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New Real Estate Strategy for Nonprofits

If nonprofits want to have any shot at luring young talent, their office space is going to have to look a lot more like office space at for-profit companies. (The "c" in 501(c)(3) now stands for "cool" employee lounge.)

Youth for Understanding, an intercultural student exchange program, recently moved from a remote location in Bethesda to Shaw, which is not only helping transform the nonprofit’s image but also contributing to recruitment of younger workers. YFU USA president Mike Hill, snapped at Bisnow's Real Estate Strategies for Associations and Law Firms event at the downtown Renaissance, says associations and nonprofits are getting hipper about their workplaces and even more savvy about their real estate strategies.

Hickok Cole principal Sean Wayne says no longer is an organization’s space within its walls. It starts from the region around the building, narrowing in to the actual building. Sean designed YFU’s space with offices of different sizes, not the ever-popular open floor plans. Mike says it helps incentivize YFU employees to move up the chain. Sean says it’s all about designing the space to align with the corporate culture.

Public transportation and access to DC are top amenities attracting trade associations to Crystal City, says Vornado EVP Jim Creedon. The American Diabetes Association is moving there and others like PBS have come the last few years because of its proximity to Capitol Hill. Restaurants and after-work activities have also helped with recruitment and retention.

CBRE EVP Manny Fitzgerald helped ADA find its new space and even showed it how CBRE has moved to a free address layout in the real estate firm's Baltimore office; employees are assigned a desk each morning as they show up. The strategy has allowed several organizations to cut back on square footage. While it wasn’t the right fit for ADA, Manny says it gave them some good ideas.

ADA’s Doug Meyer (the same guy in the Georgetown Hospital TV ad on beating prostate cancer) says the decision to move requires involvement from everyone. ADA, which started talking about moving four years before its lease was up, formed seven committees to help with things like work-life balance and design. It picked Crystal City, and now the “furniture committee” is at work. Mike from YFU says it took nine months of intense business planning. The nonprofit is using its new space to generate revenue through sub-tenants and allowing nonprofits to rent it for fundraisers and seminars. Even a professional yoga studio comes in 10 times per year to hold classes.

New space needs new funds. Cardinal Bank SVP and market exec Penny Bladich says loan rates are low right now, but they're influenced by the environment at the time and the strength of the organization; a bank will look at how long it's been around and its revenue sources. The pricing of the loan will also be impacted by the bank’s relationship with the organization, including deposits and cash management.