Too many banks, thanks

This trend has become a running in-joke for D & I: too many banks. I've come up with all sorts of drug-laundering explanations, but apparently I was just spinning yarn. The real answer as to why banks are the new Starbucks is simpler:

WSJ.com - A Retailer's Lament: Influx of Bank BranchesThree years ago, Kent Oliven and his wife, Kelly, opened the Melting Point, a make-your-own candle studio and gift shop on a street lined with boutiques and restaurants in Chicago's Lincoln Park neighborhood. The setting seemed promising. Without a big advertising budget, the shop could rely in part on foot traffic to and from nearby retail establishments. And so it did.

Then came the banks. Since the Melting Point opened, four bank branches have opened nearby, two of them less than a block away from the shop. That boosted the number of banks within about a half-mile stretch along Clark Street to 10, some of them occupying prime storefronts vacated by specialty stores. At the same time, Mr. Oliven says, he has noticed fewer people walking down the street and into his shop. “Less and less of our business is coming from walk-in traffic,” he says. “I don't know if all of it is attributable to the banks, but I bet a lot of it is.”

So do city leaders in Chicago and in some towns in the suburbs of both Chicago and New York, among other locales. In response, officials are trying to push back the steady wave of bank branches that are threatening to engulf popular or burgeoning retail corridors....

[B]anks decided face-to-face transactions could be profitable. Consultants say the national banks saw how well smaller banks were doing opening new branches and set out to steal market share from them and, now, from each other

and to make it local:

Two weeks ago, Chicago passed an ordinance that requires banks to get special permission from the city to open a branch within 600 feet -- or about one block -- of another bank in designated retail areas.

more excerpts if you don't have a WSJ sub:

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The Chicago area is a prime example of this trend, with local players such as Bank One, which was bought last year by J.P. Morgan Chase & Co., fighting for customers with invaders such as Bank of America Corp. and Washington Mutual Inc. In the past two years, banks in the Chicago metro area alone added 488 branches -- more new branches than any other area in the U.S. During the same period, 447 new bank branches opened in the New York metro area.

Landlords love banks, which are more likely to pay top dollar for space and are far less apt to go bust or move out than the latest sushi bar. Rental rates for space in Chicago's neighborhood retail areas come to about $20 to $40 a square foot, says Dan Tausk, a vice president at Mid-America Real Estate Corp., a retail real-estate services company based in Oakbrook Terrace, Ill. The banks “wouldn't be making the capital investment to open a branch if they didn't see an opportunity to have a successful branch in a neighborhood,” he says.


But many city and town leaders worry that bankers' hours -- most banks close early and are open just a few hours on weekends -- and the limited foot traffic that banks generate stand in the way of creating lively and diverse retail areas that will draw pedestrians. Some leaders also worry about the loss of sales-tax revenue since bank customers don't pay taxes on their transactions as shoppers and diners do.

“The banks are coming to our community in clusters, and are really targeting the areas where retail is really important to us,” says Vi Daley, a Chicago alderman, who wrote the ordinance. “The merchants and business owners came to me saying, 'The banks are killing our business.' ”

Ms. Daley's district, which spans about five square miles and covers much of the Lincoln Park neighborhood, has been a big target for banks. She says her district has some 25 banks to serve the 67,000 people who live in it. Last year, three new bank branches opened in a single block on West Armitage Avenue in Lincoln Park, an area included in the new ordinance.

The banks are “putting a very generic face on what was a more creative and eclectic area,” says Kristine Sheftel of West Armitage Avenue, where the full-time mother frequently strolls and shops with her young daughter in tow.

Clark Street, home to the Olivens' Melting Point studio and shop, is another retail area covered by the ordinance -- and none too soon, many believe. “When you walk down the street now, instead of seeing an interesting display in a clothing store, you pass a bank where there's nothing to see,” says Patricia Joseph, a publishing executive who has lived in the neighborhood for about 15 years. She notes that banks replaced a Gap store and a women's clothing boutique in the neighborhood in the past few years.

The ordinance hasn't seemed to ruffle the banks

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This page contains a single entry by Seth A. published on February 23, 2005 7:39 PM.

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