Category: Market Insight

buying church property

Critical Steps for Buying Church Property

Market Insight

From The Religious Real Estate Review, August 2020
By Marcus Daniels, Ed Luckett, & Terry Rogers

Whether you’re just starting a ministry or your church’s congregation has outgrown its building, it’s likely that you’ve had to take on an unusual new role: that of a real estate expert. Although faith leaders understand how to preach effectively and build a community of believers, not many are equipped with the knowledge for buying church property. From evaluating the value of the property to gaining zoning approval to inspecting the facility, there are many steps church leaders need to go through before signing on the dotted line.

But church leaders are not the only ones who lack familiarity with the process of selling or buying church property. Many commercial real estate brokers also lack the familiarity with laws and regulations unique to religious properties.  Consequently, many lack the vision and strategic guidance to thoughtfully lead you through this process. Matters regarding church real estate require a specialized approach that should include an adviser who has both real estate expertise and experience working with churches.

If you are considering buying a church building or purchasing a nontraditional property to convert into your congregation’s new home, here are four critical steps to position your church for success.

ALIGN CHURCH LEADERSHIP
Before you can even think about selecting a site, everyone from your church administrators to your congregation members need to be aligned in terms of your long-term vision and how the new building will help you achieve the objectives and goals you have set. An experienced church broker can help shepherd a congregation through conversations about location, property-specific issues and design decisions to avoid a disconnect within your congregation.

KNOW YOUR RECENT HISTORY & WHERE YOU STAND
Get your business documents, attendance and balance sheets for the past three years and keep your financials safe and secure to be prepared to create a financial plan. Make sure your financial and organizational records are in order. You should be able to produce financial statements for the past three to five years, information about any existing debt obligations and current assets, as well as tithes and offerings. Additionally, review your articles of incorporation or bylaws, and determine who is going to be the signatory for the execution of the documents.

CREATE A FINANCIAL PLAN
Next, you need to create a financial plan for how the congregation will lease or purchase the property. If you choose to lease, make sure you understand the real market value of the property so you know if you can handle lease payments. If you choose to purchase, you will probably use a combination of funding sources, such as a capital campaign, donations and bank loans. A good rule of thumb: Churches can borrow three times their annual giving.

LOCATE THE APPROPRIATE CHURCH PROPERTY
There are many spiritual, emotional, and congregational considerations when selecting a site, and it’s helpful to remember that the “perfect property” doesn’t exist. Church leaders need to be flexible. For example, many churches are leasing or buying nontraditional church buildings because there is a low inventory of existing churches for sale. If you have identified a potential building, investigate local regulations and conditions, including easements, parking and zoning regulations, and utilities, to determine if the property can be used for religious purposes. Additionally, gain a clear understanding of what it will cost to convert the building into a suitable church.

Unfortunately, without the aid of an experienced church broker, many churches purchase buildings that aren’t zoned to be churches or that they ultimately cannot afford because they did not account for how much it would cost to repurpose or renovate.  If you do find an existing church building in a good location that fits within your budget, make sure it suits your needs and is in good physical condition, so renovations required are more cosmetic than infrastructural.

Unlike a traditional real estate agent who must string together the professionals necessary to complete the purchase of a property, an experienced church broker offers a full turnkey solution. It pays to find the right partners who can connect you with church lenders and capital campaign leaders, organize documents and reports, manage the zoning process, oversee the inspection of the facility and the construction process, seek congregational approval, negotiate the deal, and hand you the key.

This article is an excerpt from The Religious Real Estate Review, a newsletter providing the religious community with up-to-date news on real estate development specifically by houses of worship in the Washington DC Metro region. Each issue provides updates on recent transactions, real estate development, religious news, and upcoming community events.

Marcus N. Daniels, Ed Luckett, and Terry Rogers of NAI Michael are the editors and publishers of The Religious Real Estate Review and have over 30 years of combined experience in commercial real estate sales and leasing specifically with churches and houses of worship.

Click here to view the latest issue of the Religious Real Estate Review.

UMD social distancing pushes need for more housing

UMD Social Distancing Increases Need for Housing

Market Insight

UMD social distancing requirements push the need for more off-campus housing. New construction is underway for both on- and off-campus housing. Developments still progressing despite COVID-19 slowdown. The latest issue of the PGCRE Newsletter: Upper County is available! James Miers and Stephen Catalano discuss the latest news in College Park and the surrounding area. Read more below or click here for the full newsletter.

UMD SOCIAL DISTANCING INCREASES NEED FOR HOUSING

When the University of Maryland, College Park reopens on August 31st, social distancing rules will force changes in daily life: masks will be required in university buildings, students will be asked to wipe down surfaces they use, and classes of over 50 students will be entirely online.

Meanwhile, the university expects to house “more than 75%” of students who applied for on-campus housing, despite converting all triple and quad dorm rooms to doubles. Some dorm lounges will be converted to residences – a change that began prior to the pandemic – and some on-campus lounges outside of dormitories will be closed entirely.

The decreased density of on-campus housing means there is more demand for off-campus living. Private student housing living quarters tend to be less dense buildings already: accommodation per square foot is higher and the number of students using each bathroom and toilet is lower. For these reasons, it is likely that the demand for off-campus housing will increase in the short term as the pandemic reduces on-campus availability more than it has reduced demand for enrollment. According to one property manager at a student housing complex, phones have been “ringing off the hook” after the university first clarified its fall semester living guidelines and classroom rules on June 15th.

