Who wants vacant bank buildings? Probably not a bank

About a half dozen vacant bank buildings dot the Boise landscape. Unlike the typical retail, office or even restaurant structure, where the rules of supply and demand briskly move the market, empty bank buildings present a problem for commercial real estate agents.

Bank buildings don’t exactly lend themselves to any other purpose than the friendly fortress environment that banks espouse. And these days, with mobile technology making it easier to bank from anywhere, even banks have little interest in traditional vacant bank spaces.

“Between scanning and online technology, there is no need for brick-and-mortar branches,” said Rob Perez, Idaho market president of Northwest Bank.

Perez predicts most, if not all, of Boise’s vacant bank buildings will not be filled by banks. And thus vacant banks sit on the market for months and years until someone with imagination comes along.

McDowells Specialty Repairs, an auto and home upholstery shop, recently picked up the former Home Federal Bank building at 10443 Fairview Ave. The obvious question: What does McDowells plan to do with the safe?

“The vault is going to be a think tank, an office area, ground zero for McDowells,” said Ashley Cadwell, project coordinator for McDowells’ expansion to the bank building.

McDowells specializes in home and car upholstery and furniture, anything cosmetic on the car interior and exterior. The bank-specific design of the building didn’t concern McDowells one way or the other. The most important thing was that the property has many car dealerships nearby.

“The main thing was the location,” Cadwell said. “This opens us up to be more convenient to the Eagle side of town.”

McDowells will continue to do upholstery at its Cole Road location, while woodwork will move to the bank, though everything may eventually move to the bank.

“The building, as is, will suit a lot of our needs,” Cadwell said. ”We’re going to add on. We’re going to enclose the drive-thru. That will be the showroom. The bank space will be the workshop.”

Mike Erkmann, an agent at Mark Bottles Real Estate, had the Home Federal listed for six months before McDowells came to him. In that time, a coffee shop took a look as did a gold and silver shop and a used car lot. This bank property had an extra challenge that turned away potential buyers: somebody else owns the land under the building.

“Most of the time it was because of the ground lease situation,” Erkmann said. “It was too complicated.”

Vacant banks on the market include a former Bank of the Cascades at Vista and Cassia; a former Mountain West Bank on West State Street near Glenwood; a one-time Washington Federal  at 10150 W. Fairview (near the McDowells); a former Key Bank at Cole and Ustick and two bank vacancies in larger buildings: the Zions Bank at 890 W. Main that emptied when Zions moved next door in February into the Eighth and Main tower and the Syringa Bank space at One Capital Center, 999 W. Main, that emptied when the Idaho Department of Finance shut the bank down in January.

Debbie Martin, principal and founder of DK Commercial, is wrestling with the Vista/Cassia and Cole/Ustick properties.

“I have two of them that I’m trying to figure out what to do with,” Martin said. “They are older locations. It’s hard to find a bank to backfill that.”

She said a developer initially scouted the Vista/Cassia location with the thought of demolishing the bank for a Starbucks. The Seattle coffee company ultimately chose to build directly across the street in the Vista Village shopping center.

With a little imagination, Martin believes either location could be converted for a fast-food place or another restaurant, especially the one at Ustick and Cole. Banks and fast-food do have one thing in common: a drive-thru culture.

In the past, some bank buildings have been repurposed, like the Mattress Firm on Milwaukee Street, which used to be a US Bank branch, and the Starbucks on Franklin Road that was converted from a bank branch years ago.

The former Boise City National Bank building, built in 1891, still bears the name of the bank even though Boise City National shut down in 1932 during the Depression. First Security Bank occupied the building many years, followed by Idaho Power Company and JR Simplot Co. Fork restaurant has filled the street level space since 2011.

A Home Federal on Fairview became a gun retailer, and a bank building at the former Parkcenter Mall was torn down to make space for a playground for Sage International School, which now occupies the mall.

Buying a bank building for the property just to tear it down to build something else is not an attractive option.

“It’s an expensive piece of dirt to tear the building down,” Martin said.

Then again, modern America is all about tearing down buildings every generation or two.

“A lot of real estate at the end of its life cycle gets destroyed and something appropriate goes up,” said Scott Roark, an assistant professor of finance at Boise State University. “Technology changes make some spaces obsolete. Bank branches are going away. What always happens with real estate when existing uses become obsolete, you look for the best reuse.”

Bank branches of the old days, that is, as recently as the 2000s and 1990s, typically measured about 3,000 square feet. Banks generally need far less space now. Supermarket branches are a good example.

“With online and mobile banking, when people can do stuff on the phone, there is less of a need for traditional bank branches,” Roark said. ” You don’t need as many tellers.”

Banks, however, rarely buy buildings; they typically lease. Perez calculated Bank of the Cascades likely paid about $22 per square foot on the Vista/Cassia property, but the building would probably draw only $15 per square foot from another tenant – if one steps forward.

“It kind of conspires to be a bad economic deal for current owners,” Roark said. “You’re trying to make the best of a bad situation if you own that space.”