Report: Population, Business Growth Drive Healthcare/Non-Profit Expansion in Lower Manhattan
Since the 2008 recession, healthcare and non-profit companies relocating to the district have taken 1.6 million square feet of space and accounted for 35% of new private sector jobs (16,800) in the district.
NEW YORK CITY—Since the fourth quarter of 2009, healthcare and non-profit employment have grown 78%, which is nearly three-times the rate of growth for these sectors citywide, according to a report released by the Alliance for Downtown New York.
The report notes that the population of Lower Manhattan has risen 20% during that period and overall private sector employment has risen by 22% since the end of 2009.
Since the 2008 recession, healthcare and non-profit companies relocating to the district have taken 1.6 million square feet of space and accounted for 35% of new private sector jobs (16,800) in the district. Today, one in seven Lower Manhattan private sector employees work in either the healthcare or non-profit fields.
“Lower Manhattan has become a magnet for healthcare companies and nonprofits,” says Jessica Lappin, president, Downtown Alliance. “Being here offers more affordable space with unparalleled access to public transportation as well as close proximity to key partners, government offices and potential funders.”
Last year approximately 7% of all new leasing activity in Manhattan was by non-profit and healthcare tenants. Those sectors reached a borough-wide market share of 16% in 2016 and 14% in 2013, according to commercial brokerage firm Jones Lang LaSalle. The Alliance for Downtown New York’s Healthcare and Nonprofits in Lower Manhattan report notes that those two sectors currently occupy approximately 5% of all leased space in Lower Manhattan.
Besides the population and overall business growth, leasing activity is being driven by the lower cost office space available in Lower Manhattan. The report states that the average Class A rent is about $14-a-square-foot below Midtown and $28-a-square-foot below Midtown South, according to Cushman &Wakefield.
“Healthcare tenants, in particular, have moved to Lower Manhattan in droves in response to the needs of an expanding set of residents and office workers in the neighborhood as well as the surrounding growing population in Manhattan, Brooklyn, and the New Jersey waterfront,” the Alliance Downtown report states. “Healthcare and non-profit users have similar real estate needs and are drawn here to satisfy their requirements for affordable office space, a centralized location with robust transportation access and buildings with opportunities for more specialized space layouts than traditional offices.”
Other notable data points from the report include:
• Non-profits and healthcare tenants have accounted for approximately 15% of all relocations south of Chambers Street since the first quarter of 2008. During the more than 10-year period, 99 healthcare and non-profit firms involving a total of 1.6 million square feet have relocated to Lower Manhattan.
• There are currently more than 1,000 healthcare and non-profit firms currently operating in Lower Manhattan, including New York-Presbyterian Hospital, which is the only major hospital south of 14th St.
• The largest lease deal since the height of the recession in 2008 was the Teach for America deal at 25 Broadway (172,774 square feet) in 2014 and the lease by Syneos Health, which relocated and consolidated space from a number of Manhattan locations to 86,498 square feet at 200 Vesey St. in November 2018.
• The top five healthcare and non-profits in lower Manhattan by square feet leased are: Teach for America, Municipal Credit Union of New York, the Legal Aid Society, Beth Israel Medical Center and the American Civil Liberties Union.