Nonprofit Tenants and Office Buildings Prove to be a Win-Win Combo
In a weak office market, nonprofits have become increasingly sought after. Nonprofits are eligible for a real estate property tax exemption when they own their space; and with that in mind, nonprofit deals are structured as leasehold condominiums which “essentially allow nonprofits to be viewed as owning their space on a long-term lease of at least 30 years.” In the past, due to higher rents nonprofits have avoided the city’s higher quality buildings, but more recently able to take advantage of the high volume of office vacancy and generous concessions as well as relocation costs being offered by some landlords. The flexibility to downsize is also playing a significant role in relocation decisions. A recent deal completed by ABS Partners secured the New York Public Library (NYPL) as a tenant at its 270 Madison Avenue building; and while the NYPL benefited from an aggressive deal, the landlord gained the occupancy of a credit tenant, making it a “win-win” for both.