GlobeSt.com: I find it interesting that this property was brought to market by “several” other brokerage firms. How are bank-occupied properties different from other retail tenants and what is your marketing approach?

Gulock: From a marketing approach, it is crucial to match the needs and fill the requirement for a specific buyer. We have built a strong flow of business including a very defined database of investors with an affinity for owning in this niche-type investment. This coupled with sufficient investigative work to determine how the branch is being utilized and how it is serving its community is what makes the difference when evaluating risks. We examine a variety of issues including but not limited to demographics, traffic counts and density and wrap all those things into our marketing platform.

A bank as a business is necessity-based. Enough of the population continues to need quick and easy access to their money, financial advisors, and ATM machines. The flags are among the most recognizable retail brands. Perhaps one of the biggest differences is if the bank is within a Community Reinvestment Act (CRA) location. If it is, the prospect of a continued occupancy at a certain location is defined because it is very hard and very costly for a bank in a CRA area to relocate. CRA is a federal law that encourages commercial banks and savings associations to help meet the needs of borrowers of all types, including lower income areas. This adds stability for the ownership and translates into a unique value proposition other retailers don't have access to.

GlobeSt.com: Have banks been affected by online banking or other digital activity?

Gulock: The short answer is yes. Actually, the people that own the real estate are the real recipients of change. We have observed change in the bank-occupied property market with the way space is utilized compared to years past, but we are continuing to see positive growth. Over the last 5 years, the top 50 financial institutions in the United States have increased total deposits by 31%, while the total number of brick-and-mortar branches has decreased by 9.5%.

GlobeSt.com: What has activity for bank-occupied properties been like this year?

Gulock: Overall there has been significant demand. The attributes of each location and size are the game-changer this year. There is a notion of concern that some existing larger than average bank branches for today's standards are in danger of being shuttered. We believe for the time being, most have already shaken out. Cap rates continue to be at a premium and the price per square foot has stayed strong as well in both primary and secondary markets across the nation. Alternative use “re-use” opportunities for a specific location are part of the evaluation. Finally, this year we are seeing a more conservative and strategic approach when it comes to new branch openings.

Daily-needs retail is still dominating retail investment activity, but it isn't exclusive to grocery and pharmacy neighborhood centers. Banks also fit the daily needs bill, but they require a slightly different strategy. Still, demand for bank-anchored shopping centers is increasing. We sat down with Kyle Gulock, managing director of the bank property group at Charles Dunn Co., for an exclusive interview about bank real estate investment.

GlobeSt.com: Daily-needs retail is dominating the retail investment market. Do banks typically fall into this category? What is investor demand like?

Kyle Gulock: Yes, financial institution services certainly can fall into the daily needs category. Although space utilization is ever changing in banks, the customers continue to walk through the bricks-and-mortar doors for a variety of reasons. Another aspect includes the presence and flag recognition of the brand in the financial industry, which points to the necessity of a bricks-and-mortar presence.

For these reasons, in addition to a scarcity of inventory, and the fact that the top bank brands have some of the highest credit ratings available for retail assets, there is definitely demand for well-located bank properties. They continue to trade at a premium.

GlobeSt.com: I find it interesting that this property was brought to market by “several” other brokerage firms. How are bank-occupied properties different from other retail tenants and what is your marketing approach?

Gulock: From a marketing approach, it is crucial to match the needs and fill the requirement for a specific buyer. We have built a strong flow of business including a very defined database of investors with an affinity for owning in this niche-type investment. This coupled with sufficient investigative work to determine how the branch is being utilized and how it is serving its community is what makes the difference when evaluating risks. We examine a variety of issues including but not limited to demographics, traffic counts and density and wrap all those things into our marketing platform.

A bank as a business is necessity-based. Enough of the population continues to need quick and easy access to their money, financial advisors, and ATM machines. The flags are among the most recognizable retail brands. Perhaps one of the biggest differences is if the bank is within a Community Reinvestment Act (CRA) location. If it is, the prospect of a continued occupancy at a certain location is defined because it is very hard and very costly for a bank in a CRA area to relocate. CRA is a federal law that encourages commercial banks and savings associations to help meet the needs of borrowers of all types, including lower income areas. This adds stability for the ownership and translates into a unique value proposition other retailers don't have access to.

GlobeSt.com: Have banks been affected by online banking or other digital activity?

Gulock: The short answer is yes. Actually, the people that own the real estate are the real recipients of change. We have observed change in the bank-occupied property market with the way space is utilized compared to years past, but we are continuing to see positive growth. Over the last 5 years, the top 50 financial institutions in the United States have increased total deposits by 31%, while the total number of brick-and-mortar branches has decreased by 9.5%.

GlobeSt.com: What has activity for bank-occupied properties been like this year?

Gulock: Overall there has been significant demand. The attributes of each location and size are the game-changer this year. There is a notion of concern that some existing larger than average bank branches for today's standards are in danger of being shuttered. We believe for the time being, most have already shaken out. Cap rates continue to be at a premium and the price per square foot has stayed strong as well in both primary and secondary markets across the nation. Alternative use “re-use” opportunities for a specific location are part of the evaluation. Finally, this year we are seeing a more conservative and strategic approach when it comes to new branch openings.