by Nathan Artt, Principle, Ministry Solutions
Over the past few months, there have been quite a few articles talking about construction spending within the âreligiousâ sector. The data suggests that churches are not building, or planning to build, because of the lingering aftereffects of the âGreat Recessionâ. If you look at the chart below, you can see why people have drawn that conclusion! This is from the Federal Reserve Economic Data (FRED) website.
As you can see, the amount of money churches spent last year on construction is at it lowest point in over ten years, and is a third of what it was at its peak. However, if you talk to any architects, they will tell you that they are busier than they have been in a long time. So, is construction spending indicative of what is actually going on in the marketplace? The answer is an emphatic NO.
This economic data for construction spending is not an indicator, it is a result. âThe result of what?â, you ask? Well, the âgreat recessionâ hit us hard in 2008. Projects already being developed finished in 2009 and 2010, and there werenât a lot of churches planning in 2011 and 2012. Construction spending went down in a consistent pattern because it is typically two to three years behind the activity of the people who are planning projects.
One of the key indicators for predicting construction spending is whatâs known as the Architecture Billing Index. Itâs pretty simple actually- considering it can take anywhere from a year to 3 years to go from planning to construction, the best way to predict whether or not the construction spending data is going to change is to see how busy architects are. Here is what is happening in the architecture world:
As you can see, the Architecture Billing Index is up nearly 50% from 2009 in the Religious segment. Thatâs a BIG number. In fact, weâre almost back to where we were pre-recession. Here are a few key takeaways from this information:
- Churches are planning to expand their facilities
- The economy has greatly improved, and donors are opening up the pocketbooks again.
- Itâs going to be more expensive to build in a year from now
- Along with an increase in construction spending that you will see over the next few years, you will also see a rise in average construction cost. Contractors have been taking projects for next to nothing to keep their people busy, but the cost of materials and the cost of labor will be on the rise because of the increasing demands for goods and services within the construction industry.
- Hiring a good contractor is more important than ever
- As contractors get busier, they are going to have a larger menu of clients for them to choose from. Thatâs right- hiring a contractor has gone from a buyersâ market to a sellersâ market. Make sure that you hire someone you can trust, and will make you a priority.
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