Oh my goodness! Nine months ago we covered this urgent topic when the Religious Herald published a feature story emphasizing the unprecedented reasons why a church should build now! Well, if we thought June 2009 was appropriate for such a message, today it is even more timely. Conditions affecting construction costs have only become more favorable for the builder since last spring; and we all know that lending rates are still near historic lows.
Jim DePasquale
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Frequently I am asked, “What is going on with construction costs for churches?” and the best answer I can give is, “Today a church is going to get a $1.20 value for 90 cents. ” And, yes, there are truly remarkable stories to support this notion. But let’s first examine a few facts.
Our nation’s construction spending was at its lowest level in six years in December 2009. On top of this phenomenon is the recently published building industry data indicating that construction costs have decreased by percentages in the teens. While each commodity cost has dropped differently, the fact is they have dropped, and labor has followed. Annual inflation rates which had run between 8.7 percent and 10.4 percent in building costs have disappeared.
So what about those remarkable stories? These anecdotes come from the files of our architectural practice as we keep in contact with general contractors and building industry representatives.
One contractor is doubling up on job superintendants just to hold on to good, long-term personnel. Last October our firm received construction bids that were 23 percent below projected costs. In January of this year we priced a church building and learned that the cost per square foot is running 10 percent below numbers we customarily see. Some reputable contractors are operating at 20 percent below their normal volume. Another is at 80 percent to 90 percent down. Recent advertisements for a construction superintendant job generated 114 responses. Sitework subcontractors, in particular, are eagerly seeking new work — as their heavy equipment sadly sits rusting in the rain.
So how can your church afford to build now? Giving, after all, is down and many of your members are unemployed. Yes, contributions are down, but so are expenses. The usual revenue/expense balancing formula has enabled churches to emerge intact from 2009; and we are turning the corner with a glimmer of hope. Gross national product numbers are up, as are manufacturing indices and corporate profits. Consumer confidence is also moving in the right direction. Unemployment numbers, meanwhile, are heading downward.
But how about the bank? When we borrow we have to pay back. Yes we do! But lending rates are so favorable that the annual savings per $1 million loan value can be a healthy $10,000 to $20,000 compared to not-so-long-ago loan rates. Combine that math with current construction cost factors I noted above, and you will find that a $2 million project, paid over a 20 year period, could result in a total savings of $500,000 to $750,000. And I did not even consider the savings churches are experiencing now that runaway inflation has been curtailed. If you are curious, factoring those savings actually results in additional savings well into six figures.
Build now! A church is going to get a $1.20 value for 90 cents!
Jim DePasquale, AIA, a member of Bon Air Baptist Church in Richmond, is currently chair of the Interfaith Forum on Religion, Art and Architecture of the Virginia Society, AIA, and a partner in a Richmond architecture firm. His column appears regularly in the Religious Herald. Send questions to the Religious Herald editor at jwhite@religiousherald or directly to to DePasquale at [email protected].