Wednesday, November 22, 2006

Cashing out in NYC

A recent New York Sun article echoes one from April in The NonProfit Times about charities in New York City cashing out property in the recent real estate bubble. Some of the figures are eye-popping, with associations or churches getting tens of millions for properties that they paid far less for years or decades earlier.

To a large degree this is a Manhattan story, for example the New York Historical Society may be able to get more than $100 million for a single vacant lot because it's right next to Central Park and eligible for a high-rise building. Cushman & Wakefield, a real estate services company, told Nonprofit Times that 32 nonprofits sold properties in Manhattan totaling $582 million during 2004, the third year in a row that sales exceeded purchases.

But similar things have happened in other hot real estate markets, for example Fourth Presbyterian Church on Chicago's North Michigan Avenue has had an offer on the table to sell its parking lot for a high-rise development. The potential $25 million land sale has been stalled because the local alderman doesn't like it, but seems likely to happen eventually. While the national real estate bubble has burst overall the strong growth in major urban centers hasn't, so established non-profits will be tempted to cash out longstanding headquarters properties and move someplace cheaper.

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