Nonprofit and public sector tenants took a total of 2.6 million square feet in 2011, approximately the same amount it leased a year earlier, but committed to much larger leases than in the previous year, according to a new report released yesterday by Cassidy Turley.
Deals like NYU Langone Medical Center’s combined 420,000-square-foot lease at 1 Park Avenue in May, and Open Society Foundations’ lease for 152,000 square feet at 224 West 57th Street in April, were among the biggest deals of the year and accounted for a large chunk of all nonprofit leasing activity, according to Cassidy Turley’s “Not-for-Profit & Public Sector Leasing Activity in 2011” report.
The number of leases that exceeded 50,000 square feet comprised 1.29 million total square feet this year, as opposed to 477,000 square feet the year before.
The burgeoning and expanding health care industry, which added 1,300 healthcare jobs in 2011, also contributed to the size of these deals. Three of the five largest leases were by health care firms, according to the report.
One of the hottest buildings for public sector tenants was 100 Church Street, which absorbed a 58,000-square-foot expansion by Healthfirst and a 90,000-square-foot expansion by the State of New York’s Office of Temporary and Disability Assistance, according to the report. Add that to the 280,000 square foot lease renewal that the NYC Law Department is finalizing for renewal and it’s little surprise the SL Green (SLG)-owned building has seen a shrinking occupancy rate.
Other buildings, like 120 Wall Street, The Empire State Building and 77 Water Street (which added The William J. Clinton Foundation as a tenant), also performed well in 2011.
“You see a concentration of leasing activity all the way downtown,” said Robair Reichenstein, a managing director at Cassidy Turley and one of the authors of the report.
The fact that these nonprofits have big backers, especially with the George Soros-backed Open Society Foundations, have helped fuel this leasing activity.
“All that grouping of the top five [leases] are all organizations with healthy balance sheets,” said Mr. Reichenstein. “These are all organizations that are as solid as solid can be, so I think it makes sense that these are the large organization that can make the large floor commitments,” he added.