Sacred Ground – A Guest Post from Llenrock Group
Jun 3, 2015
This post from Eric Hawthorn is part of our Llenrock Group guest post series and originally appeared on the Llenrock Group blog.
As U.S. cities resume population growth and development interest increases across asset types, city officials and aspiring developers must address questions of space. After all, it’s all well and good to recognize that a market needs more residential options, or has a demand for new retail or office construction, but if there is nowhere to accommodate this new inventory, that’s that. Spacial constraints are certainly quite significant as rent- and value-drivers for any commercial real estate asset type (just look at places like NYC and the Bay Area), but they also inhibit economic and population growth to a great extent. So when it comes to urban real estate opportunities, limited space is at once a blessing and a challenge. For any politically healthy big city (I realize that’s an oxymoron), officials and development professionals will work together to identify aging, obsolete, and particularly vacant properties to make room for new, more vital developments.
One common example of this is the abundance of abandoned homes in many big cities. While there are a lot of legal hurdles and political pitfalls, vacant/dilapidated properties (and there are thousands and thousands of them in major U.S. cities) can offer development/redevelopment opportunities. If a developer is lucky enough to acquire a string of such properties, the resulting large lot is an even more promising opportunity. For an example of how cities can create space by leveraging their glut of vacant single-family and row homes, consider this award-winning article from the Philadelphia Real Estate Council (PDF).
Abandoned homes are surely among the most pervasive sources of blight and wasted space for most major cities, but what are some other kinds of real estate that are underused and offer an opportunity for an enterprising developer to reuse land or repurpose an existing structure? Here in Philadelphia, we have an epidemic of shuttered industrial properties, huge ugly vestiges of the city’s manufacturing past. We also have formerly beautiful properties like the Divine Lorraine Hotel on North Broad Street, which developers have been trying for years to repurpose.
And then we have churches. For a variety of reasons, there are more than a few vacant, underused, or financially troubled properties that have previously served as places of worship (mosques, synagogues, churches, what have you). Let’s not get sidetracked by discussing the various reasons these places have fallen on hard times (are cities increasingly secular? Perhaps). No, religion remains a hugely powerful cultural force (just watch the news…) but the fact remains that the spate of church constructions we’ve seen in American cities over the last 100 or more years has left an overhang of this property type. In many cases, the structures are in great neighborhoods and are stunningly beautiful, but often in need of some internal or external repairs.
Assuming God is cool with it, what can a developer do with a derelict or unused church property? There are a few options. Here in Philly, more than one church has been converted into a theater. Other church properties have become multipurpose community centers–hosting everything from daycares to 12-step groups to religious groups representing a variety of faiths. In New Hope, Pennsylvania, maybe an hour north of Philly, a beautiful old cathedral has been converted to a Cajun restaurant (go figure).
And then there’s the residential option. In the past decade or two, more than one developer has worked to convert aging church properties into loft apartments or even condos. In Philly, examples include
- Wissahickon Methodist Church in Philly’s Manayunk section: in 2003, before the multifamily craze’s peak, developers converted the more than a century-old church into eight condos ranging in price from $220K to $380K (pricey, considering their small sizes, but renovating a stone church is no cheap task). The developers later had to reduce some of the units’ sale prices.
- In the Graduate Hospital neighborhood, developers converted the vacant Saint Matthew Baptist Church into the aptly named “Sanctuary Lofts.”
- In the Main Line suburbs, three different churches are in various states of residential redevelopment.
In the latter case, the Main Line properties are being converted by an interesting company called Main Line reBuild, which has carved out a very fascinating niche for itself as church-conversion specialists. Likely, as various religious organizations (especially Catholic archdioceses) are forced to trim their real estate holdings in an attempt to raise capital, we will see many more opportunities for adaptive-reuse projects like those above. However, it surely takes a very specialized team to successfully execute any church-to-commercial or church-to-residential conversion.
Author: Raymond T. Cirz
