Banks play CBD musical chairs
A swag of city-based bank branches are in the middle of a grand game of musical chairs as leasing deals struck up to 10 years ago expire.
Despite or perhaps because of the shift to online and mobile banking, the weight of the personal is proving significant and bank branches are getting bigger rather than smaller, according to CBRE retail leasing agent Zelman Ainsworth.
Citibank has occupied 350 Collins Street for many years.Credit:Erin Jonasson
The latest round of banking chamber leasing deals started about 15 months ago and there are four more banks still looking for new digs, Mr Ainsworth said.
"The bank deals happen in groups every seven to 10 years. It's easier for them to move into other former banking chambers because the infrastructure they need is already there," he said.
Banks are spending millions of dollars installing technology in their banking branches, including instant cash and cheque deposit in the ATMs, coin counting and dispensing machines, internet terminals, free Wi-Fi and video conferencing options.
A recent report into banking by consulting group Accenture found that banks are becoming advisory centres offering advice on how to use technology and solving client problems while selling more complex financial services. The report found young customers, aged 18-24, made the most use of branches and did not regard digital services as substitutes for human interaction.
"Banks are not getting smaller. It's all about the customer experience now," he said.
Many of the deals struck in this round have been on the prestigious Collins Street strip. CBA has moved from the Dexus-owned 367 Collins Street into a strata shop at the foot of 325 Collins Street which is owned by a private investor.
Westpac has moved from Dexus-owned 360 Collins Street into the bottom of Phileo's $108 million tower at 303 Collins Street on the corner of Elizabeth Street and opened a new branch at the bottom of its spanking new headquarters at 150 Collins Street.
Bendigo Bank has meanwhile moved out of No. 303 and shifted into the space vacated by health insurer Bupa at the Block Arcade at 292 Collins Street.
The US-owned Citibank, which has occupied 350 Collins Street for many years, has shifted from 235 Little Bourke Street in Chinatown.
Citibank, which has only six CBD-based branches in Australia, has recently announced a plan to remove cash from its banking outlets because only one in 20 customers are coming in for bank notes.
Mr Ainsworth said banks are strategic in their choice of locations and prefer corners. Chinatown, close to the Little Bourke Street entrance to Melbourne Emporium, is popular. The Bank of Melbourne has moved into the space vacated by Citibank. It also recently opened a new flagship store at the bottom of the Rialto on Collins Street.
"It's not a coincidence that the Bank of Melbourne and Bank of China are next door to Emporium, or that Bank of Melbourne is in the Rialto tower."
Bank of China's shift into 219-225 Swanston Street has restored the impressive Beaux Arts-style building to use as a banking chamber. Built in 1928 for the English, Scottish and Australian (ES&A) Bank it has spent the past 10 years as a Rip Curl outlet.
Bank of China is reported to be paying $700,000 a year for the space. Rents have doubled in the past 10 years, with many of these deals ranging from $400,000 to $1 million a year depending on size and location.
"Rents have increased along with capital values in the past 10 years," he said. "But landlords like banks because they're a stable tenant and banks like retail because it gives them a 24-hour presence in the market."