Best Ways For NYC Non-Profits To Navigate COVID-19 Recovery
Answering NYC Non-Profit Work Space Questions During and Post COVID-19
By Jane Brody, Executive Director for Non-Profits Division, Vicus Partners
In our mission to be an unwavering advocate and partner in long-term success for Non-Profits, we as a company — and as humans — are grateful to be a resource for NYC Non-Profits as you navigate the COVID-19 pandemic and continue your missions in our communities. We’ve received many questions from Non-Profits over the last few weeks around how to lower operating costs and keep cash, and wanted to share with you some guidance we’ve given with the goal of creating solutions for you and your organization as you navigate this unchartered territory.
Vicus Partners’ Executive Director for Non-Profits, Jane Brody, discusses many of your questions and our suggested solutions in detail on Nonprofit Radio: here.
Here are some of the most common questions we’ve received over the past few weeks, and our suggested solutions:
Do I Have Any Rights To Stop Paying Rent During COVID-19?
The truth is, every lease is different. Your lease may have specific provisions for circumstantial deferred rent or rent abatement during times of material business interruption or revenue loss. Many companies have business interruption insurance for this reason, but to date the Coronavirus pandemic is not being covered as such by most insurance carriers. If you do have these provisions in your lease, we can help you speak to your Landlord about exercising these rights. If you don’t, we’re here to help you brainstorm and get creative; there is no cookie-cutter approach, but we’re prepared to work with you and to facilitate these conversations with your Landlord.
Some solutions we’ve seen work:
- Deferring 100% of rent for 3 months; beginning in late 2020 or 2021, tenant pays back the months of deferred rent over the remaining lease term
- Deferring 50% of rent for 3- 6 months, to be paid back over the remaining lease term
- 3-6 months of free rent now to be added to the end of the existing lease term
For tenants who have less than 2 years left on their lease: we’ve also been able to structure lease renewals with landlords at what we call ‘blend and extend‘ economic terms: you sign a longer term lease now and in return for the commitment receive favorable base rent and free rent as well as a taxes reset to $0. This is a solution that solves for both the tenant and the landlord’s needs right now, and one we are happy to work with you on implementing if you have less than 2 years left on your lease.
What Should I Think About When Moving or Renewing? When Do I Start?
We always advise Non-Profit tenants to start thinking about moving or renewing 18 months before your lease expires; as we mention above, that’s especially true right now given the blend and extend solution we’ve structured for tenants in the past few months. In general, that time frame gives you time to:
- Think about how to modify your existing space or find a new space to better serve your mission
- Get all your stakeholders on board, including your executives, staff members who may understand the day-to-day future office needs better than your operations team, and your board members
You should engage with a tenant rep commercial leasing broker to give you 2 to 3 options of what’s on the market so you can compare your space to a similar space across the street or across town. We proudly represent tenants only and never landlords, so are able to objectively find and negotiate the right space for you and your mission with your best interests at heart. As you explore other comparable space options, you can use your leanings to go back to your Landlord to negotiate – we call this the BATNA approach (best alternative to a negotiated agreement).
But I Love My Landlord, And She/he Is A Donor, Should I Still Negotiate?
The short answer is yes. Some organizations are afraid to challenge their Landlord because she might be a donor of the organization or has shown support by deeply understanding the mission. It’s vital to remember that the goal in these conversations is not to challenge, but rather to communicate effectively and collaborate to find a solution that works for everyone:
- If you’re speaking to your landlord about COVID-19 related rent relief, landlords are humans too who will respect your need and work with you to find a solution that puts your organization’s mission first.
- If you’re discussing renewal terms with your Landlord, remember that your organization is positively impacting the community where your Landlord owns, so they have an additional business level incentive to work with you, especially if you create leverage using our BATNA approach.
What Are Some Trends You See In The post COVID-19 Market?
As we told Nonprofit Radio, New York City commercial real estate transactions are down 40% in the first quarter and 1.6 million square feet of sublease space has hit the market. That makes it a market where the landlord is “reaching” for the tenant, and tenants can take advantage of more flexibility as they rethink their office spaces and leases.
Additionally, we’re seeing large brand tech companies changing the amount of physical space per employee. Office spaces typically account for 175 square feet per employee; now with social distancing guidelines, this has increased to 300 square feet per employee. That doesn’t necessarily mean people will be taking up more space, but it does mean that organizations will be rethinking their flexible work policies, office layouts, and general company operations to fit this new normal. We’ve put together some useful articles that look at the future of offices to help you think about your future office spaces:
- How Flexible Working Will Change Our Office Spaces (After COVID-19)
- 6 Office Design Trends In Post-COVID-19 World
- COVID-19 To Lead To Great Local Communities In NYC
- 8 Ways To Help Protect Your Office Space From Coronavirus and Future Pathogens
As you know, not all Non-Profits are the same. Each organization has its mission and its own needs; when it comes to finding the right home for that mission the right tenant rep broker will strategize with you on the space needs for all your stakeholders including you, your Executive team, Board members, donors, clients and the communities you serve; consider your mission when finding a Landlord match who strongly supports that mission; and ensure the economic terms allow you to spend less money on operating costs and more money on your mission.
We pride ourselves on representing the Non-Profit tenants who better our communities and our city, and are always available to do what we do best: represent you as a tenant and deliver solutions with integrity, intelligence and transparency.