We are being attacked by banks in our quiet neighborhood.
10 banks operate on two blocks on Germantown Ave.
chestnuthilllocal.com
Chestnut Hill business leaders agree: A proliferation of banks is hurting the Avenue. What remains to be seen is how much it will hurt and what the Hill can do about it. First of two parts.
by KRISTIN PAZULSKI
Kitty Kelly Albrecht has spent her whole life in Chestnut Hill. She still lives in the house she grew up in on Ardleigh Street and she remembers when she could go to the Avenue for a sweater, a needle and thread or a pair of socks.
“I miss the ordinary stores,” she said.
She especially misses the owner-operated stores, like Streeper’s Drug Store, which moved to a space behind current-day Border’s Book Store after years at Germantown and Evergreen avenues, and Frank A. Warner Shoe Store where Penzey’s Spices is now. Also, she remembers the small restaurants like Morrison’s Sandwich Shop, now occupied by Fiesta Pizza, and Nicoletti Confectionary, which was in the 8600 block of the Avenue.
Today, the classic and independently owned specialty shops still exist on the Avenue, but the general consensus of the community and merchants is that the Avenue’s retail mix is suffering, and has been suffering for years. The concern for a loss in retail variety and a small town atmosphere, initially seeming like a nostalgic recollection for the “good ole days,” is becoming a more visible problem for the Avenue’s business, as the diverse retail commercial chains that took over the independently owned shops are now leaving, and bank branches seem to be taking the place of these high-rent paying retailers.
In the five-block span, from the 8200 block to the 8600 block of Germantown Avenue, there are nine bank branches — six directly on the Avenue and three others tucked into the side streets of the corridor.
Just one year ago, there were only six branches. Commerce Bank opened its branch early this year, and Citibank and Valley Green Bank branches are expected to be operating by the fall.
When it comes to banks on the Avenue, the community is already apprehensive. The loss of Wawa to the Valley Green branch, as well as Citibank’s move into two storefronts and the difficult time the Chestnut Hill Community Association had with the design of Commerce Bank, has put an emphasis on the negative aspects of bank branch proliferation on the Avenue.
Bob Previdi, executive director of the Chestnut Hill Business Association, said the loss of some popular retailers and the replacement of those spaces with bank branches has heightened the communities awareness to the issue.
“The Wawa departure gives us the opportunity to talk to more people because the issue is on their minds,” he said.
But is the concern over the number of bank branches legitimate, or is it a concern brought on by the recent loss of Wawa and other retailers, such as Color Me Mine, Talbots Petites and, come April 2008, Chico’s? Do bank branches hurt a commercial corridor like Chestnut Hill’s and can a community do anything to control them?
Why bank branches?
One reason banks have proliferated in Chestnut Hill is obvious: banks are ideal tenants.
A small business is less likely to be able to afford the rent that a bank can, and a small businesses can be less reliable, especially if the business is new. Banks generally have a constant flow of money coming in and have the backing to support that money.
A marketing report done by Urban Partners for the Chestnut Hill Business Association in 2005 concluded that some of the Avenue’s vacancies — another concern of merchants and customers — is partly due to the increase in rent over the years.
“The great rise in rent levels that occurred over the past decade may have caused some landlords to increase rents beyond the capacity of many categories of retailers,” the report reads.
Although the report was focusing on causes of the Avenue’s vacancies, an increase in bank branches is another result of that increased rent.
“It’s harder to afford your space in Chestnut Hill,” said Russell Goudy Jr., manager of the Kilian Hardware Co., suggesting that the district’s lack of variety is the result of increasingly expensive real estate. Kilian has owned its building at the corner of West Highland and Germantown avenues since the 1920s, Goudy said.
“There is a planning theory called ‘highest and best use,’” said Michael Quinlan, information and policy director for the International Downtown Association based in Washington, D.C. That theory basically determines what property uses will yield the maximum profitability, as long as the use is legally and physically possible and financially feasible in the market it is in.
