Suzanne Sunshine is the president of newly formed company S. Sunshine & Associates. Founded in June, the company provides commercial and residential real estate services to non-profit organizations, donating a percentage of its fees back to each client.
Sunshine was previously the vice president of the New York non-profit practice group at CB Richard Ellis, where she closed more than 200,000 square feet in real estate transactions for non-profits. Prior to joining CBRE, she was the director of the New York non-profit advisory group at Cushman & Wakefield, where she developed its first specialized department for non-profits.
Sunshine is the daughter of legendary real estate marketer Louise Sunshine, and worked as executive vice president of new business development at her mother’s company, the Sunshine Group, from 1998 to 2001.
Sunshine spoke with The Real Deal about her new venture and the plight of non-profit organizations in the current economic downturn.
What made you feel that now was the right time for your new business?
It’s very timely because of the recession — many non-profits are in dire need of additional sources of revenue. I can donate back a percentage of my fee earned to each client. The big companies can’t do that in the way I do it. My mission is to do well and do good.
What made you feel confident breaking out on your own?
I’m the great granddaughter of Barney Pressman, the founder of Barneys New York, and the daughter of Louise Sunshine. I have a strong entrepreneurial heritage. I’m highly qualified and I have a lot of experience. When you’ve been in the work world for 25 years you know you’re ready to go out on your own. I’m 45 — the same age that my mother was when she left Donald Trump.
What are the challenges facing non-profits in the current climate?
The challenges are tremendous. It ranges in severity from the groups that were invested with Madoff and are bankrupt to groups that have lost their typical sources of revenue. A lot of public money has been pulled out from under them. All of the non-profits are looking at strategic planning, and the only way they can grow is by looking at additional sources of revenue or earned income.
What are some of the solutions to these problems from a real estate standpoint?
Real estate represents the second largest item on a balance sheet for a not-for-profit. A very important way they can increase their mission and save money is by locating in markets that are other than primary. I just closed a deal this week with the Foundation for Child Development at 295 Madison at 41st Street. They have 3,800 feet, the entire floor, and they’re paying a mid-$40s rent which a year ago would have been $70. Foundations tend to be in The Plaza district of Manhattan, above Grand Central between Third and Seventh avenues. But [the foundation for Child Development] was willing to be one block south of Grand Central. Foundations’ endowments have fallen from 20 to 40 percent. When their leases expire, they want to spend less money on rent so they can build their endowments back up and put more money into their grantees.
For [other types of] not-for-profits, they will have to move further west, further east, downtown and to the outer boroughs.
What about subleasing?
Many non-profits have too much space [because they’ve cut staff due to funding shortages] and it’s very hard to sublet the space, but it’s not as hard if they sublet to another non-profit.
Why is it so hard to rent out the space?
There’s so much sublet space on the market, and non-profit space wouldn’t appeal to some of the tenants in the market right now, like media companies or lawyers.
What are non-profits and foundations looking to pay for space these days?
Non-profits don’t want to spend more than $20 to $28 per square foot. At this point it’s $20 to $25 for subleasing, and they’re looking to spend about $28 on new space. From 2002 to 2009 rents went from $26 to $44, and they’re now back to $28. It’s been unreal.
Foundations were spending $70 to $120 per square foot over the last seven years, and they’re now looking to spend $40 to $55. That’s a huge drop.
Are non-profits having any luck in asking landlords for decreases in rent?
I do advise all of my non-profits to appeal to their landlords for rent reductions for the time being, until they can reorient themselves. The landlords that understand how important the not-for-profit sector is to the economy of New York City, those people say yes. Some of the most philanthropic people in New York are real estate landlords.
Do those rent reductions count as a tax write-off? If you give a non-profit a rent reduction, you’re giving a charitable gift and it can be written off.
How many people are you planning to hire for your new company?
There are a lot of brokers right now looking for jobs who want to be in a niche business. During hard times, non-profits try to increase their [services] since they’re doing the things that people need more during a crisis, so it’s a good niche to be in during down markets. My hope is two to three people within the next four weeks.
Anything else you want to add?
It’s nice that something positive can come out of such a difficult time. I couldn’t have done this if we didn’t have this recession, because not-for-profits weren’t as aggressive about looking for new sources of donations and contributions. Out of lemons comes lemonade. I feel my company is lemonade.