Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
SCT
Retail landlords put faith in houses of worship
April 16, 2019 Most likely, the thought of leasing space to a church has rarely, if ever, crossed the mind of the typical mall or shopping center owner. But that is changing as contemporary and largely nondenominational religious institutions have continued to grow and evolve.
Some of these churches boast congregations that number in the thousands of attendees, and they tend to be financially sound and to inject significant amounts of capital into upgrading their spaces. Moreover, having shed the image of being Sunday-only users, some of these church tenants drive traffic all week long by https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
providing day care, food-and-beverage, bible-study sessions, self-help classes, fitness clubs and similar events and services. Shopping centers can satisfy a variety of needs for churches, namely parking, visibility and wide, open spaces easily adapted to their use, says Matt Messier, a principal who oversees the religious, educational and not-for-profit practice group at Orlando, Fla.–based brokerage Foundry Commercial. What is more, many nondenominational houses of worship want to disassociate themselves from traditional church buildings and are looking for cost-effective alternatives to development, he says. “Today many of the church groups we’re talking to are either growing and expanding into a new site or are megachurches that have multiple locations,” said Messier. “A lot of shopping center owners have discovered that churches do bring in a significant amount of business to their property all the time — it’s not just for two hours on a Sunday morning.” Messier, who has helped churches acquire vacant bigbox and grocery stores in various states, says his home state of Florida lists some of the biggest and fastestgrowing churches in the U.S. Landlords are taking advantage of the opportunities. New York City–based Brixmor Property Group, for one, recently signed a lease with Celebration Church to backfill part of a former Hobby Lobby at its 334,000-square-foot Regency Park Shopping Center, in Jacksonville. Last year Outreach Magazine, a publication focused on Christian churches, https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
ranked Celebration Church the 18th largest and the 10th fastest-growing megachurch in the country. In April Celebration Church was set to embark on a $2.5 million improvement plan to transform the 50,000-square-foot space into a 1,000-seat sanctuary, a preschool and a youth center.
https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
Christ Fellowship Church, a Florida-based megachurch of some 26,500 members, acquired the 127,000-square-foot Dillard’s at Boynton Beach (Fla.) Mall about seven years ago
When considering church tenants, Brixmor focuses on proven organizations that can bring value to a property, as opposed to startup churches or churches that are in https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
as opposed to startup churches or churches that are in distress, says Christopher Ralph, the Brixmor vice president of leasing who worked on the deal. Brixmor also leases space to houses of worship in its Williamson Square and Festival Centre properties, in Franklin, Tenn., and North Charleston, S.C., respectively. In addition to a church’s ability to bring more traffic to the centers during the week, there is the fact that Sunday worshipers tend to patronize the restaurants in those centers after services are over, Ralph says. “Churches that are already established tend to match the goals that we have, which is to be the center of the community,” he said. “Celebration Church is planning a significant build-out, so they’re making as big of a commitment to the shopping center as a lot of the retailers are.” Meanwhile, early last year Oceans Unite Christian Centre moved its sanctuary and a café into a roughly 20,000square-foot space at Indian River Mall, in Vero Beach, Fla. That church also provides day-care services and has leased additional space for a gym, says Katy Welsh, CLS, the Boca Raton, Fla.–based Colliers International senior vice president who represents the 740,000-square-foot property. And one of Oceans Unite Christian Centre’s members leased space separately for a photography studio. “Ten years ago we wouldn’t have been having this conversation — not about a sophisticated mainstream shopping center or mall,” said Welsh. “Churches just weren’t tenants that we would have put in, and most of the leases with national tenants would have restricted us from having a religious organization as a tenant.”
https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
Oceans Unite Christian Centre also spent about $2 million on tenant improvements, points out Mike Kohan, principal of Kohan Retail Investment Group, a Great Neck, N.Y.–based firm that acquires aging malls with an eye toward repurposing them. Kohan Retail purchased Indian River Mall in 2017 for $12 million. “A lot of retailers are going bankrupt or closing stores, so this is one way to make sure that mall traffic is not decreasing to the level of being a red light for other tenants,” he said. “Oceans Unite is a great tenant, and we’re happy to have them.” Kohan Retail also leases space to a Hispanic Christian church at its Washington Square Mall, in Indianapolis.
“The existing tenant base today realizes that it needs to keep an open mind as to what the mix of a shopping center might be going forward, versus 10 years ago, when the lease was written”
Messier says that landlords became more agreeable to leasing space to churches (as to gyms and other uses they had historically resisted) following a rash of big-box closures during the recession of a decade ago. Shopping center tenants that may have used co-tenancy restrictions to keep churches out in the past have seen the light too. “The existing tenant base today realizes https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
that it needs to keep an open mind as to what the mix of a shopping center might be going forward, versus 10 years ago, when the lease was written,” Ralph said. “I think you’re seeing that as it applies to all nontraditional users.” Still, some towns are reluctant to accommodate religious uses in shopping centers, says Franklin Zemel, a partner in the Fort Lauderdale, Fla., office of law firm Saul Ewing Arnstein & Lehr who specializes in religious land use, among other practice areas. In most states, retail landlords that lease space to churches continue to pay taxes on the entire property, but churches are still exempt from sales tax, notes Zemel. Consequently, fearing the loss of a revenue-generating vessel, cities rely on what are often antiquated city codes to restrict religious users in shopping centers, he says. If a retail property’s zoning allows for movie theaters or other public assemblies, however, the prohibiting of a church from occupying space in the center is then considered to be based on message and not on use, he explains. That amounts to discrimination, and, usually, a simple letter to a city attorney removes these roadblocks, Zemel says. But some cities are rewriting their codes to prevent all public assemblages from their commercial shopping districts, as a means of avoiding the issue. “Cities are allowed to zone different areas how they want, and if a property is not zoned for public assemblies, then religious assemblies won’t be
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
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permitted,” he said. “But religious assemblies cannot be treated on less than equal terms of nonreligious assemblies in shopping centers.”
“Would you rather have a church with the possibility of additional cash flow, or would you rather hold out and pray for a commercial user?”
https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
Churches sometimes acquire vacated big-box stores and anchor spaces in their own right. Christ Fellowship Church, a Florida-based megachurch with some 26,500 members, acquired the 127,000-square-foot Dillard’s at Boynton Beach (Fla.) Mall about seven years ago. This is only one of that church’s 13 locations. And in Jacksonville, Impact Church acquired a 200,000-square-foot former Belk space at Regency Square Mall in 2016. Gene Livens, a senior director and real estate consultant with Service Realty, a Texas-based brokerage that specializes in church real estate, says he expects to see more nondenominational churches locating in shopping centers and malls. These contemporary houses of worship are reaching more youth than mainstream denominations are, he points out. “For landlords, whether to lease to a church depends on what you think shopping centers are going to look like in 20 years,” said Livens. “Would you rather have a church with the possibility of additional cash flow, or would you rather hold out and pray for a commercial user?”
https://www.icsc.com/news-and-views/icsc-exchange/retail-landlords-put-faith-in-houses-of-worship
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Retail landlords put faith in houses of worship | ICSC: International Council of Shopping Centers
7/1/19, 5:58 PM
By Joe Gose Contributor, Shopping Centers Today
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