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Tuesday, Oct 3, 2023


By SHELLY GARCIA Staff Reporter The current spate of bank mergers is putting a slew of former bank branches onto the market, creating opportunities, as well as challenges, for real estate brokers and developers. Some 100 bank branches in L.A. including more than 25 branches in the San Fernando Valley are on the block, and those numbers could double once a number of pending mergers are completed. Many of the newly available properties are proving an easy sell for Valley brokers because they sit on prime locations, at the corners of heavily trafficked intersections with good visibility and lots of parking. In some cases, the spaces are so desirable that they are commanding premium pricing. A former Coast Savings property in Studio City recently sold for $2.8 million, $500,000 more than the original asking price because there were so many bidders for the property. (The buyer has remained anonymous, but brokers believe it to be Banana Republic.) “Even if a bank doesn’t want it, there’s a pretty substantial list of retailers who do,” said Art West, who works in the real estate dispositions department at Washington Mutual Inc., which has acquired Great Western Financial Corp. and American Savings Bank, and is currently awaiting approval to acquire H.F. Ahmanson & Co. “Malls are filling up, vacancies are dropping and rents are climbing. Prospects say, ‘If I can’t be in the mall, where else can I be?’ ” Because its merger is still pending, Washington Mutual has yet to announce how many branches it will divest. But those branches will be just some of the bank properties coming on the market. Ahmanson, the parent company of Home Savings Bank, earlier acquired Coast Savings Financial. First Nationwide Holdings Inc., parent of California Federal Bank and Golden State Bancorp Inc., will merge with Glendale Federal Bank in November. Meanwhile, Wells Fargo & Co., which several years ago acquired First Interstate Bank, now is merging with Norwest Corp., which could add even more branches to the mix. Corner properties are in high demand by retailers and other service companies like travel agents that thrive on high-visibility locations, brokers say. But properties located on the ground floors of office buildings can be a hard sell. Traditionally, those spaces only have been used by banks and securities companies. “Securities companies have moved upstairs and banks are shrinking their square footage,” said Pete Puzo, a vice president with Grubb & Ellis Co. in Sherman Oaks. The size of most of these ground-floor office spaces 8,000 to 10,000 square feet is too large for the new banks that are coming on the market. And the kinds of companies that seek such space health clubs and record stores, for example often are unacceptable to the owners of the high-rises. “The bank space in a high-rise office building is going to take a while to absorb,” Puzo said. But even the most desirable locations have one feature that is posing challenges to brokers and non-banking companies interested in leasing the spaces. “What do you do with the vault?” asked Keith Green, associate vice president at the Seeley Co. With their foot-thick walls and concrete-reinforced construction, it can cost as much as $50,000 to demolish a vault. Add to that the cost of reconfiguring the interior bank space, which was designed for rows of teller windows, and buying or leasing a bank branch can get pretty pricey. As a result, brokers say tenants are asking for concessions on the lease rate or sale price or for tenant improvement allowances to help cover the cost of the necessary renovations. Some tenants in these bank branches are tearing down entire structures and rebuilding them to suit their needs. But others are working around the problem. Some have decided to use the vaults to store files. A medical group opted to turn a former Coast Savings Bank branch vault into an X-ray room; a pet store decided to use the space to store pet food. Then there’s the real estate broker who liked the look of the vault so much, he redecorated the space with the vault door as the focal point. “He’s got this great, big vault door in the middle of the space,” said Washington Mutual’s West. “He says it’s quite a conversation piece.”

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