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Deals & Dealmakers

Churches step up their real estate game

Churches out-bought everyone in the not-for-profit and public sector real estate game last year, according to a new report.

During a year that saw the sector set record highs in both sales and leasing, religious organizations were the most active, selling 28 properties for a total of $163 million.

Another 14 church groups spent $77 million buying property.

According to a new report from Cushman & Wakefield, 209 real estate transactions were completed within the non-profit and public sector — up from 203 the year before — representing nearly 8.2 million square feet, a 28 percent jump on 2016’s historic high. 2017 saw a total of 80 sales in the sector, which was nearly double the 48 deals in 2016.

The sector swallowed over six million square feet of space in 129 leases averaging nearly 47,000 s/f each, 76 percent more than in 2016.

The report noted that 12 of those 129 leases were 100,000 square feet or more, and seven of them were 250,000 s/f or more.

New York City Housing Authority signed the biggest deal among the public sector, taking more than 587,000 s/f in Long Island City.

However, Manhattan still dominates leasing among the non-prifts and public outfits with 4.9 million square feet leased in the borough to churches, charity’s and government offices.

Non-profits saw the most leases in 2017 at 48 deals, but government agencies had the highest amount of space leased out at 2.7 million square feet, which was more than double 2016’s government lease numbers.

Medical tenants dipped in activity though, with only 1.2 million square feet leased out in 2017, or a 41 percent decline in activity from 2016.

Non-profits are also trending towards long leases, with the average lease term in 2017 hitting 12 years. According to Cushman & Wakefield, the reason for longer leases may be that many non-profits sign onto leasehold condos, where they are exempt from real estate taxes for at least 30 years.

The sales side of the not-for-profit and public sector is looking equally healthy as it saw 80 transactions in 2017, most of which were in Manhattan, and was nearly double the 48 transactions in 2016.

The average price per square foot for the sector came in at $540, which closely matched the city’s average of $544 in 2017.

According to Cushman & Wakefield, the growing demand for non-profit and public sector real estate will see demand extend to Downtown Brooklyn, Long Island City and Harlem.

The addition of 22 million square feet of new and redeveloped office space over the next five years in Manhattan will also likely bolster the trend, as those organizations will continue to look for collaborative and modern work environments, the report added.

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