Nonprofit Owner-Users Popping Up More In Suburban Philly Office Market

Family Matters, a nonprofit that assists families in crisis, is now also a CRE owner.

The nonprofit purchased a 28K SF building in King of Prussia last year and is renovating the space into its new headquarters for the Philadelphia area.

“It was a good value compared to some of the other things we were looking at,” Executive Director Jill Lapensohn said.

With office transaction activity muted amid a conservative capital markets environment, owner-user sales like this are becoming more prominent in quarterly reports. 

Owner-occupier sales made up 21% of all office transactions in the region in the year leading up to October, according to data provided by CoStar Group.

That is more than double the 10-year average of 9%.

“This is more about the percentage share of owner-user buyers, rather than the absolute number of transactions,” CoStar Director of Market Analytics Brenda Nguyen said.

Savills identified 26 owner-user office transactions across Greater Philadelphia and Eastern Pennsylvania over the past year. Of those, just six could be described as standard for-profit businesses.

Healthcare providers, schools and other nonprofit groups are buying space outside locales favored by white-collar employers.

“The nonprofit sector ... has the ability to find assets that are perhaps better price points than signing long-term leases,” Savills Philadelphia Market Leader Jay Joyce said.

Temple University’s $18M purchase of a 274K SF former University of the Arts building at 211 S Broad St. was the largest and most expensive on his list of these transactions.

Academia Antonia Alonso Charter School came in at No. 2 with its $9.5M purchase of 300 N. Wakefield Drive outside Newark, Delaware.

Journey Church’s purchase of a 68K SF space at 1 Reads Way in nearby New Castle was the third-largest deal on Joyce’s list. The congregation spent $1.5M on the property.

Family Matters has experienced high growth in recent years. Lapensohn and her team are working out of a rented space in Bala Cynwyd, but she said it is “bursting at the seams.”

The group's leadership decided to stop renting after receiving a $12M gift from Linda and Don Brodie. The new center is named after the Brodies.

“Nonprofits don’t have to pay real estate taxes,” Lapensohn said. “It saves a lot of money.”

The organization bought the vacant 28K SF office space at 2004 Renaissance Blvd. from BET Investment for $2.8M last October. The space is being renovated into a center where the organization can provide enrichment activities and overnight care for children with special needs.

Lapensohn’s team plans to move in next month, and she said renovation work in the space should wrap up in early December.