branch banks

[appdyn]

I am working on measuring any contributory value of the features that make a small free-standing building on a pad, a branch bank (otherwise it would be a Verizon store or something).

Questions I'm ruminating include:

If new construction, how much is the lease rate raised (in your experience/market) to pay the developer for the bank features (BF)?

Or, if new construction, does the bank pay the prevailing retail lease rate and put in their own BF?

Upon resale, do any deed restrictions - preventing other bank-types from using the place - affect the price (up or down) compared to the hypothetical sale of the hypothetical neighboring Verizon store?

If there are no deed restrictions and another bank buys it, is there a measurable contributory value to the BF?

Anything else in your collective experience that might educate me?

Our data here is thin.

Thank you very much.

 

[murray stroupe]

Bank Branch

This was discussed some years, ago,here;
try search. Hope this helps

 

[appdyn]

I always search the archives before posting. But unless I searched incorrectly, I didn't find anything except for someone who was looking for comps in Louisiana. The posting dates went back to 2003.

 

[SharperImage]

bank improvements

I am working on measuring any contributory value of the features that make a small free-standing building on a pad, a branch bank (otherwise it would be a Verizon store or something).

Questions I'm ruminating include:

If new construction, how much is the lease rate raised (in your experience/market) to pay the developer for the bank features (BF)?

Or, if new construction, does the bank pay the prevailing retail lease rate and put in their own BF?

Upon resale, do any deed restrictions - preventing other bank-types from using the place - affect the price (up or down) compared to the hypothetical sale of the hypothetical neighboring Verizon store?


If there are no deed restrictions and another bank buys it, is there a measurable contributory value to the BF?

Anything else in your collective experience that might educate me?

Our data here is thin.

Thank you very much.

I've just done two branch banks that leased the property at the prevailing rents. The buildings were completed up to the point of the "bank features" which the bank installed at their cost. ie: vault, safety deposit vault, teller lines drive up window (the lessor did construct the canopy for the drive up).

I haven't seen any deed restrictions, but then it doesn't mean it doesn't happen. With that being said, most of the sales were to other banks, unless they were older buildings and then they were converted into whatever. All of the fixed assets that the bank installed will more than likely will stay unless otherwise stated in the lease.

I hope this helps.

SI

 

[CCAAMO]

Given the state of the banking industry, there will be no shortage of bank buildings from banking consolidation or bank closures. You really need to take this into consideration when you try to assess if the bank facilities as they are really add any value to the building if it has to be leased out on the open market. One bank building where i am was converted into a pharmacy and a coffee house. The pharmacy uses the value to lock up the drugs but they do not pay a premium over the going rental rate for the building.

 

[H.B. Userman]

In my little town of 9,000, a large local bank recently vacated their 800 SF drive-up corner location in lieu of a new facility. In this town, there are currently 6 banks with 7 locations. Just when it seems has plenty of banks, a credit union from a nearby town has signed a lease (from what I hear to be $5K/MO! from a moderately credible source) to that 800SF, 4 lane drive-thru location.

The former owners, the larger local bank, sold the property back to the original owner recently just before the lesee was found. The bank owned the property for 20+/- years but the original deed stated the seller could retain the option to purchase the property back from the bank for the original price for the land, plus all original construction costs.

The original seller bought it back for a cheap price and engaged in a lease that gave hime a HUGE going-in cap rate probably over 30%. Lucky for him. I wonder if the bank would have kept it and leased it to another bank if they knew they could get a lease for that amount.

Quite a variance between the Fee Simple and Leased Fee in this case.

 

[appdyn]

Thank you all. Does anyone have a lead as to the old thread that Murray S. referenced? How long are things kept in the archive?

Thanks again

 

[PropertyEconomics]

It has been my experience, with the exception of the vault, nearly all bank fixtures are essentially obsolete at the end of the banks occupany. There are some tenants that will use the vault and even some that may use the drive up facility, but like the others, it has not been my experience that these features are attributable to higher rents. Tenants desireing these features will look for them which may lessen the lease up time .. but it is very doubtful they will pay more for the features above what they could lease comparable space for without the features.

 

[Kali the Boston Terrier]

We had one bank branch that sat vacant for a while, when it was finally picked up it went as a Dentist office. I believe that property did have a deed restiction...I guess the real question about bank branch, is the old safety deposit, vault, multiple office branch or one of the newer retail type branches with little frill or thrill. The prior type I think has a continued economic life after bank, however the newer branches with their fashionable facades I believe do no thave much life after a bank, IMO.

 

[Vernon Martin]

When I was at Home Savings of America, we were selling many branches in geographic areas we were pulling out of, such as Chicago and Florida.

I think it is still the case that there is a great surplus of banking space in this country due to technological changes, such as ATMs and Internet banking. Some branches are obsolete, some are not, and this depends mainly upon the quality of the location from a retail point of view. A branch at the most heavily trafficked intersection in town is likely to be acquired by another financial institution, whereas most branches in secondary locations get recycled as broker's offices, restaurants, retail stores, etc., and the bank improvements have neglible contributory value, other than that the vault becomes a novelty item.

Last week I stayed at the Hotel Icon in downtown Houston, which turned out to be a recycled bank building, with the vault situated behind the front desk, and presumably used as a hotel management office. The lobby included an elegant bar and restaurant.
Very nicely restored, and a good place to stay if you are visiting downtown Houston.