As Published in the February 8, 2016 issue of Banker & Tradesman
By Joseph Morrison III
Special To Banker & Tradesman
Finding good real estate to develop a retail property can be difficult. Finding good real estate to develop a retail bank branch in New England can downright painful.
Unlike other parts of the country, we are blessed and yet cursed with a scarcity of undeveloped land for real estate investors to purchase, improve and lease or for owner-users to develop and occupy. This is especially true for well-travelled thoroughfares in primary and secondary retail markets.
As we ride this latest upcycle, it appears that retail development can be segregated into two types: large lifestyle retail and mixed-use projects, and small single-tenant projects.
In both instances, a financial institution has its work cut out when it is faced with securing a great location for a new or relocated branch without paying a premium.
Larger high-profile mixed use developments that were recently completed include University Station in Westwood, MarketStreet Lynnfield, The Point in Littleton and 3rd Ave Burlington. These projects all feature grocery anchors, vibrant restaurants and retailers, fitness centers and other non-retail uses such as residential, hotel and senior housing. This formula has become essential to create a critical mass of activity as well as a dynamic environment where residents, guests, workers and shoppers want to spend their time.
Todd Fremont Smith, senior vice president of development at Nordblom Co. and initiator of 3rd Ave Burlington reflects on why Nordblom embarked on the project and why it has been so successful since opening: “It’s not enough anymore to build an apartment community without convenient and compelling amenities. The same is true for office environments as well. In addition, there is something captivating about visiting a unique restaurant or store that cannot be found in every community or street corner. That’s the type of distinctive place we tried to create at 3rd Ave and so far the consumer response has been fantastic.”
Ever An Evolution
With the number of visits to bank and credit union branches on a steady decline, financial institutions need to get creative in their design, staffing and technology implementation at branches to compete with other restaurateurs and retailers for square footage in premiere retail developments.
But it’s not just the developers that need convincing. Many communities view financial institution branches as stagnant users that open late, close early and don’t create quality traffic that can help bolster nearby retailers and restaurants which leads to a vibrant business experience. Some communities have gone so far to restrict the use altogether from certain zoning districts within a municipality.
How do banks and credit unions overcome this stigma? Evolve.
Change your model. Financial institutions can no longer think of themselves as simply competing against other financial institutions. In the eyes of the best retail investors, operators and developers, they are in competition with necessity-based retailers that generate multi-week customer trips. They are going head-to-head with coffee shops and fast casual food providers that residents and day-time employees not only crave but now require as part of their daily experience. Financial institutions need to study what these other operators do well and think creatively on how these aspects can be implemented in certain cases within a branch’s operations.
Enhance the design. Consumers do not just make decisions with their heads and wallets. Emotion is a key component. One of the reasons it’s so enjoyable to shop in one of the several recently-opened Wegmans supermarkets is because of its thoughtful design. When you are deliberating over the selection in the cheese shop at Wegmans’ store, you feel like you are in a cheese shop and not in a cavernous, 140,000-square-foot warehouse. This feeling is created through the meticulous design of the lumen levels in the lighting to the color and material of the flooring. The same can be said for the dramatic nature of the entrance at The Bancroft, another 3rd Ave Burlington business that has consumers talking as much about its one-of-a-kind design as it does about its exceptional food and service.
Despite decreasing traffic in branches, the quality of the trip is still substantial and the facility’s design needs to speak to the consumer and reflect the institution’s history, products and services.
Implement functional and time-saving technology. Technology can be tricky and circumstances alter cases. Some retailers and restaurants have done a fabulous job integrating technology seamlessly into their customers’ experience when entering a brick and mortar location. Implementing too much tech into a branch can alienate some customers, many of whom may be a financial institution’s most profitable clients. Not having enough tech can immediately rule it out as a banking option for younger customers who value instant access over a personal touch. One thing is for sure – technology will continue to evolve, and so will its implementation within financial institutions; plan for flexibility when designing a branch.
In order to remain a relevant option for developers and communities to consider in an increasingly competitive environment, financial institutions need to step up their game and be creative in their approach. It’s not enough to just be a “good, clean use” anymore. Consumers, and as a result, developers and communities, are demanding more.
Joe Morrison is development manager of Quincy-based Paramount Partners LLC. He can be reached at moc.s1566529544rentr1566529544aptnu1566529544omara1566529544p@nos1566529544irrom1566529544j1566529544.