TALLAHASSE, Fla. — Credit unions that have gone through the process of converting a non-financial building to a new branch seem to agree on why they chose that route: location and timeline. While commercial real estate values have declined significantly, prime spots along major thoroughfares that can accommodate a drive-thru easily are still hard to come by, even in shell-shocked real estate markets like Florida.
Location, Location, Location
"We made the decision for the classic reason of location, location, location," said Holly Maddox, SVP of Envision CU. The credit union recently purchased a KFC here for $1.8 million and plans to quickly convert the structure to a new branch. "We purchased the building before it officially went on the market and we have already had multiple offers to purchase the property. It's definitely highly desired and we could have already turned a profit by re-selling. Even if we made this purchase and we decided not to move forward we wouldn't lose money; we'd come out ahead."
In Wisconsin, Blackhawk Community CU's flaship branch is in a building that was once a Steak 'N' Shake. "As with all potential sites, a priority is location, location, location," CEO Bob Carmichael echoed. "Another factor in the decision was construction time. Starting from scratch, the project would have taken approximately 6 months to occupancy. The existing building was destructed to its frame and the existing foundation, exterior walls and roof were used in the construction of the branch office. The restaurant had a drive-thru — and is now our drive-up facility; the project took only three months, thus saving three months of construction."
A Fast-Food Affinity
While Madison, Wis.-based La Macchia Group has converted a number of different commercial structures into CU branches — including a funeral home — it's no coincidence that the majority of the sites converted to financial branches are fast-food joints.
"Fast food guys are usually the first to get into the markets," said La Macchia Group CEO Ralph La Macchia. "You have a site that is sized suitable for a small financial institution, and located usually in a very convenient area."
Though there is a substantial amount of work that goes into the conversion process, especially if the building is old or has structural problems, many times fast-food sites can be preferable over abandoned bank branches. After all, if the previous financial institution no longer values that location, why should a potential buyer looking to use the building to provide similar services?
"Vacant financial institutions aren't always available, and when they are it's usually for a reason," La Macchia Group VP-Planning & Real Estate Ben LaMacchia pointed out. Even so, the potential value is still worth exploring, he added.
