DALLAS—While banking is not disappearing, it's certainly transforming. Although the winds of industry change are not completely predictable, two key themes continue to dominate banking's real estate landscape in 2018: mobility and optimization. Branch banking continues to evolve, driven by customer demand for convenience. i.e., the ability to do business anytime and anywhere.
Banking institutions are accommodating this evolution, according to JLL's 2018 banking update. The report spearheaded by JLL's Dallas-based Walter Bialas, vice president, market research, highlights continued branch optimization by both large and small banking institutions, a feature reported last year that is still shaping the industry. Locally, as an example, the Dallas metro has gone from 1,812 branches in 2010 to 1,672 in 2017.
“As recently as four to five years ago, banks considered themselves successful if they had more branches than their competitors. Now, with mobile banking apps, which were non-existent 10 years ago, and the growing acceptance of online and mobile banking, the banking industry is trying to optimize to meet their clients' needs while increasing their quality of service,” Bialas tells GlobeSt.com. “We all knew it was happening, but I was surprised to see to the extent that it was happening. There is no market or brand that's immune.”
The report discusses the following issues shaping the industry: bank branches continue to consolidate; banks continue to drive more business into fewer branches; the largest banks are all shedding branches as an overall review of service lines, seeking to optimize footprints; branch optimization should not be viewed as a broad industry pullback; and branch reuse and redevelopment continues to challenge the industry.
Looking forward in 2018, new branch development is slowing and a net number of approximately 1,700 US branches (approximately 2% of total inventory) are expected to close. There will also be a continued emphasis on mobility and technology as replacements for tasks that traditionally took place in branches.
As banks optimize, some branches have been abandoned on the sidelines. These vacant branches exist in most US markets. Although many are still in good locations, a branch bank may no longer be the optimum use. Patience and creative strategies are often necessary to reuse and redevelop these assets.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
