A convenience shop.
A pizza place.
A jewelry store.
Former bank branches in Western New York have been refitted for life after the teller line.
And more could come. A wave of First Niagara and KeyBank branches – 23 in the region – will start closing in October, a result of KeyCorp’s $4.1 billion acquisition of First Niagara Financial Group. Many of the branches will be shut down because there’s another Key or First Niagara location less than a mile away, and, in some cases, just across the street.
So who will move into the empty bank branches?
Other lenders would seem like ideal candidates, but they aren’t opening new branches as in the past. In fact, many banks are trimming their brick-and-mortar networks, as customers choose to handle more of their transactions online.
In light of these trends, it’s difficult to foresee all 106 First Niagara and Key branches set to shut down in four states carrying on as branches for other banks.
Sixteen First Niagara branches in the Buffalo Niagara region are scheduled to close Oct. 7. The bank owns seven of the properties and leases the other nine. Meanwhile, Key will close seven of its branches. It owns two of them and leases the other five. One of the seven Key branches will close in November; the closing dates for the rest are yet to be announced.
During its discussions with the Justice Department about the First Niagara deal, Key pledged that, when selling any branches, “we would first look for other depository institutions to purchase sites we vacate,” said Jack Sparks, a Key spokesman.
As for soon-to-be-vacated branches in leased space, Key will “work with landlords directly regarding our current term,” Sparks said. “We will also market the leased space to other depository institutions, per the terms of our agreement with the (Justice Department).”
And if the other banks pass?
“They’re going to have to get creative,” said James Dentinger, president of McGuire Development.
One factor in favor of finding reuses for the branches are their good locations, Dentinger said. Banks chose these spots because they’re visible and accessible, often with their own parking lots.
Restaurants or retailers might fit as new users, he said.
No doubt some of the branches will have more appeal than others, based on their locations, size, condition and the asking price.
“It’s going to take a little bit of time for these to be absorbed, but they will be absorbed,” said Robert P. Strell, president of Robert P. Strell Real Estate Advisory Services.
New uses could include offices for doctors, insurance agencies, accountants and lawyers, Strell said. In communities that restrict new buildings with drive-thru windows, empty branches that already have those windows could appeal to fast-food restaurants or coffee shops trying to enter the market.
This will hardly be the first time former branches have been forced to find a new purpose. Even without a merger driving the decisions, banks have closed some locations or simply left one space in favor of another, opening the door to other uses.
• The King of Diamonds, a jewelry retailer, left the Statler Towers and bought a former M&T Bank branch at Delaware and Hertel avenues. M&T moved across the street, into a former Citibank branch.
• Just south of the jewelry store on Delaware, a former branch was converted first to a Supercuts and then Jet’s Pizza shop.
• In the Elmwood Village, First Niagara closed a neighborhood branch on Elmwood Avenue. A convenience store called the Market on Elmwood moved in.
• In front of AppleTree Business Park in Cheektowaga, a former branch became a Time Warner Cable customer service center.
• HSBC Bank USA took heat for closing a branch – which the bank said was not profitable – on Fillmore Avenue in late 2009. The bank donated the building to the Community Action Organization of Erie County, which turned it into the Alphonso “Rafi” Greene Jr. Masten Resource Center.
• Rochester media outlets reported Panera Bread will open a restaurant inside a branch that M&T Bank left for a new location.
The 16 First Niagara branches and seven Key branches set to close stretch from Batavia to Jamestown and from Lockport to East Aurora.
The soon-to-be closed branches are in 17 communities in Erie, Chautauqua, Niagara or Genesee counties. Four communities – Amherst, Jamestown, Orchard Park and West Seneca will have multiple branches vacated. In West Seneca, branches at 325 Orchard Park Road, 1251 Union Road and 2345 Union Road will close. Three branches will also close in Amherst: 665 North French Road, 827 Hopkins Road and 5190 Sheridan Drive.
Only one branch will close in Buffalo, the First Niagara branch on Hertel Avenue near Starin Road.
Banks get first shot
The First Niagara and Key branches about to close must first be marketed to financial institutions, under the agreement with the Justice Department.
Commercial real estate brokers Richard Schechter and Tyler Ballentine of Pyramid Brokerage are on the local front line of that effort. Working as subagents to Jones Lang LaSalle, the national brokers for Key, they will try to find new buyers or tenants for First Niagara locations in Western New York closing Oct. 7.
“We don’t have prices yet, and we can’t show the properties until … after they close,” Schechter said.
Even so, Ballentine said they have received a strong initial response about the properties. Some of the inquiries have come from local banks, as well as from banks in other parts of New York State, Pennsylvania, Ohio and Delaware. Some credit unions are also in the mix, as well as some developers who might have a tenant lined up, or who like a particular corner where a branch was located.
One challenge is that banks branches nowadays tend to be smaller, reflecting changing customer needs.
But Ballentine said he has seen situations where, even if a bank thought a vacant building was too spacious for a branch alone, it filled the rest with companion operations, like an insurance agency. And if a bank happens to be new to the region, it could use the additional space for corporate offices, Schechter said.
Does Schechter think the soon-to-be-vacant First Niagara branches will be filled reasonably quickly?
“We certainly hope so,” he said, “but we can’t predict the future.”