Bank Design, Construction Takes Center Stage As Number of Branches Fall

Individual bank branches are increasingly important as the number of bank locations in the US continues a decade-long decline.  And while the way in which consumers interact with their banks has changed, bank branch design and construction has only become more critical. 

“Fewer remaining branches means that the impression and experience consumers have with each individual branch is more important. Rather than a branch on every corner, consumers may now have easy access to only a single branch,” researchers from JLL write in a new report on the sector. “This raises the stakes for the impression that each branch leaves and for how it represents the bank’s brand overall, and it increases the number of consumer and business use cases a single branch needs to address.”

Banks have also assumed a more central role in Americans’ lives as FDIC deposits increased sharply during the pandemic, JLL analysts notes. 

But against that backdrop, the challenges for building or renovating branches have multiplied. Well-documented supply chain bottlenecks made the availability of materials scarce, with the average duration of the design phase of a bank branch project increasing by 22% and the construction phase increasing by 14%. 

But JLL says the construction supply chain situation is now “generally stable or improving.”  

“Some domestically produced goods have returned to pre-pandemic lead times, while delays for imported materials have at least shown signs of improvement over the past few quarters,” the report notes. “The overall situation is improving, but the impact on schedules from the pandemic lingers.” 

Specifically, costs will remain the biggest challenge for owners and occupiers planning fit-out projects, as prices remain volatile and inflation unpredictable.  While JLL experts say “the worst may be behind us in terms of volatility,” higher costs are here to stay. 

“Elevated inflation can be found across all sectors of the economy,” the report notes.  “For construction, the materials shortage, extended project timelines, limited skilled labor availability and pent-up demand for new work all combine to create an environment where costs are expected to continue rising steadily.”

De novo or full-fit out projects starting in new locations from shell conditions ranged from $411 per square foot on the base level, defined as a location designed with simple finishes focused on function, to $563 psf for median-quality projects with increased complexity and upgraded finishes, to $720 psf for high-end projects. 

Major renovations ranged from $226 psf on the base level to $303 psf for median-quality projects to $356 psf for high-end.  And minor projects—defined as “refresh” endeavors designed to update finishes and technology throughout a branch—range from $96 psf (base) to $139 psf (median) to $199 psf (high-end).