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October 06 , 2008

Dallas banks are dealing with excess branches and prime corners

October 3, 2008-The Dallas Morning News-by Steve Brown

The paint is barely dry on Wachovia's newest branch bank in Dallas' North Oak Cliff neighborhood. But it's already time to give the just-finished building a makeover.

Wachovia, which last week agreed to a government-assisted buyout from Citicorp, on Friday announced it instead would pair up with Wells Fargo. Also last week, Washington Mutual sold out and will now to be rebranded by J.P. Morgan Chase. And other bank failures and consolidations are in the works.

The banking sector downshift should end several years of frantic branch building and corner buying in Dallas and other locations.  After building hundreds of new retail locations and paying record prices for sites, the financial sector is about to suffer a surplus of sites as operations are merged or shut down.

Thank the Lord. For a while there, it seemed every high-profile intersection in North Texas would be gobbled up by bank branches. Now with the number of banking firms shrinking like a cheap suit, real estate brokers are pondering new uses for their excess properties. "On the positive side, you are talking about triple-A real estate for the most part," said Steve Lieberman, chief executive of Dallas' Retail Connection. "There's going to be plenty of demand for the space." But at what price? "The banks were chasing deposits and willing to spend an unparalleled amount of money," Mr. Lieberman said. "The probability of reproducing those economics will be much lower."

Even so, restaurants and coffee shops could take some of the former bank spots. But swapping greenbacks for lattes can take some creativity. "If they have vaults in the building, that will be an issue," Mr. Lieberman said. "And some of these buildings have parking based on office requirements vs. retail and restaurants." Dealing with the drive-through lanes can also be tricky. It's tough to get a hamburger in one of those little plastic tubes.  Sub sandwiches are a better bet.

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