Will they remain vacant? Marcus & Millichap’s, Austin Weisenbeck and Sean Sharko, take an optimistic view and see this as an opportunity. Let’s see what they recommend…
Recently, 44 bank branches throughout Chicagoland shut down as a redundancy mitigation measure following Fifth Third Bank’s acquisition of MB Financial.
Property owners will want to get a new tenant lined up as soon as possible, but there’s one issue: the only fitting tenants for these spaces are other banks.
The easiest and best use for any single-tenant retail location is to find a user who could operate in the unique space.
Some could languish on the market without repositioning. However, Austin Weisenbeck, senior vice president, investments at Marcus & Millichap, sees only opportunity in these vacant locations.
“Banks have been known to choose solid real estate, much like drug stores,” said Weisenbeck. The retailers that are expanding right now are mostly restaurant based, which is a perfect use for re-tenanting, especially one that could use the drive through.
Finding a new user for a modern, stand-alone bank branch could be difficult as few tenants have a need for multiple drive-thru lanes.
“When you have all of those other drive throughs, up to three or four, that really is only utilized by a bank or credit union,” said Sean Sharko, senior vice president, investments, Marcus & Millichap. It is often expandable building area. Developers have built out that whole drive through to add gross leasable area and make it into a small shopping center.
There are other internal components of a bank that make it difficult to hand the keys over to a non-bank user. Bullet-proof glass, the large teller window and the vault are all signs that a building used to be a bank.
If a vacant bank branch isn’t attracting any tenants, it may be time to put in some capital and reposition the space for a broader retail base.
“A lot of these tenants, in order to achieve that turnkey status, they expect the landlord to make some significant tenant improvement contributions,” said Weisenbeck. Some landlords will find a developer who will buy it out right from them and then will add value themselves.
If a developer does reposition a former bank branch, these locations are well-suited for immediate care, physical therapy, dialysis or other healthcare uses, and these users often pay rents commensurate to what the bank would have been paying.
“The good thing about these branches is that a strong majority of them are in a good retail locations,” Sharko said. They are accessible, on hard corners, and are in desirable spots where other retailers would like to be.