Posted on : Monday July 9, 2012

By George W. Brown, President, Total Construction Services, Inc.

There are a variety of conditions that may contribute to a congregation’s desire to purchase land and build new ministry facilities. Inadequate parking, limited space for facilities expansions, changing neighborhoods, and a transition from rented facilities to a “permanent home” are just a few. However, in many cases it may be wiser to purchase and renovate an existing church or commercial property rather than relocate to a previously undeveloped building site. In this article we will discuss some of the important factors to consider when evaluating the choice to either “build new” or “buy and remodel.”

1)  Perhaps the first thing to consider when considering a new site is zoning.  Churches are considered commercial uses for zoning purpose, and although religious facilities are permitted in some residential zones, that is not universally true.  In many cases, a special exception or conditional use approval is required before a church can legally use the property for worship, and this applies to both new and existing residential and commercial facilities.  Zoning requirements also vary from county to county, and each site needs to be individually researched.

Community reaction to a proposed new church in the neighborhood can be quite negative, and can significantly delay the development and construction process while adding considerable legal costs for re-zoning  to the project budget. It is always wise to consult with a knowledgeable real estate agent or zoning attorney early in the land or building selection process.

2)  Land development costs associated with a new site or a site to be redeveloped will in some cases equal or exceed the cost of the proposed building.  These costs may include road access, grading, import or export of soils and topsoil, paving, storm water management, reforestation, soil borings, and costs to bring public utilities to the site.  In many cases, when congregations choose to relocate in an office park or mixed-use retail location, site engineering and site development costs can be entirely eliminated.

3)  Despite adverse economic conditions and a slowdown in the commercial construction market, building construction costs have steadily risen during the past few years, posting a 10% increase for the years 2010 and 2011.  This is primarily due to raw material price increases conditioned by rapidly growing demand in emerging foreign markets, in addition to surging fuel costs and costs for petroleum based products in the USA.  New International Building and Energy codes continue to require greater energy efficiencies and more labor intensive construction methodologies that also contribute to higher square foot costs for construction. These factors can help to make the case for buying and renovating an existing facility for ministry more attractive, even if some major alterations to an existing building are required in order to make it suitable for a congregation’s needs.

4) Environmental impact fees, utility connection fees, building permit fees and fees for third-party inspections that are now required in many instances will almost always be considerably higher for new construction on a new site than for remodeling and expanding an existing building.  These and other project “soft costs”, along with the necessary architectural, structural, mechanical and electrical engineering and design costs can easily add 15% or more to actual construction costs, and should be considered when evaluating the decision to purchase land or relocate to an existing building.  An equally important consideration is the difference in project timelines for preconstruction services necessary to obtain the required permits for construction.  Once a congregation knows what its facilities must provide in terms of ministry space and appearance, a remodeling project with some additions can generally be designed and permitted in 6-8 months, as opposed to a 13-21 month typical timeline for a new facility on new or redeveloped land.

The decision to relocate a congregation from its present ministry space to a new one usually represents an expensive and complex process that might span several years from beginning to end.  In today’s real estate and construction environments, it makes sense to carefully consider two possible roads to achieve maximum value for the dollars that will be invested in ministry facilities, with an eye towards preserving the maximum amount of available funding for the ministry that will flow out of the new location.  Although the picture of a new church building on a perfect site is frequently appealing as a first choice, it may not be the wisest choice for a particular congregation at that point in its history.

Examples of non-typical church buildings that have been converted from former uses to ministry facilities include the following:

1. A pastor with a vision to plant a church and reach singles and young families in the center of our Nation’s Capital chose an old movie theater (with no parking!) located within a mile of the White House.  The ministry has grown rapidly, and currently simulcasts its worship services to two other inner-city storefront locations, with a third site under consideration.  The congregation also operates a very successful coffee shop on a busy corner within two blocks of its home location.

2.  An ethnic ministry whose members come from a 50-mile radius recently chose to relocate from Riverdale to a more convenient mixed-use business park in Laurel.  Their ministry is expanding, and they are purchasing land in Prince George’s County.  However, they are presently unable to support both the land purchase and the debt service that would result from constructing new space at that location.  Instead, they decided to purchase and renovate two adjacent warehouse/office condominiums in Laurel that have ample parking and permit a two-story interior floor plan that supports their anticipated growth for the next 5-7 years.

3.  A rapidly growing mid-size church in Anne Arundel County chose a multiplex theater in a large shopping center for its home.  After looking at land that was sufficient in size to meet their parking requirements and evaluating the cost of site improvements and new building construction, they realized that the theater location would afford them plenty of parking and excess interior space for future ministry expansion at a lower cost.  This congregation is continuing to grow, and is presently in the midst of planning an interior buildout of previously unfinished space.

4.  An older church with dated facilities in Wheaton was located in a changing neighborhood.  The parcel of land on which it sat was highly valuable for high-rise construction, the church was woefully short on available parking, and its facilities needed significant infrastructure improvements.  They purchased land in a residential area in Montgomery County and embarked upon what was to become a very expensive four-year planning and zoning process in order to obtain approvals to develop and build at the new location. This excessive cost and delay was due in large part to very strong, well financed, and unanticipated community opposition to the church from the neighborhood.  In the meantime, the sale of their original property was completed, and they were forced to relocate to temporary facilities in a large nearby Christian Academy.

They are presently weighing the decision to stay at the school location and build a Sanctuary that would also serve as a chapel for the Academy.  This will involve completing the development engineering of their “first choice” site in order that it can be sold to another congregation and some of their development costs can be recouped.

5.  A growing startup church in Dundalk was looking for its first home. There were no available church buildings for sale in the area, and the cost of land and site development was prohibitive to this smaller congregation. They purchased a former Verizon computer center that included ample parking, very strong building construction, and abundant infrastructure (water, sewer, and electrical services) that were all very well maintained.  They are currently occupying the facility and working through the process of seeking plans approval for major renovations to the building.

Land costs, site development costs, building construction costs, and a changing and more difficult lending environment all contribute to the need for congregations to consider non-traditional options for their ministry locations when planning to expand or relocate their ministry facilities. There are ample choices available in the current real estate market, and shopping centers, mixed use centers, and office/warehouse parks make good locations because of the ample parking and the availability of extra parking during a congregation’s normal peak hours (evenings and Sunday mornings).

Total Construction Services, Inc. has built or remodeled more than 85 churches in its 26 year history, and these projects have included new churches on new sites, major expansions to existing facilities, and relocations to other facilities that require extensive renovations in order to accommodate the ministry needs of the congregation. As a part of our commitment to serve the needs of the local Church, we are pleased to assist congregations in evaluating new sites as well as  existing buildings that require remodeling, on a no charge basis.  As a ‘design –build’  contractor, we also have extensive knowledge, experience and contacts with design professionals, legal counsel for zoning questions, and local building code requirements throughout the Baltimore-Washington area.  Call us today if we can assist you in your “Build New” or “Buy and Remodel’’ decision.