A few years ago, Chestnut Hill saw a rash of chain stores leasing on the Avenue, said Christopher Lane, co-owner of the Philadelphia Print Shop, 8441 Germantown Ave., and a member of the BID board. The Print Shop owns the building in which its storefront is housed.
By leasing to chain stores, landlords were able to charge the “highest” rents, and now the chains have left, Lane explained, “the only businesses going to pay those rents now are the banks.”
Luke Morano Sr., whose family owns Caruso’s Market, grew up in Chestnut Hill but now lives in Blue Bell. He said it was the loss of the independent stores to larger chains that have hurt Chestnut Hill’s retail operations.
“There were little shops here making a living,” he said, “but then the speculators [landlords looking for higher rent as opposed to small business] came in and changed the scene. Then [the chains] left and banks came in. It changed the character of Chestnut Hill.”
Chestnut Hill is not the only town facing these hardships, and banks certainly aren’t the only culprits.
The resort town of Telluride, Colo., is dealing with the “highest and best use” theory. The town council of Telluride is debating on whether to restrict, through zoning regulations, the retail uses in its corridor’s first floor retail space.
Telluride’s issue is with real estate offices — not bank branches — taking up retail space, but both uses, which attract specific, non-browsing customers, present a similar problem to a retail corridor, said Scott McQuade, CEO of Marketing Telluride Inc., which manages the marketing of the town. Service-oriented businesses, like real estate offices and banks, belong in the second floor of commercial space in a retail district, McQuade said.
McQuade said increasing rents around the country, and banks’ willingness to pay those rents, are making bank branches appealing tenants.
“Banks are winning in the game of who is able to pay the attractive rents,” McQuade said. “In doing so, they are displacing restaurants, retail and merchants.”
The Chestnut Hill area is attractive to banks in terms of advertising and traffic. Of the bank representatives interviewed for this story, all said having the foot traffic and stability of Chestnut Hill’s neighborhood make the location desirable.
David Flaherty, a spokesperson for Commerce Bank, said banks are attracted to an established residential and growing commercial area because they are “ideal for generating deposits,” which is a branch’s focus.
“There’s still an interest in branch banking,” he explained, despite the heightened use of Internet banking. “We’ve never stopped building stores because as a retailer, you can’t be successful without stores. Banks are seeing [Chestnut Hill] as a good area with potential, so you’re seeing a rise in the branches in the past few years.”
“Obviously banks want to be where people are,” said Peg Marty, executive vice president and director of retail banking with Citizens Bank, which has had the same branch on the Avenue since 1989. “Clearly the neighborhood has a need, otherwise more wouldn’t be coming into the community.”
Though many in the community don’t think there’s a need for nine branches, and shop owners have said they wouldn’t be surprised if, by virtue of supply-and-demand and the bank industry’s merging operations, branches eventually close.
“It’s almost obvious that there are too many banks now to serve this community,” Kilian’s Goudy said.
John Ingersoll, co-owner of the Chestnut Hill Cheese Shop across from the new, two-storefronts-wide Citibank, said he sees the branches sprouting up along corridors such as Chestnut Hill as expensive advertisements for the banks.
“They have to have more of a presence because of the coming of online banking,” he said. “I would basically call it a billboard for Citibank.”
Is the concern warranted?
In April, Slate.com published an article by Daniel Gross about the infestation of bank branches in commercial corridors. Westport, Conn., the author’s hometown, had 26 branches open or approved for construction. He wrote that the country has seen a 10.4 percent increase in bank branches between 2002 and 2006.
“Those numbers don’t seem huge,” he wrote. “But as has been the case with income growth, bank-branch growth has been concentrated in what an American Bankers Association official referred to as ‘special ZIP codes.’ That explains the proliferation of bank branches in tony suburbs and gentrifying urban areas.”
Gross identified three negative effects that branches can inflict on a business district:
(1) they take away space from more interesting, customer-attracting retail operations, (2) they usually close earlier than other stores and restaurants on a corridor, leaving dark gaps in a commercial strip, and (3) they easily close branches as companies merge, leaving potential vacancies.
