Connecticut Nonprofit to Sell Building Housing Shared Nonprofits Workspace
The Corporation for Independent Living (CIL) will put its Hartford, Conn.-based Atlantic Works building, which houses more than two dozen tenants, most of which are nonprofits, up for sale. An initial asking price has not yet been set, Kent Schwendy, President and CEO of CIL, told The NonProfit Times.
The Atlantic Works building, which was formerly known as Hartford Square West, is located at 75 Charter Oak Avenue. Since 2013, a joint effort between CIL, which owns the building, and the Connecticut Alliance of Nonprofits, which served as the building operators and managers, has provided office space at below-market rates to nonprofits.
Occupancy rates have run upward of 90%, with exact figures fluctuating as tenants have been allowed occupancy under long, short, and month-to-month leases. The majority of tenants are part of the Nonprofit Center, a building-specific organization that provides shared amenities and support systems, although membership in the Nonprofit Center has not been a requirement for tenancy. The building also has one commercial tenant, according to Schwendy.
The intent behind Atlantic Works was to provide office space to nonprofits at between 10% and 25% below market rate, or $2 to $4 cheaper per square foot, based on the lease length and improvements requested by each tenant, Schwendy said. But even at those advantageous rates, tenants faced a number of headwinds which were exacerbated by the coronavirus pandemic.
“The impact of COVID-19 on office occupancy was that more and more of the tenants were not interested in signing long-term leases or extending their leases, preferring to go to month-to-month leases,” Schwendy said. “We were spending more to keep tenants there. There were increasing costs to keep operating the building, between inflation and getting contractors in to do work. We realized the only way we could make the building sustainable would be to raise the rates to market or close to market, and if we do that we would no longer be assisting nonprofits. There is no mission-supported reason for doing that. We would just be a landlord.”
The CIL and the Connecticut Alliance of Nonprofits had sought ways to keep the building viable for nonprofits, such as securing grants. But while the Hartford Foundation for Public Giving, a community foundation, had been a strong supporter, its leadership agreed with CIL leadership that, given limited resources the Atlantic Works model did not represent the most practical use of funds.
Separately, the CIL and the Connecticut Alliance of Nonprofits had attempted to secure nonprofit status for the building. That request was denied by the city of Hartford.
Having the building declared a nonprofit would have freed it from paying taxes, as well as possibly allowing it to secure services at nonprofit rates. Those savings would have been passed along to tenants, but the ultimate fate of the project would not have changed. “It would have reduced operating expenses but it would not have been enough to change our decision,” Schwendy said.
Once a sale price is announced, the building will be represented by Bob Botters of commercial real estate and investment service firm CBRE.
As of mid-April, tenants have been notified that all lease extensions will be at market rate, in fairness to the eventual new owner, Schwendy said. The current building owners are keeping tenants informed regarding the sale, and the Hartford Foundation for Public Giving is offering tenants guidance regarding their next courses of action.
Recent tenants have included, and still include, Connecticut After School Network, Connecticut Council for Philanthropy, Connecticut Women’s Education and Legal Fund, Everyday Democracy, The Fund for Greater Hartford, Family of Life Education, Hartford Area Habitat for Humanity, Hartford Performs, Poverty & Race Research Action Council, Women’s Institute for Housing & Economic Development and YMCA of New Britain Sexual Assault Crisis Service, among others.