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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.
With substantial reduction in commercial office prices in New York City, nonprofits now has an excellent opportunity to expand, relocate, or upgrade their physical space in support of their mission. In a generally tight real estate environment, this presents a rare opening—one that organizations can seize by combining a range of financing tools to fund new facilities.
Over the past 30 months, interest rates have more than doubled, prompting many nonprofits to pause large capital projects. But waiting for ideal economic conditions may limit opportunities.
While the broader environment remains challenging, it has created a temporary buyer’s market.
• After peaking in 2023, interest rates have begun to inch downward.
• Holding out for major rate reductions could mean missing the current availability of Class-A commercial office space at discounted prices.
• Demand is subdued for now but will likely rebound as quality inventory shrinks.
Nonprofits should consider advancing capital projects now, positioning themselves for the next upswing following the current market slowdown.
Large capital initiatives—whether property acquisitions, renovations, equipment purchases, or refinancing high-cost debt—benefit from a comprehensive financing strategy.
In addition to capital campaigns, internal equity, and traditional loans, nonprofits should evaluate options such as municipal, state, and federal grants; subsidized financing; incentives; and tax credits. These programs often provide the essential elements that complete a project’s capital stack.
Nonprofits may be consider the following sources:
• Tax-exempt bonds
• Taxable loans from banks, credit unions, and alternative lenders
• Loans from Community Development Financial Institutions (CDFIs)
• Energy-efficiency financing
• Specialty lending programs
• Social impact investment funds
• NYC and NYS capital grant programs
• Arts and cultural grants
• Government incentives
• SBA loan programs
(For further details, see Think Forward’s guide to capital project financing.)
Most capital projects require a blend of financing. The New York Immigration Coalition illustrates a strategic mix of options.
• Sector: Social Services
• Location: 131 West 33rd Street
• Project: $8.5M headquarters acquisition and consolidation
• $5.0M NYC Capital Grant
• $1.5M New York State Grant
• $1.0M Bank Loan
• $1.0M Equity
NYC and NYS capital grants can cover up to 90% of eligible costs for projects under $2M, and 50% for costs above $2M—making them powerful tools in nonprofit real estate development.
Owning a facility provides long-term financial stability and shields organizations from unpredictable rent spikes that can disrupt budget planning. Ownership also enables nonprofits to tailor their space to program needs—including community-focused, mission-driven uses—and creates a valuable asset that appreciates over time, without real estate tax obligations.
In short, property ownership creates long-term organizational resilience and expands program possibilities.
Nonprofits represent 5% of all NYC businesses and contribute $77 billion annually to the local economy. Your organization may be part of this vital network of service providers, which includes:
• Housing and shelter providers
• Early childhood centers
• Charter and private schools
• Community health centers
• Social service agencies
• Youth development organizations
• Workforce development providers
• Hospitals and rehabilitation facilities
• Skilled nursing facilities
• Religious institutions
• YMCAs, JCCs
• Fundraising entities
• Arts and 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.
With substantial reduction in commercial office prices in New York City, nonprofits now has an excellent opportunity to expand, relocate, or upgrade their physical space in support of their mission. In a generally tight real estate environment, this presents a rare opening—one that organizations can seize by combining a range of financing tools to fund new facilities.
Over the past 30 months, interest rates have more than doubled, prompting many nonprofits to pause large capital projects. But waiting for ideal economic conditions may limit opportunities.
While the broader environment remains challenging, it has created a temporary buyer’s market.
• After peaking in 2023, interest rates have begun to inch downward.
• Holding out for major rate reductions could mean missing the current availability of Class-A commercial office space at discounted prices.
• Demand is subdued for now but will likely rebound as quality inventory shrinks.
Nonprofits should consider advancing capital projects now, positioning themselves for the next upswing following the current market slowdown.
Large capital initiatives—whether property acquisitions, renovations, equipment purchases, or refinancing high-cost debt—benefit from a comprehensive financing strategy.
In addition to capital campaigns, internal equity, and traditional loans, nonprofits should evaluate options such as municipal, state, and federal grants; subsidized financing; incentives; and tax credits. These programs often provide the essential elements that complete a project’s capital stack.
Nonprofits may be consider the following sources:
• Tax-exempt bonds
• Taxable loans from banks, credit unions, and alternative lenders
• Loans from Community Development Financial Institutions (CDFIs)
• Energy-efficiency financing
• Specialty lending programs
• Social impact investment funds
• NYC and NYS capital grant programs
• Arts and cultural grants
• Government incentives
• SBA loan programs
(For further details, see Think Forward’s guide to capital project financing.)
Most capital projects require a blend of financing. The New York Immigration Coalition illustrates a strategic mix of options.
• Sector: Social Services
• Location: 131 West 33rd Street
• Project: $8.5M headquarters acquisition and consolidation
• $5.0M NYC Capital Grant
• $1.5M New York State Grant
• $1.0M Bank Loan
• $1.0M Equity
NYC and NYS capital grants can cover up to 90% of eligible costs for projects under $2M, and 50% for costs above $2M—making them powerful tools in nonprofit real estate development.
Owning a facility provides long-term financial stability and shields organizations from unpredictable rent spikes that can disrupt budget planning. Ownership also enables nonprofits to tailor their space to program needs—including community-focused, mission-driven uses—and creates a valuable asset that appreciates over time, without real estate tax obligations.
In short, property ownership creates long-term organizational resilience and expands program possibilities.
Nonprofits represent 5% of all NYC businesses and contribute $77 billion annually to the local economy. Your organization may be part of this vital network of service providers, which includes:
• Housing and shelter providers
• Early childhood centers
• Charter and private schools
• Community health centers
• Social service agencies
• Youth development organizations
• Workforce development providers
• Hospitals and rehabilitation facilities
• Skilled nursing facilities
• Religious institutions
• YMCAs, JCCs
• Fundraising entities
• Arts and cultural institutions
How Aperture Foundation Financed Its New Space at 380 Columbus Avenue, Manhattan
How to Combine Available Financing Options to Fund New Facilities
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