Nonprofits Need More Office Space

The latest CBRE Nonprofit Real Estate Benchmarking Survey reveals that nonprofits are in need of more office space, and experts say this is a good thing for the …

The latest CBRE Nonprofit Real Estate Benchmarking Survey reveals that nonprofits are in need of more office space, and experts say this is a good thing for the office real estate market. The survey polled more than 200 nonprofits from various locations around the country and 93% of them reported that they expect profits to remain the same or grow, which means some of them will need more office space to accommodate a larger workforce. Even so, analysts say nonprofits aren’t quick to take up the same practices as corporate office renters, and office efficiency doesn’t rank high among nonprofit priorities. For more on this continue reading the following article from National Real Estate Investor.  

Demand for office space from the non-profit sector is increasing, according to a recent CBRE Nonprofit Real Estate Benchmarking Survey. The sector suffered in the wake of the recession, with layoffs and scaling down of space. But organizations that include both charities and trade associations reported that they are more likely today to spend dollars on advocacy, marketing budgets and member programs than in the past few years.

A total 225 non-profit executives responded to the CBRE survey, with most coming from groups in Chicago, New York City and Washington, D.C. About 93 percent of the respondents said they anticipate revenue to stabilize or grow for 2013

Gregg Witt, senior vice president at CBRE, says the groups were much more positive in their responses then in the years following the downturn. “When times were tough, there was a lot of cutbacks,” Witt says. “Now with the rising economy, the non-profits are encouraged that people will start giving again.” For example, only about 5 percent of the organizations are downsizing this year, compared to more than 20 percent who reported layoffs in 2011, and almost one in three respondents said they are interested in expanding staff and/or office space in 2014.

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Trade groups, associations and foundations are faring somewhat better than the social service charities that rely on donations or government funding, Witt says. “Just a few years ago the member groups saw dues drop, fewer people attending conferences and even smaller trade magazines due to less advertising, but now the professionals have recovered and are looking for space,” he says.

In the Chicago suburbs, there’s a current trend of medical groups either moving to or building new headquarters, Witt says. In August, for example, the American Academy of Orthopaedic Surgeons broke ground on a 180,000-sq.-ft. new headquarters in Rosemont, Ill. Academy officials said in a statement that the AAOS had exhausted the capacity of its 151,000-sq.-ft. building at 6300 N. River Rd. in Rosemont.

“With more useable staff office space, the new building will allow us all an opportunity to modernize our workspaces and offers room to grow, both of which are a nod to the future,” said Karen Hackett, CEO of the Academy. The AAOS is partnering on the building with the Arthroscopy Association of North America, the American Orthopaedic Society for Sports Medicine, the American Association of Hip & Knee Surgeons and the Orthopeadic Learning Center, which will offer education space.

Non-profits, however are still slow on following corporate America’s office methods, Witt says. Ten year leases are normal, and while the average amount of office space per non-profit worker has dropped to 343 sq. ft. from 373 sq. ft. in 2012, that’s still much higher than the 150-sq.-ft. per person goals being set by many companies, he says. A large percentage of this year’s survey respondents said they are still not interested in modern office reconfigurations such as open floor plans, hoteling, desk sharing or working remotely.

“I think it’s a generational thing, you still have a lot of baby boomers running these groups,” Witt says. “They tend to not want to change how things are done. You may start to see in a few years these groups, that now getting leaders who are in their 30s and 40s, who may want to attempt office space efficiency, but right now it’s still kind of like the oil tanker plowing through the ocean. It’s going to take a while to turn that around.”

This article was republished with permission from National Real Estate Investor.


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