Case Study

Metropolitan Jewish Health Systems

Capitalizing on the new post-COVID market and a relatively new tax-exempt leasehold condominium structure for a 115-year old organization

March 1, 2022

Doctor holding a patience hand

Overview

  • MJHS challenged CBRE’s team to help them consolidate four locations across Brooklyn and downtown Manhattan totaling 173,000 square feet into one headquarters location, to minimize out of pocket capital expenses, to manage occupancy expenses long-term and to create a more modern workspace with excellent access to public transportation.
  • CBRE helped MJHS analyze their square footage needs and identify efficiencies related to consolidation onto larger floors.
  • CBRE focused MJHS’s search on buildings and landlords willing to consider a leasehold condominium structure that provides 501(c)(3) nonprofits with an exemption from paying real estate taxes.
  • CBRE capitalized on the downtown Manhattan market dislocation in the wake of the pandemic, convincing multiple landlords to reach to secure MJHS’s tenancy.
  • CBRE structured a unique leasehold condominium wherein if MJHS’s application for the tax exemption were denied by the City, then the structure and term would fall back to a 15 year traditional lease, while MJHS’s concession package from the landlord would remain in place.

  • 138,000

    Total Square Feet

  • HQ

    Relocation

  • $1.25M

    Annual Tax Exemption Savings

  • Bargain

    Economics Derived From a “Down Market”

Improving quality of life for our employees, offering access to more public transportation, bringing our staff together to support greater collaboration, and remaining fiscally responsible, were key priorities in seeking new office space
“Improving quality of life for our employees, offering access to more public transportation, bringing our staff together to support greater collaboration, and remaining fiscally responsible, were key priorities in seeking new office space”  – David Wagner, President and CEO of MJHS Health System
The sun-filled space at 55 Water Street boasts sweeping views of the cityscape and harbor and excellent access to public transit (NYC Subway and Ferry). Area amenities include South Street Seaport, world class restaurants, and museums.
The sun-filled space at 55 Water Street boasts sweeping views of the cityscape and harbor and excellent access to public transit (NYC Subway and Ferry). Area amenities include South Street Seaport, world class restaurants, and museums.
55 Water Street boasts large floor plates, excellent infrastructure, back-up power, long hours of operation, recent upgrades to the building lobby and a $5 million enhancement to the exterior landscaping (enhanced lighting, new paving, planters and additional seating). Lobby image courtesy of The Retirement Systems of Alabama.
55 Water Street boasts large floor plates, excellent infrastructure, back-up power, long hours of operation, recent upgrades to the building lobby and a $5 million enhancement to the exterior landscaping (enhanced lighting, new paving, planters and additional seating). Lobby image courtesy of The Retirement Systems of Alabama.
55 Water Street is home to the Elevated Acre public park, a meadow flanked by delightfully designed gardens and planters 40 feet above the streets of New York. © Nathan Sayers
55 Water Street is home to the Elevated Acre public park, a meadow flanked by delightfully designed gardens and planters 40 feet above the streets of New York. © Nathan Sayers

The Solution & Result

  • After nearly 25 years in their current location, CBRE built consensus on an MJHS relocation strategy.
  • 55 Water Street was identified for its large, sun-filled tower floors which enabled MJHS to consolidate on two contiguous floors and reduce their overall footprint by 20%.
  • Leveraging other alternatives in parallel and the pandemic market helped our client achieve favorable terms.
  • The consolidated organization expects to realize a collective savings of $40 million over the 30-year lease term compared to remaining in its former Brooklyn headquarters.

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