Gross’ second issue may not affect Chestnut Hill because most of the Avenue’s businesses are shut down by 7 p.m., but the other two merit attention.
“There are things that you really don’t have here,” Goudy said, addressing the lack of retail mix. He asked where he could go to buy an inexpensive pair of jeans or another type of non-fashion apparel.
Despite the Slate article and the attention that the importance of having retail variety in a district is getting in commercial corridors, the effect bank branches have on commercial corridors seems under-researched. Most downtown associations contacted by the Local haven’t looked into the issue, and many responded to Local questions with, “That’s a good question” or “We should look into that.”
But the few that did have something to say on the topic said there were positive attributes to having banks in a community and along commercial corridors.
“Bank branches can be important to a downtown for a number of reasons,” said Paul Felt, editor of Downtown Digest, an e-newsletter published by Downtown Research and Development Center, based in Boonton, N.J.
“If a bank has its business downtown, they are invested in the community, just like a smaller business or a homeowner.”
Bank branches, especially smaller, locally owned banks, Felt said, can offer strong financial sponsorship opportunities for events and fund drives.
Valley Green Bank, the Northwest’s only community bank, has already contributed to local organizations and sponsored neighborhood events. For the last two years, Valley Green was the lead sponsor for the Friends of the Wissahickon and they’ve sponsored events with the Chestnut Hill Historical Society, West Mt. Airy Neighbors and Weavers Way Coop, to name a few.
Jay Goldstein, president and chief executive officer of Valley Green, echoed Felt.
“We are the only community bank on the Avenue,” Goldstein said, “so we truly believe that because we are owned and managed by people from the community, that we are best prepared to be partners with the community.”
When Citibank opens its Chestnut Hill branch in September, it will give a $5,000 donation to Chestnut Hill-based Need in Deed, which helps Philadelphia teachers organize service learning and social improving projects with their students, according to Robert Julavits, a Citibank spokesman.
“We support the community through grants and volunteerism, and we certainly will provide both to the Chestnut Hill area,” Julavits wrote in an e-mail.
Cathy Bower, a spokesperson for National Penn Bank, situated in the train station for the Chestnut Hill West/R8 commuter line, said the bank “tries to be integrated in the community,” by working with retailers.
She said Penn National, the former community bank Chestnut Hill National Bank, has held drawings for gift baskets with products from local businesses and has provided coupons to local businesses as well. They’ve also made contributions to local groups, such as the Chestnut Hill Business Association, the Chestnut Hill Historical Society, Need in Deed and Germantown’s Habitat for Humanity chapter.
“Respect for history is part of the Chestnut Hill community,” Bower said, so when the branch moved into the train station, it made sure money went into restoring the old, 1884 structure.
Felt also said a bank branch can add foot traffic to a corridor like Chestnut Hill’s, and therefore bring attention to the businesses around a branch.
It’s easy to argue, however, that more pedestrian traffic would be generated by a convenience store, as Wawa did. It is easy to see that West Highland Avenue has seen much less traffic since the Wawa vacated the 23 W. Highland Ave. property on May 18.
“I used to go to the bank 52 times a year — once a week,” said Goudy, whose hardware store sits on the corner that used to experience much of Wawa’s foot and vehicle traffic. “Now I go like four times. They are not generating foot traffic.”
Bruce Freedman, owner of the Chestnut Hill Bootery, said the amount of banks, and subsequent lack of retail options, deters visitors from coming to the Hill.
“Would a bank make you come to Chestnut Hill and shop? No,” he said. “But would a shop selling things you like? Yes, a resounding yes.”
So, instead of Chestnut Hill lamenting the influx of banks, maybe it should be asking itself if it has the right retails interspersed with the banks to attract the errand runners, and does it take advantage of the banks’ sponsorship opportunities?
Or possibly it’s just the natural business trend of a district that allowed chains to come in and raise rental expectations before realizing that cobblestones and cute street lighting don’t compensate for steady foot traffic.
To be continued next week. |
