"Nonprofits are counter-cyclical, so when pricing begins to godown, they start to look at ways that they might capitalize onlowering their expenses," Sunshine tells GlobeSt.com. "We surveyedabout 200 nonprofits, and nearly all said their currentdonor/funding levels had either moderately or significantly slowed.The reason they would try to come into the market is that pricesare at an all-time low again. So there's a lot of activity, butthere's also a lot of uncertainty."

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Along with that uncertainty comes confusion. Sunshine citesrecent front-page articles in both the New York Times andthe Wall Street Journal that said the commercial real estatemarket is getting worse. "Yet when we're actually in the market,landlords are holding tough on rents for the moment," she says."We're not seeing as much decline as you would think from thepopular media."

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Ultimately, "most nonprofits would like to stay put right now inthis economy, if given the choice," Sunshine says. "But they'restill looking for cost-effective alternatives," and suchalternatives do exist. "Many landlords are in distress, where youcan get a deal that is probably less expensive than it would havebeen six months now. There will be more properties in distress, andso there are many landlords that want to get good deals done."

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The opportunity posed by a landlord's distress bringsuncertainty of its own, as nonprofits are well aware. "If thetenant is big enough, they can negotiate a non-disturbance clauseto their lease," Sunshine says. "That way, if a bank takes over theproperty, they're not affected. I'm seeing that more and more innegotiations."

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At the same time, Sunshine says she's seeing more requests fromnonprofits to negotiate for the ability to opt out of a long-termlease after five years, "and pay back all of the unamortized costsif their funding doesn't come back. That would be another way toalleviate their funding concerns. Landlords are more open to thatthan they were a year or two ago, in the good days."

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Most nonprofits would prefer to renew in place if they can, saysSunshine. A potential snag is when "landlords start playing aroundthe concept of rentable versus usable square footage, and increaseit from one lease to the next. Nonprofits are not as sophisticatedas your typical tenant. They're not set up as a for-profitbusiness, and often they don't understand how a space can grow. Itcomes down to not what the price is per rentable square foot, butto what the gross rent is, and is it more or less than they'repaying now."

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Helping them in this decision-making process are the nonprofits'boards, who have the business savvy that the tenants themselvesoften lack. "If the numbers don't pencil out, they're going tomove," says Sunshine. Then it becomes a question of how interestedthe building owner is in keeping the nonprofit tenant, sheadds.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.