DOWNLOAD THE FULL PGCRE NEWSLETTER SUMMER 2020

New Hotels in Prince George’s County

Market InsightMarket Reports
One of the new hotels in Prince George's County, The Hotel at UMD.
The Hotel at the University of Maryland in College Park

The hotel/hospitality market in Prince George’s County is expanding. Since 2016, 11 new hotels have developed in Prince George’s County including MGM National Harbor, The Hotel at the University of Maryland, and Cambria Hotel & Suites in College Park. Those few alone added over 1,500 new hotel rooms in the county.

Additionally, other new hotels are delivering in late 2019 and early through late 2020. These include the Hyatt Place at National Harbor, Homewood Suites in Largo and the Residence Inn by Marriott at Ritchie Station.

The hotel sales market in Prince George’s County continues to outperform most similar jurisdictions across the United States. It is projected to continue to thrive with over $3 billion in economic development projects over the next five years.

To learn more about the new hotels in Prince George’s County and to read the full Hospitality Market report, click here.

This report is prepared by Marcus Daniels, Terry Rogers, and Ed Luckett of NAI Michael.

High end residential at Editors Park

High-End Residential Development Thriving in Maryland

Market Insight

High end residential development is thriving throughout northern Prince George’s County. New projects, representing over 2,000 units, are underway at all points in the development process. Demand is keeping pace with development.

Multifamily development has been a major force along Route 1 for years, especially with the development of student housing starting in 2011. The pace of construction reflects renewed interest in living around College Park. This means more traditional residential development – apartments, condos, and townhouses – is growing too.

Developers work hard to bring options to high-earning professionals by building luxury homes that they can’t keep on the market. Townhomes are under contract nearly as soon as they’re completed. As three representative projects – Greenbelt Station, Riverdale Park Station, and Editors Park – show, developers have been able to sell new townhomes at a range from $214 to $385 per square foot. This equates to around half a million dollars per unit.

To learn more about high end residential development in Prince George’s County, along with other area news, view our full Route 1 Route 295 Corridor Newsletter.

Click here to view the spring edition of the Route 1 Route 295 Corridor Newsletter.

industrial demand

Industrial Demand in 2017

Market InsightMarket Reports

2017 saw a variety of industrial demand levels – investment sales reached new heights, while leasing slowed for the first time in three years.

The Prince George’s County industrial market experienced an increase in vacancy, going up to 7.6% as opposed to last year’s 6.5%. However, there were two large Class A leases signed in 2017.

Despite the slowdown in leasing activity, industrial demand from investors has been strong. Pricing has reached an all-time high, and scarcity of industrial-zoned land will keep the market tight.

In 2018, we expect to see increased industrial demand in leasing. Additionally, evidence shows sales values for industrial should reach over $150 per square foot.

CLICK HERE TO READ THE FULL REPORT

Development in Prince George’s County

Deals & TransactionsMarket Insight

The wave is here! NAI Michael’s new newsletter highlights the latest development and changes in the Route 1 / Route 295 corridor.

Before his passing in 2014, our former county executive Wayne Curry predicted that Prince George’s County was on the way up.  He saw changes in business and regulation and construction creating real opportunities nearby and he knew that good things were in store for our county. His predictions are now coming true.

2017 has been a momentous year for development in the Route 1 / Route 295 corridor of Prince George’s County. The Hotel opened in College Park, Metro’s Purple line is under construction, the county’s first Whole Foods opened in Hyattsville, and numerous residential projects are in the pipeline. Additionally, companies like Kaiser Permanente are expanding their footprint within the county with new office space. The newsletter includes more details about these changes, and more.

CLICK HERE TO READ THE FULL NEWSLETTER

Office Vacancy Reduced in Prince George’s County

Market InsightMarket Reports

Prince George’s County office vacancy reduced by over half a million square feet leased in the last six months!

Leasing of vacant space achieves over 357,000 square feet in the first quarter 2017 – the highest quarterly absorption for the last 10 years.  Recently signed leases and new leasing activity indicates that Prince George’s County is poised for continued significant growth in office leasing in 2017.

The Washington DC area office market includes the District of Columbia and adjacent suburban submarkets in Maryland and Virginia. The Washington DC area office market consists of about 470 million square feet in 10,051 buildings.  Net absorption for the overall Washington Area was positive 2,754,849 square feet for the first quarter 2017.  The Washington Area vacancy decreased from 14.6% to 14%.

Prince George’s County office space net absorption of vacant space was positive 357,767 square feet in the first quarter 2017.  Annual rental rates for Prince George’s County office space have increased steadily almost every quarter for the last five quarters with the first quarter 2017 rate per square foot of averaging in the mid-twenty dollar range on a full service basis.

FOR A FULL OFFICE MARKET REPORT, CLICK HERE

Office vacancy declined in 2016 in Prince George's County

Office Vacancy Declined in 2016 for Prince George’s County

Market InsightMarket Reports

Over the course of 2016, office vacancy declined in Prince George’s County and in turn, average quoted rental rates have risen steadily.

 It was a year for the Prince George’s County office market. Office vacancy declined steadily every quarter, from 19.2% at the beginning of 2016 to 18.8% by year end. Based on 5-year averages and known construction activity, office vacancy is expected to drop to 17% by the end of 2017. Average full service rental rates increased in 2016, from $20.96 in Q1 to $21.43 in Q4.

A total of 114 office sale transactions were completed in 2016. These transactions totaled 2,597,862 square feet and $168,786,687 in sales volume. Many new owners plan on investing substantial capital into their assets to retain and attract tenants. For leasing, over 153 full service leases were completed, representing 530,820 square feet. One of the largest lease deals of 2016 was with the growing tech-education company, 2U Inc. They are in the process of relocating into 252,950 square feet they leased at 4900 Harkins Road in the Lanham/New Carrollton area.

FOR A FULL OFFICE MARKET REPORT, CLICK HERE

 

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