing of the Miami Center office building in 1986. Eventually, he joined Codina Bush Klein Realty for seven years as a broker, until he went to New York City for 14 years. Valdez spent 10 years with the Edward S. Gordon Company and four years with Goldman Sachs as a vice president, helping to co-manage the firm’s acquisition and disposition of the office space the firm uses to run its businesses in the Americas, from Argentina to Canada. Valdez has developed a practice spanning New York and Miami advising corporations, individuals and non-profit organizations in their search for real estate, and on the broader goal of how non-profits can function most efficiently by managing their total occupancy costs. Valdez spoke to The Real Deal about the special role brokers can play for non-profits, advising them in the kind of space these firms are looking for and the differences between this practice in Miami and New York.
How do non-profits think differently about their real estate choices?
I have been a commercial property broker for the better part of 24 years, and I know from experience that non-profit organizations are not always as well-advised for how to go about managing their lease and total occupancy expenses as they should be…I think they worry about how much it costs to have an office, but don’t always think strategically about how to always obtain the best possible rental rate — this results in their typically paying premium rents.
What are the challenges for these organizations when they look for real estate?
Non-profits don’t always consider the timeline and the amount of time it takes to lease space. The leasing process generally takes 12 to 18 months, depending on the size of the space. If you don’t have time to move to an alternative location, you don’t have any leverage in your lease negotiation, particularly in a renewal. And you’re going to pay whatever your landlord expects you to pay rather than more effective and lower rents. So the common mistakes non-profits can make is that they assume their landlord will either let them terminate their leases early, and don’t always get the agreement in writing, or they think that they will save money by negotiating without a broker.
What kind of space do they typically look for?
Non-profits range from private foundations with a few individuals taking 1,000 square feet to hospitals or schools — huge users of space, or big social service agencies. So there’s a big range. In Miami, the typical size lease approaches 5,000 square feet.
Can you talk about your work in New York?
For example, I was responsible for managing the process and completing a lease in New York for 166,000 square feet, for the Gay Men’s Health Crisis, a $51 million lease obligation, which just closed last June. Advising in New York, I do a tremendous amount of work on a pro bono basis, such as advising non-profits on real estate leasing best practices. In Miami, I just joined Blanca Commercial this year, so we’re just gearing up for the tenant representation practice.
What are the differences between working with non-profits in New York and Miami?
The non-profits I’ve encountered in Miami are well advised and very sophisticated. There’s not a big difference. The biggest difference is that Manhattan is a 400 million square foot market, while Miami is a 50 million-square-foot market, so there are more tenants, more landlords and more activity in New York. But the fundamentals on how real estate markets work are exactly the same. We’ve been meeting with some of the non-profits in Miami, and like I said, they’re well advised, they understand the process and they’re doing the right things, to make sure they manage their expenses.