Although it may not be a typical commercial real estate player, the Roman Catholic Archdiocese of Boston has reportedly entered into a commercial lease.
The church property, a parking lot, is located in Boston’s South End. The leaseholder has plans to transform the lot into a rental apartment building, complete with an underground garage and retail spaces on the ground floor. Best of all, the church will reportedly be assigned 70 spaces in the underground garage.
The terms of the lease are for 99 years, which means a steady income at a time when many churches are struggling for financial viability. One commentator praises the deal for creatively tapping utilizing the church’s assets — property — to provide more liquidity.
The lease arrangement is notable in another respect: A clause requires that commercial tenants or uses conform to the social teachings of the church. According to the developer, having a restaurant as the commercial tenant would be an easy way to satisfy that clause.
The story is a good illustration of the flexibility with which commercial property owners can approach a lease agreement. Developers anxious to tap into a prime real estate location may be willing to agree to such conditions in a commcercial lease.
The story also illustrates that leasing commercial property can be a good strategy during period of tight cash flow. In this case, the church was located in a prime neighborhood but needed more cash flow. A real estate attorney understands that location is but one of many potential attributes to leverage in lease negotiations. Make sure you have an experienced real estate attorney during your side during such negotiations.
Source: Boston Globe, “Boston church taps land to ease finances,” Lisa Wangsness, Feb. 17, 2015