Bank branches dwindle as technology optimizes user experience

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March 1, 2018


Two themes dominate the banking real estate landscape: mobility and optimization.

Thanks to a trend started during the recession and the advent of financial technology, banks large and small are consolidating and no institution is immune to this evolution. The net number of branches in the U.S. declined from 91,900 in 2016 to 89,900 last year.

Houston has experienced a net decrease in bank branches every year since 2010, totaling 108 closed bank branches from 2010 to 2017. The market saw 32 close from 2016 to 2017 alone.

Optimization, however, should not be viewed as broad industry pullback. New branches are still being opened, particularly in growing metros, just more selectively than in previous periods. Approximately 125 branches opened in 2017, most of which were under 4,000 square feet, reflecting the broader trend toward space optimization.

The evolution of retail banking has left vacant branches in most U.S. markets, including many in prime retail locations.

There are currently 850 vacant branches across the U.S., totaling 3.4 million square feet. Redeploying vacant bank branches can require some creativity. As a result, 28 percent of vacant branches are on the market for more than 30 months.

Successful strategies to redeploy branches across the U.S. have included credit unions, mobile phone stores, fitness centers, educational services, local-serving office space, personal services, restaurants and fast-food.

The Houston market has seen vacant bank branches repurposed for a variety of new users including credit unions, restaurants, educational services centers, and even churches.

Looking forward, new branch development will continue to slow in 2018 and we expect a net number of 1,700 branches (approximately 2 percent of total inventory) to close across the U.S. this year.

Find out more by downloading our 2018 U.S. Banking Outlook.

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