Banks Close Record Number of Branches in 2017
Somewhat lost in the wave of store closure announcements last year was news that another major user of retail space abandoned a record amount of square footage. U.S. banks accelerated their pace of branch consolidation last year, closing a net of 2,069 locations, an 18 percent increase over the net number closed in 2016.
The net number of closed branches affecting the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – amounts to about 10.46 million square feet of retail space closed, based on the average size of existing U.S. bank branches. That amount, however, does not include reduced square footage from branch relocations.
This CoStar report on bank closures and the effect they are having on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
That pace of closures could speed up even more in 2018 in markets with U.S. and Philadelphia commercial real estate as many bank holding companies reported plans to deploy a significant portion of expected savings from tax reform legislation enacted last month into increased spending on technology. They also are expected to support increasing reliance on digital and mobile technology by bank customers to conduct more of their banking activity.
Wells Fargo & Co. is the poster child of the movement. It closed a net of 194 branches last year – the highest among all U.S. banks — and it expects to close 250 branches or more in 2018 in parts of the U.S. and Philadelphia commercial real estate market, plus as many as 500 in each 2019 and 2020.
“Based on our current assumptions regarding consumer channel behavior and our own technology advances as well as other factors, we can see our total branch network declining to approximately 5,000 by the end of 2020,” said John Shrewsberry, CFO of Wells Fargo. As of Sept. 30, 2017, Wells Fargo operated 6,082 U.S. branches.
The bank is also reducing properties and other businesses including stand-alone mortgage locations and is transitioning operational activities in its auto business from 57 regional banking centers into three larger regional sites in a move that potentially could impact national and Philadelphia commercial real estate listings.
Citizens Financial Group represents another approach banks are taking in shedding excess space involving the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – which will reduce the overall square footage of each branch.
“There’s a little bit of pruning of the number of locations, but the greater element of that program is trying to take 4,200-square-foot branches and turn them into 2,500- or 2,200-square-foot branches,” said Bruce Van Saun, chairman and CEO of Citizens Financial. “I’d say, by 2021, I think we’ll have gone through 50 percent of the branches as the target.”
Citizens operates more than 1,100 branches. The rent savings from the effort will be reinvested in digital technologies, Van Saun added.
Meanwhile, 85 percent of banks dealing with U.S. and Philadelphia commercial real estate listings plan to make digital transformation programs a business priority for 2018, according to the EY Global Banking Outlook 2018.
“In order for banks to weather the performance challenges that lie ahead, they must prepare for a future led by innovation and technology,” said Jan Bellens, EY Global Banking & Capital Markets Deputy Sector Leader. “The pace of innovation continues to accelerate, and banks must have a strategy in place to ensure their implementation of new technology is effective.”
According to EY, 59 percent of banks surveyed anticipate that their technology investment budgets will rise by more than 10 percent in 2018.
Banks closing the most branch locations (net) in 2017:
- Wells Fargo Bank, 194
- JPMorgan Chase Bank, 137
- The Huntington National Bank, 134
- First-Citizens Bank & Trust Co., 127
- Bank of America, 119
- SunTrust Bank, 119
- KeyBank, 112
- PNC Bank, 109
- Branch Banking and Trust Co. (BB&T), 92
- Capital One, 73
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (email@example.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.
As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.
Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.