Former Bank building advice

9 Replies

I am going to check out this property tomorrow on the west side of Cincinnati.  It is fully leased except for the bank who has vacated and moved around the corner.  Ideally I would love to land another bank to occupy this space.  Has anyone here ever landed a bank tenant or re-purposed a former bank building?  

Thanks! Ash Patel

Most banks are reducing their branch count, since more and more banking is done online these days. You will want to look for a bank that is expanding in your area. In our area, there are a number of former bank branches that have been empty for a considerable period of time. Good luck.

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I managed a neighborhood retail center where a credit union moved out.  They had an ATM installed on one wall of windows and a special room built in the space to house this equipment.  They might have had a safe that could be transported but no vault or security deposit boxes were built out.  Other than that, the rest of the space was built out as an office.  

The tenant took out the ATM and restored the window and ceiling to original condition after some persistent reminding to their increasingly grumpy lease end administrator guy.  They also removed any security system as well.  

Hopefully the place doesn't have a big old vault or other heavy duty build out special to banks.  

Thank you @Dale Shin and @Al Wilson .  I checked out the space today and the bank doesn't have a vault or a safe deposit room, just a giant ATM safe.   The space could easily be converted to retail.  I would need $8/sq ft out of the former bank space to break even on this property.    

Not the most appealing deal unless the seller is willing to get creative.

So you need to release the bank space at 8 sq ft just to break even??

That is a horrible deal. I look at retail strips all the time. Off of a 25% down payment we are hitting about 15% cash on cash going in. Breakeven occupancy is in the low 60's for servicing the mortgage buying in the low 8 cap's going in.

Occupancy is about 90% going in when buying. Even if 100% occupied we deduct vacancy and add in reserves and anticipated future TI's and LC's.

If something had to be 100% occupied just to break even I would think you wouldn't even look at it. An exception is if it is sitting on very valuable land where you could repurpose at a much higher cost than what you bought it for.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

@Joel Owens Thanks for giving it to me straight! I agree with you but I think I needed to hear it from a pro. I have to share that I score my best deals from residential Realtors who list commercial deals. They are not familiar with Loopnet/Co-Star, cap rates etc. My last strip was a true NNN purchased for a 16% cap.

In this case, the Realtor took my pro-forma and asked if he can show it to his seller.  He was totally unfamiliar with commercial financing/pricing.  I will pursue this deal if the price comes way down.  - ash  

Yes occasionally a residential agent will list something commercial for a friend. I love those as you can beat them up on price even further without them knowing anything.

That's a case why the seller needs to list with an experienced commercial broker so they do not leave money on the table.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

Originally posted by @Ash Patel :

@Joel Owens Thanks for giving it to me straight! I agree with you but I think I needed to hear it from a pro. I have to share that I score my best deals from residential Realtors who list commercial deals. They are not familiar with Loopnet/Co-Star, cap rates etc. My last strip was a true NNN purchased for a 16% cap.

In this case, the Realtor took my pro-forma and asked if he can show it to his seller.  He was totally unfamiliar with commercial financing/pricing.  I will pursue this deal if the price comes way down.  - ash  

Whole heartedly agree. Residential agents unfamiliar with CRE tend to me my best deals. I purposely create and send a full proforma showing the deal as it exists before value adds and or re-tenanting to show and support my offers.