Projects
Here for you
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Editor's Note: a version of this article was originally published in the Rudder Property Group Fall 2024 newsletter. The collaboration was an opportunity to focus on nonprofits and property acquisition.
Real estate prices for commercial office space in New YorkCity have decreased substantially. This is good news for nonprofit organizations hoping to advance their mission and expand or consolidate programming in upgraded space.A window of opportunities is opening in an otherwise tight real estate market, and now is the time to take advantage by combining available financing options to fund new facilities.
During the previous 30 months, interest rates have more than doubled. In response, many nonprofits are reluctant to undertake large capital projects, but is the sensible move to delay real estate investments until economic conditions improve? Not necessarily.
The current economic environment, although still challenging, has produced a buyer’s market—at least for the short-term.
Waiting for interest rates to go down substantially poses the risk of missing out on a sizable Class-A office stock and at favorable prices. Demand for CRE may be low for the moment, but this will quickly change as the quantity of quality office spaces diminishes.
Nonprofits should finance their capital projects now, in anticipation of an upcoming cyclical rebound after the market slowdown.
Many different project drivers can be behind large capital investments, including acquisitions and renovations of new project facilities, investments in leasehold improvements, machinery and equipment, and refinancing high-cost debt. Nonprofits should approach capital project financing in a similarly holistic manner—using a financing equation with multiple components.
Nonprofits can tap into a range of financing options. In addition to capital campaigns, organization equity, and, of course, debt financing, we encourage our clients, where appropriate, to consider city, state and federal capital grants, subsidized government financing, incentives, and tax credits. Programs like these are often how a project financing capital stack is ultimately completed.
• Tax-exempt bonds
• Taxable loans from banks, credit unions, non-bank lenders
• Loans from Community Development Financial Institutions (CDFIs)
• Financing energy upgrades
• Specialty lenders and funds
• Social impact investors
• NYC and NYS capital grant funding
• Grants for cultural and arts projects
• Government incentive programs
• Small Business Administration (SBA) loans
For a more detailed explanation, download ThinkForward’s guide to capital project financing options.
In truth, it takes a mix of financing options to make most projects financially feasible. The following three projects demonstrate a few possible combinations.
In each case, our nonprofit client acquired a Class-A office commercial condominium space in Manhattan.
Capital grants can fund as much as 90% of your capital improvements for projects up to $2.0 million and 50% for costs of more than$2.0 million. Consider how NYC and NYS programs impacted our client, the New YorkImmigration Coalition, an umbrella policy and advocacy organization representing 200+ immigrant and refugee rights groups throughout New York.
Social Services
$8.5M acquisitionHeadquarters consolidation
$5.0M City Council & Borough President CapitalGrant
$1.5M Empire State Development Grant
$1.0M bank loan
$1.0M organization cash
Low-cost capital markets financing can achieve up to 100% of your project costs. Tax-exempt bonds are typically secured for projects of $10M or more. The Orthodox Union, a first-time borrower, had outgrown its current leased space, which was both outdated and ill-equipped to support expanded programming. Although remaining in New York presented some financial challenges, leaving the city during a time of economic upheaval and uncertainty was not an option.
Social Services
$43.0M acquisition
New, expanded headquarters
$43.0M tax-exempt bond financing
(100% of project costs funded)
Community Development Financial Institutions (CDFIs) provide bridge loans, loans for renovations, and mini-perm loans, typically up to a maximum of $8M, for a term of up to 10 years. Because CDFIs can provide loan amounts for up to 90% of appraised values, less cash is required upfront from the sponsors, making this an appealing option for our client the Aperture Foundation.A prominent location on Columbus Avenue will bring greater visibility to the globally recognized publisher of photography.
Cultural Institution
$17.0M acquisition and renovation
Exhibition, event, and office spaces
$8.0M CDFI loan financing
$5.5M CDFI construction loan
$2.7M City & State Capital Grants
Owning your own facility is attractive on many levels. Nonprofits rely on effective long-term financial management to ensure uninterrupted resources for staff to pursue mission-related activities. Significant, unexpected increases in occupancy costs, upon lease renewal, can derail the best of strategic financial plans.
In addition to gaining some certainty in a fluctuating rental market, property acquisition represents an opportunity to design space to fit exact, often specialized, requirements, including community programming and fundraising. Furthermore, owning (versus leasing) means having an asset with no real estate taxes, which increases in value over time. It's a decision with lasting positive impacts for an organization.
In short, property ownership leads to more possibilities.
Did you know the nonprofit sector makes up 5% of all businesses operating in New York City? Nonprofits contribute $77B to the economy every year.
Maybe your mission-driven organization is numbered among these essential service providers.
• Housing and Shelter
• Early Childcare Centers
• Private/Charter Schools
• Community Health Centers
• Community Services Providers
• Youth Development Providers
• Workforce Development Providers
• Acute Care Hospitals
• Rehabilitation Facilities
• Skilled Nursing Facilities
• Religious Institutions
• YMCAs & JCCs
• Fundraising Organizations
• Arts & Cultural Institutions
Editor's Note: a version of this article was originally published in the Rudder Property Group Fall 2024 newsletter. The collaboration was an opportunity to focus on nonprofits and property acquisition.
