Square foot per person down significantly over 10 years, 501(c)(6) organizations optimistic and planning for more growth
Chicago, September 30, 2016 – Nonprofit organizations are hunkering down in older facilities, with the number of users in spaces 10 years or older increasing, causing some to be concerned about recruitment and retention as offices age, according to CBRE’s tenth Annual Nonprofit Real Estate Benchmarking Survey.
Even as the economy has led many nonprofits to be more optimistic about growth, the majority are not exploring new office opportunities. According to the survey, which focuses on 501(c) (3), 501 (c)(6), and 501 (c)(4) organizations in 26 states and the District of Columbia, 47 percent of respondents report that they have resided in their current headquarters location for 10 years or longer, up from 40 percent in 2015.
For those that own, the trend is significantly higher, with 68 percent claiming 10 years or more in the same location. Yet, long-term leases are the most popular with nonprofits as well, with 41 percent of those that lease opting for a 10-year term, up from 40 percent in 2015.
“There are many benefits to long-term leases that organizations can gain, such as maximizing concessions and reducing out-of-pocket costs relating to relocations and tenant improvements,” said Gregg Witt, senior vice president at CBRE Nonprofit Practice Group. “However, this year’s survey shows that for those that own, staying in facilities for longer periods of time, maybe 15 or 20 years, is impacting staff and operations.”
Nonprofits that own their space noted a higher perception that their offices are in need of a renovation at 32 percent versus 17 percent compared to those that lease. Perhaps more telling, those that own believe at a higher rate that their facilities actively hurt recruiting efforts (13 percent) when compared to those that lease (seven percent).
“As facilities age, it can become harder for these nonprofits to recruit new talent,” said Witt. “Workspace and amenities are a factor in the talent war, and, for nonprofits with older, outdated space, the bid for new talent is that much harder.”
Square foot per person down considerably over 10 years
Since CBRE began tracking data for the sector in 2007, shrinking square footage per person has been a dominant trend.
For large organizations (20 or more employees) square feet per person was at 396 in 2007 and is now down to 325, an 18 percent reduction. For small organizations (19 or fewer employees), the change has been much more dramatic, dropping from 591 square feet per person in 2007 to 442 in 2016 for a 25 percent reduction.
“Overall, large organizations are more efficient, but smaller organizations have made greater strides throughout the course of the survey,” said Manny Fitzgerald, national leader of CBRE’s Nonprofit Practice Group. “The economy has improved and more workers have been added to the same footprint, which contributes to this trend. However, we definitely have seen some nonprofits incorporate open layouts and new workplace strategies to be more efficient with their space.”
Optimism high among 501(c)(6) organizations
Optimism among 501(c)(6) organizations is much higher than 501(c)(3) counterparts, with 28 percent of 501(c)(6)’s reporting that their business is growing, compared to 23 percent of 501(c)(3) organizations. And, while 20 percent of 501(c)(6)’s report that business is starting to improve, only 11 percent of 501(c)(3)’s report the same findings. Along the same lines, 13 percent of 501(c)(3)’s reported business is getting worse, compared to only five percent of 501(c)(6)’s.
501(c)(6) organizations rely heavily on membership dues, while 501(c)(3)’s are generally cause-based and rely on donations.
“It may be that 501 (c)(3) nonprofits, which rely on donations and grants, are feeling pressure from a decrease in government and private funding sources,” said Fitzgerald. “This directly impacts their ability to deliver services.”
Overall, 64 percent of respondents said that they will not take any cost reduction measures this year, up sharply from 53 percent last year, further demonstrating optimism in the market.
Other Findings
Telecommuting is a growing trend for nonprofits, with 68 percent reporting that they have a telecommuting policy, up from 61 percent last year. Alternative work environments such as hoteling, desk sharing and working remotely continues to rise, with 57 percent of organizations saying they have discussed such arrangements, up considerably from 44 percent in 2013.
To read the entire report visit: http://www.cbre.us/services/office/nonprofit/Pages/benchmarking-survey.aspx
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.