Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.
Industry experts expect healthcare clinics and co-working facilities to move into former bank spaces.
From 2016 to 2018, 5,700 branches closed across the country, and forecasts call for another 1,700 bank branches to close this year.
Banks are shrinking their physical footprints because of their focus on omni-channel strategies to connect with customers, not because of inherent problems with their retail branches. Banks remain in a healthy position.
Online banking didn’t exist 10 years ago. Now people can conduct regular transactional business (deposits and direct bill payment) online rather than having to go to a branch to do so. Banks are in a healthy position because they have entered the omni-channel world, where sometimes you need a physical presence, sometimes you need an online presence, sometimes you need a mobile presence, and they’re working through all those channels.
But amid banks shrinking their physical footprints, landlords must get creative to fill vacant space. Retail healthcare facilities and alternative users like co-working operators may be able to move into closed bank spaces.
The $3.5 trillion U.S. healthcare industry is estimated to grow by over 70% to $6 trillion by 2027. Only 10% of U.S. shopping centers have a healthcare-related tenant, though that is expected to nearly double by 2022.
Clinics benefit from highly visible locations, convenient parking and proximity to growing neighborhoods—attributes many bank branches possess.
Retail landlords benefit from a healthcare tenant because medical service providers usually sign longer leases, compared to traditional retail tenants. Medical leases tend to be long-term because of the high cost of relocating equipment. Physician and hospital groups often have higher credit ratings as well.
Healthcare providers can also boost foot traffic and sales growth for surrounding retail tenants, as the influx of patients and physicians raises demand for the center’s restaurants and stores.
Besides healthcare clinics, co-working offices are often well-positioned to succeed in former bank branch locations.
Co-working operators tend to focus on high wage markets and cities with a large concentration of professional services firms, especially tech-heavy areas. Last year, the amount of co-working space in the U.S. rose by 16% and there is no end in sight.
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About Beau Beach, CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@ProwessIRES.com