Real estate prices for commercial office space in New YorkCity have decreased substantially. This is good news for nonprofit organizations hoping to advance their mission and expand or consolidate programming in upgraded space.A window of opportunities is opening in an otherwise tight real estate market, and now is the time to take advantage by combining available financing options to fund new facilities.
During the previous 30 months, interest rates have more than doubled. In response, many nonprofits are reluctant to undertake large capital projects, but is the sensible move to delay real estate investments until economic conditions improve? Not necessarily.
The current economic environment, although still challenging, has produced a buyer’s market—at least for the short-term.
Waiting for interest rates to go down substantially poses the risk of missing out on a sizable Class-A office stock and at favorable prices. Demand for CRE may be low for the moment, but this will quickly change as the quantity of quality office spaces diminishes.
Nonprofits should finance their capital projects now, in anticipation of an upcoming cyclical rebound after the market slowdown.
Many different project drivers can be behind large capital investments, including acquisitions and renovations of new project facilities, investments in leasehold improvements, machinery and equipment, and refinancing high-cost debt. Nonprofits should approach capital project financing in a similarly holistic manner—using a financing equation with multiple components.
Nonprofits can tap into a range of financing options. In addition to capital campaigns, organization equity, and, of course, debt financing, we encourage our clients, where appropriate, to consider city, state and federal capital grants, subsidized government financing, incentives, and tax credits. Programs like these are often how a project financing capital stack is ultimately completed.
• Tax-exempt bonds
• Taxable loans from banks, credit unions, non-bank lenders
• Loans from Community Development Financial Institutions (CDFIs)
• Financing energy upgrades
• Specialty lenders and funds
• Social impact investors
• NYC and NYS capital grant funding
• Grants for cultural and arts projects
• Government incentive programs
• Small Business Administration (SBA) loans
For a more detailed explanation, download ThinkForward’s guide to capital project financing options.
In truth, it takes a mix of financing options to make most projects financially feasible. The following three projects demonstrate a few possible combinations.
In each case, our nonprofit client acquired a Class-A office commercial condominium space in Manhattan.
Capital grants can fund as much as 90% of your capital improvements for projects up to $2.0 million and 50% for costs of more than$2.0 million. Consider how NYC and NYS programs impacted our client, the New YorkImmigration Coalition, an umbrella policy and advocacy organization representing 200+ immigrant and refugee rights groups throughout New York.
Social Services
$8.5M acquisitionHeadquarters consolidation
$5.0M City Council & Borough President CapitalGrant
$1.5M Empire State Development Grant
$1.0M bank loan
$1.0M organization cash
Low-cost capital markets financing can achieve up to 100% of your project costs. Tax-exempt bonds are typically secured for projects of $10M or more. The Orthodox Union, a first-time borrower, had outgrown its current leased space, which was both outdated and ill-equipped to support expanded programming. Although remaining in New York presented some financial challenges, leaving the city during a time of economic upheaval and uncertainty was not an option.
Social Services
$43.0M acquisition
New, expanded headquarters
$43.0M tax-exempt bond financing
(100% of project costs funded)
Community Development Financial Institutions (CDFIs) provide bridge loans, loans for renovations, and mini-perm loans, typically up to a maximum of $8M, for a term of up to 10 years. Because CDFIs can provide loan amounts for up to 90% of appraised values, less cash is required upfront from the sponsors, making this an appealing option for our client the Aperture Foundation.A prominent location on Columbus Avenue will bring greater visibility to the globally recognized publisher of photography.
Cultural Institution
$17.0M acquisition and renovation
Exhibition, event, and office spaces
$8.0M CDFI loan financing
$5.5M CDFI construction loan
$2.7M City & State Capital Grants
Owning your own facility is attractive on many levels. Nonprofits rely on effective long-term financial management to ensure uninterrupted resources for staff to pursue mission-related activities. Significant, unexpected increases in occupancy costs, upon lease renewal, can derail the best of strategic financial plans.
In addition to gaining some certainty in a fluctuating rental market, property acquisition represents an opportunity to design space to fit exact, often specialized, requirements, including community programming and fundraising. Furthermore, owning (versus leasing) means having an asset with no real estate taxes, which increases in value over time. It's a decision with lasting positive impacts for an organization.
In short, property ownership leads to more possibilities.
Did you know the nonprofit sector makes up 5% of all businesses operating in New York City? Nonprofits contribute $77B to the economy every year.
Maybe your mission-driven organization is numbered among these essential service providers.
• Housing and Shelter
• Early Childcare Centers
• Private/Charter Schools
• Community Health Centers
• Community Services Providers
• Youth Development Providers
• Workforce Development Providers
• Acute Care Hospitals
• Rehabilitation Facilities
• Skilled Nursing Facilities
• Religious Institutions
• YMCAs & JCCs
• Fundraising Organizations
• Arts & Cultural Institutions
NYC agencies are encouraging investments in IndustrialBusiness Zones (IBZ).This is good news for real estate developers and building owners hoping to attract manufacturing and light industrial tenants through redevelopment of their properties. Financial assistance through the NYCIndustrial Development Agency (NYCIDA) can make a sizeable contribution to most capital stacks.
For many organizations, delaying a project means delaying future success. Tax credits and economic incentives can help fund the next step forward in any mission-driven organization’s growth and evolution. Considering the life line that these programs can represent, let’s take a few moments to understand what incentives are and how to tap into the potential for your company.
%20(1).png)