Over the past five or 10 years there has been a downright explosion of bank branches all over the place. With the rapid consolidation of the sector, that's bound to change. In New York, for example, there's no way JP Morgan Chase keeps all the Washington Mutual branches open. At any rate, this will translate into more vacancies and subleases.
“Like any retailer, they thought â€˜out of sight, out of mind,' so they changed the way banking was done” by making themselves more visible to customers by adding more stores, Roseman said. Competition among banks for space drove up rent prices and drove out small businesses and even large businesses that might have fit better into those locations.
In just the past week, J.P. Morgan Chase & Co. took over a bulk of Washington Mutual's operations and Citigroup Inc. acquired most of Wachovia Corp. The surviving banks will review their portfolios and see which of their newly acquired branches and their existing ones should stay open and which should close, Roseman said.
The banks must still honor their leases, so many will be looking to sublet the spaces where they close branches, said Lisa Breier Urban, an attorney with the law firm Breier Deutschmeister Urban & Fromme in New York. Smaller businesses and so-called “mom and pop” stores, which were pushed out when the bank branches were expanding and driving up rents, might not be able to afford the spaces, even though the market values across the country will readjust in the coming months, Urban said. “My sense is that when they are gone, they are gone,” she said of the small businesses. “Only chains have the money to step into these types of spaces,” Urban said, citing New York City's ubiquitous drug store Duane Reade as an example.