By Kevin Eckstrom
Religion News Service
Saturday, April 29, 2006; B09
A crunch on open space in many cities has developers courting churches with multimillion-dollar offers to buy their property and sometimes even the air above their heads.
Finding the sky is the limit, many congregations are cashing in.
"In an urban area, air rights are just as much an asset as a piece of property," said the Rev. John M. Buchanan, pastor of Fourth Presbyterian in Chicago, which is working on a deal that could bring in $25 million.
From New York to Seattle, downtown congregations are striking deals worth tens of millions of dollars. Those willing to sell are often Protestant churches saddled with aging buildings, growing deficits and shrinking memberships.
Although the real estate market has cooled in recent months, industry veterans say the church trend remains strong, especially in revitalized cities where the supply of condominiums and office space has not caught up with demand.
In New York, where the only place to go is up, developers are willing to pay top dollar for not just land, but also the air above a church's roof.
On Manhattan's Park Avenue, the byzantine-style Christ Church United Methodist is dwarfed by high-rise apartment buildings on the corner of East 60th Street. The 70,000 square feet of "air rights" above the church is considered developable space that can be sold to the highest bidder, even though the church has no plans to build up.
Christ Church negotiated a selling price of $430 a square foot -- twice the going rate in New York's cutthroat real estate market -- for the unused vertical space. The November deal generated $30 million for the church.
The church's pastor, the Rev. Stephen Bauman, said the sale of an unused "vertical asset" will fund ministry programs, including a public school in the South Bronx that has been adopted by the church.
In Chicago, Fourth Presbyterian Church hopes to overcome neighborhood opposition to a proposed 60-story condominium tower that would bring the church $25 million for selling its air rights along Michigan Avenue. The money would allow the church to expand its tutoring programs and care for the elderly and to do more outreach in the city's housing projects.
Nearby, St. James Episcopal Cathedral has signed a 120-year lease worth more than $10 million to erect a 64-story tower that includes a 65,000-square-foot Canyon Ranch wellness center and restaurant.
In Seattle, an office tower will replace First United Methodist Church in a deal that preservationists estimate at $30 million. The money will be used to build a new church facility and fund a homeless shelter and feeding programs.
In the District, Calvary Baptist Church at Eighth and H streets NW sold a building and a parking lot to make way for office buildings in a rejuvenated neighborhood. The $11 million profit was quickly consumed by church renovation projects, and cost overruns put the congregation in the red.
But gleaming new facilities -- five kitchens, a recording studio and a rock-climbing wall -- have reenergized the parish.
Calvary's pastor, the Rev. Amy Butler, said that the young professionals who now call the neighborhood home have helped double attendance on Sunday mornings and that the facilities allow the church to host several new programs.
"This is big-time real estate," said Butler, who said the deal has been both a blessing and a curse, "and we don't know what the hell we're doing."
A few blocks away, First Congregational United Church of Christ plans to raze its 1960s-era building for a new facility that will include condominium units. Church officials are negotiating a deal that will preserve social service programs on site, and proceeds will help build the church's endowment.
Some Catholic churches have gotten in on the game, with St. Paul's Catholic Church near New York's Lincoln Center selling air rights in two deals worth a total of about $35 million. But the most active players appear to be mainline Protestant churches, including Episcopal, United Methodist, Presbyterian and Lutheran congregations. Unlike Catholic churches, in which bishops and cardinals have the final say, the semi-independent status of mainline congregations lets them play the market more freely.
After decades of declining membership, many congregations are using their biggest asset -- their property -- to rethink their ministry and presence in U.S. cities.
There are risks for churches not accustomed to the cutthroat world of urban real estate. Ministers trained in sermons and counseling often find themselves unprepared for hardball negotiations and high finance.
"I'm a new pastor, and it's been Real Estate Development 101 from day one," said the Rev. Donna Claycomb, pastor of Washington's Mount Vernon Place United Methodist Church, which is selling two classroom buildings for an office project worth several million dollars.
An artist's rendering of an eight-story atrium in Claycomb's new building is optimistically filled with young parishioners and children. The average age of her 50-member congregation is 82. "Unfortunately," she said, "the people don't come with the building."
Some church leaders are concerned that a lucrative real estate market has made churches vulnerable to the lure of development. Presbyterians in New York, for example, have launched a citywide building survey to determine which properties could be sold off and which should stay.
The members of West Park Presbyterian Church on New York's Upper West Side were offered $40 million for their crumbling building on Amsterdam Avenue, but they decided to sell air rights for about $15 million to build a 21-story mixed-use condominium tower that will fund repairs to the church.
"We wanted something more creative than finding a developer and just selling [the building] to the highest bidder" and walking away, said West Park's pastor, the Rev. Robert L. Brashear.
Real estate veterans say the big-dollar "walk-away" deals are tempting for aging churches, but they caution against moving too quickly.
"Whatever you do, do not sign anything with the first person who contacts you," said the Rev. Canon Andrew J.W. Mullins, rector of New York's Episcopal Church of the Epiphany, which is planning a condominium project. "I don't care if it's John D. Rockefeller. Don't sign anything."