Marty Festenstein Discusses the Rooftops Conference
We recently caught up with Marty Festenstein, Principal and Legal Practice Group Co-Leader to discuss his insights from his speaking engagement at this year's Rooftops Conference in Chicago.
Question: How did you get involved with the Rooftops Conference in Chicago?
Answer: My friend, former client, and former head of international law firm Jones Day’s real estate practice, James Hagy and I worked together on many projects throughout my career. About seven or eight years ago, James left Jones Day to teach real estate law at Loyola in Chicago as a Senior Lecturer and is currently a Distinguished Adjunct Professor of Law at New York Law School in New York, NY. He serves as an affiliated transnational professor at Peking University School of Transnational Law, as an adjunct professor at the Case Western Reserve University School of Law and at the Center for Real Estate Law of the John Marshall Law School.
In addition to these many accomplishments, James also founded and directs the Rooftops Project at New York Law School’s Center for Real Estate Studies – a nonprofit organization to assist other nonprofits in their real estate needs. James has been hosting conferences related to the Project in NY for years, and Chicago’s first conference occurred just about two weeks ago.
Given our history and shared empathy and knowledge on behalf of tenants relative to workplace design, he asked me to speak, and I was more than happy to help.
Question: What factors make up the real estate selection process?
Answer: Various factors influence the real estate selection process:
· Programming – a comprehensive understanding of the quantitative and qualitative needs of the tenant. The programming process includes surveys, interviews, focus group sessions, evaluating existing, and proposed candidate real estate options, and producing a comprehensive program report for client review and approval.
· Applying the program to candidate real estate options identified by the nonprofit and their real estate advisory firm (broker) in a process called test fitting. Test fitting is a preliminary planning study that applies the program in a two dimensional planning study. The purpose of this is to understand how the program ‘works’ in terms of efficiency from building to building and to to create leverage for the tenant/nonprofit.
· Preliminary budgeting for tenant improvements, furniture, consulting fees, moving costs etc. are created, and the broker applies this information to the financials of the lease deal. This is presented to nonprofits, as negotiations are ongoing, and eventually the nonprofit/tenant makes a real estate decision based on which option best meets their real estate strategy goals and objectives.
Question: Once a location has been leased, how much do design and material selections matter?
Answer: Design matters for all tenant types, and especially for the nonprofit sector. The materiality and design solution very much influences the ability for a nonprofit to express their mission to constituents, staff, the board, and the community they serve. It reinforces or establishes their mission given the low budgets for advertising and PR in the nonprofit sector; this is critical.
Question: What real estate challenges/opportunities exist for not-for-profits in a down economy?
Answer: Challenges: In a down economy, funding and sources of capital reduces, but the demands of the constituents and the people they (nonprofits) serve typically increase. As a result of reduced funding, it is critical to consider strategic and thoughtful approaches to the real estate needs of the nonprofit. The cost of occupancy is typically a nonprofit’s second greatest cost after salaries/benefits programs. Rooftops offers creative and strategic assistance to the nonprofits as does the real estate advisory and the architectural/design community. Engaging these consultants immediately in the process allows the process to begin early and in a thoughtful, strategically mined process. Time is important to the nonprofit for a variety of reasons, and this early engagement process considers a variety of factors important to the organization. These factors include fundraising, identifying creative, unorthodox solutions, and communicating the options to the board, staff, and constituents etc.
Opportunities: The opportunities reside in a myriad of considerations that the real estate community may or soon will be aware of. These include co-locating opportunities, re-positioning of a facility designed for a different use, owning versus leasing real estate etc.
Question: What is your biggest takeaway from the conference?
Answer: My biggest takeaways from the conference include:
· How hungry this sector is for information and knowledge
· The importance of bringing the advisory team aboard early
· The fact that even the most unconventional opportunities are opportunities for consideration
· Corporate workplace solutions influence the nonprofit sector. This is true even though the depth of pockets is very different!
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