Businesses branch out from banks - Houston Business Journal

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From the Houston Business Journal: http://www.bizjournals.com/houston/stories/2010/02/15/story1.html

Businesses branch out from banks

Former financial offices become hot commodity in real estate market
Premium content from Houston Business Journal by Casey Wooten, Reporter Date: Sunday, February 14, 2010, 11:00pm CST Related: Banking & Financial Services, Commercial Real Estate, Retailing & Restaurants Casey Wooten Reporter Customers who drive into Soap Hand Car Wash would never know the automotive detail shop occupies a former Washington Mutual bank branch location. That is, until they see owner J. Ryan Alcorns product storeroom and its massive foot-thick steel door. Or maybe the former banks bullet-proof glass window, now converted into a coffee table. Its funny, one of the first things you see is that vault, says Alcorn, who opened the Richmond Avenue car wash on Jan. 21 after decades in the corporate airline business. With bank after bank failing or pulling back from increasingly competitive markets, the versatile, prime real estate that many empty branches now sit on in the Houston region have become sought-after commercial space. Were looking to buy as many of those as possible, says Stephen Soussan, vice president at Houston-based commercial real estate firm Greenberg and Co., which acted as Alcorns broker. Theyre prime sites, theyve got great corners and can be converted easily. Real estate brokers who are banking on finding more of these locations to work with say the failures and acquisitions of financial institutions over the past two years have brought on a glut of branches. Most of these redundant bank branches are coming from banks that are shedding nonperforming branch locations or from the FDIC seizing banks, says Conrad Andersen, executive vice president of financial services asset management at Grubb & Ellis Co. More upheaval Andersen says that because of the current upheaval in the financial industry, more empty bank

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Businesses branch out from banks - Houston Business Journal

http://www.bizjournals.com/houston/stories/2010/02/15/story1.html?s=print

branches are expected to turn up in the market in 2010. Just this week, Prosperity Bancshares Inc. said it had signed a deal to acquire the 19 Texas branches owned by St. Louis-based First Banks Inc. in Houston and Dallas-Fort Worth. Officials with Houston-based Prosperity say they may shutter some branches that overlap. Meanwhile, Wells Fargo & Co. has started the Houston consolidation of 24 Wachovia and Wells Fargo branches as part of a statewide effort announced in January to consolidate 79 locations. In 2008, Wells Fargo acquired the struggling Wachovia Corp. Indeed, as many as 200 financial institutions nationwide are expected to go under this year as banks continue to suffer from asset quality issues, analysts say. For local entrepreneurs, these vacant buildings can provide a unique opportunity, and although they pose equally unique challenges, the layout of branch buildings can lend themselves to a variety of other industries. Its really a potpourri of retail uses. Generally bank branches are put there because they fit the retail criteria, says Andersen. Ed Wulfe, president and founder of Houston-based real estate firm Wulfe & Co., served as the broker for the landlord on Alcorns lease. Wulfe says he was open to the idea of converting the bank into another use. It had a multifaceted potential for everything from a Starbucks to fast food to another bank, or a car wash, says Wulfe. Yet Wulfe concedes he wasnt instantly sold on Alcorns idea. It took some salesmanship on the part of Alcorn and Soussan on an unscheduled visit to Wulfes office, which entailed a trip to the local Tasti D-Lite to pick up a round of ice cream for Wulfe and the group. But a solid business plan, coupled with the capital Alcorn raised from a Small Business Administration loan and by raiding his 401(k), Wulfe agreed to the lease. It was a different use, but I was impressed with the operator and his dedication and passion to make it work, says Wulfe. We had looked at a number of restaurants (to occupy the space), but the parking was an issue. Good layout Alcorns location isnt the first to adopt empty branches in the area. Greenbergs Soussan also worked on a 2008 deal that converted a former Washington Mutual branch on Westheimer and Gessner into a Smoothie King. The bank branch layout has helped Alcorns Greenway Plaza-area business in other ways. It boasts a large lobby, a good place for customers to relax while their cars are being worked on, and enough paved area to fit all the customers cars. The long drive-thru teller windows remained. Alcorn says they offer a wide view for customers to

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Businesses branch out from banks - Houston Business Journal

http://www.bizjournals.com/houston/stories/2010/02/15/story1.html?s=print

watch their cars being detailed. The motor-bank awning, however, was removed due to issues with a neighboring piece of property. As for the vault, Alcorn says he got quotes for as much as $2,500 to remove the steel-reinforced structure and its 2,000-pound door. He says that was reason enough to leave it alone. Ill probably put video game and vending machines in, and call it The Vault, he says.

Corner lots Lance Gilliam, retail broker and partner at Moody Rambin Interests, says his firm currently has four former Washington Mutual branches listed in the Houston area. Weve had a significant amount of interest in them, from local restaurateurs to other banks and a couple of credit unions, he says. In San Antonio, Gilliam says, Moody Rambin has converted a former WaMu branch to a restaurant and another into an outlet for AT&T Inc.s cellular division. Many of the now-empty bank branches were built during a period of rapid expansion for banks, which snapped up busy Houston street corners as they competed for prime retail spaces with stores such as CVS Pharmacy and gas stations, says Wulfe. You go through a phase of who is expanding and what type of business is aggressively pursuing good locations, says Wulfe. Its a cyclical effect between retailer other uses. A few years ago Starbucks was going up on every corner, then the banks came to the surface and went after the spaces. Yet, while trying to finance his new car wash business, Alcorn was struck by a peculiar irony: Here he was trying to put a former bank branch to use, but he found many banks unwilling to lend him the money. It goes back to that adage that when one door closes, another opens, says Alcorn. Undaunted, Alcorn says he is already in the market for a second location and would definitely consider leasing or buying another closed bank. Says Alcorn, People come in here and cant believe how comfortable it is.

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