Wachovia Plans Big Expansion Across South Florida
Written by Tom Harlan on July 1, 2004
By Tom Harlan
Wachovia Corp. expects to add 40-50 offices in Miami-Dade, Broward and Palm Beach counties in the next three or four years, company officials said.
South Florida’s growing real estate market offers demographics that are among the most impressive in the nation, said Carlos Migoya, regional president for Miami-Dade and Monroe counties. As residential and commercial developments continue to open in the area, so will Wachovia branches, he said.
Mr. Migoya said there has been solid growth on the east side of the county due to the development of waterfront properties, which bring clients with attractive demographics. Wachovia is building a bank on 152nd Avenue and Biscayne Boulevard to be close to 3,000 condo units that range in price from $175,000 to $500,000, he said.
Mr. Migoya said Wachovia is doing more than building new branches.
Banks have been redeveloped in the southeast section of the county due to the transition of the area from a poor community to an area with shopping centers and high-rises, he said.
Mr. Migoya said one office on Southeast Second Avenue was in danger of being closed five or 10 years ago but is now being expanded across two properties next to it to handle customers’ needs.
When considering where to expand, Wachovia looks at opening branches in areas close to where customers work, Mr. Migoya said. For example, while Homestead is experiencing a boom in residential housing, many of the citizens may bank in areas of Miami where they work, he said.
"We will never capture some customers where they live, but we can capture them where they work," he said, adding that Wachovia opened two offices in the west section of the county near large office complexes.
Mr. Migoya said Wachovia’s long-term goal is to continue to add branches in areas that have attractive demographics, fulfill customer preferences and make sense financially. Wachovia has a team to look at the land and buildings at each site before determining if a branch would be profitable.
Washington Mutual works with different brokerage firms,and is continually looking for opportunities to do infill in the county, said Gwynn Virostek, senior vice president of the bank’s South market.
But the process is not full-time, she said.
Washington Mutual typically looks for locations that are convenient in terms of traffic patterns on workdays and have certain residential population levels that would be interested in its full line of products, she said.
The bank is always looking to add locations that are convenient for customers, she said, adding that it opened 20 stores this week in west Florida, an area that is rapidly expanding. While Miami-Dade County wasn’t included in a recent list of expansions, Washington Mutual is always looking to add locations for the area’s customers even though quality real estate is tougher to get, she said.
Jonathan Witter, who heads Wachovia’s branch-expansion office, said Wachovia has a team of real estate and construction specialists who visit prospective sites to meet with brokers, study the overall view of the geography and send reports, which include estimated project costs, to Wachovia’s corporate office.
Then, statisticians create models based on the reports and finance specialists add figures that show things such as how the business should perform over time for a presentation on how the site would fit into the bank’s network, he said.
Mr. Witter said the best site-selection strategy blends local knowledge and insight with centralized skill, data and expertise.
"In my past experience, I’ve seen folks go to one extreme or another," he said. "But the right model is a combination."
After selecting areas with attractive demographics, Wachovia hires a planner to determine sites in the community that would best serve customers, he said. The planner works with local brokers to look at potential sites and conducts a preliminary analysis to eliminate site choices that are too expensive or have traffic problems that would affect customer needs, he said.
Mr. Witter said local planners run a detailed analytic model on top sites – including the cost of building a branch and how many deposits and loans are projected for the area. If the site is strong based on the model’s criteria, Wachovia will negotiate specific terms of sale with the site’s real estate group and, when approved, start construction on the site.
While real estate prices may be high in some of the expansion areas, Mr. Migoya said, Wachovia will open branches in the areas if they are expected to bring a certain return on investment.
"We always negotiate what the actual price of property is based on return," he said. "If we can’t get the right price from a financial standpoint, we walk away."
Wachovia loses its selected sites about 20% of the time, Mr. Witter said, adding that in those cases, there is attrition from either the bank or the developer during negotiations. The time required to select and close on a site typically takes nine to 13 months, but the figure varies depending on the type of the building and local market conditions surrounding the site, Mr. Witter said.
Mr. Witter said costs to acquire a site vary depending on housing costs and traffic surrounding a particular site. In addition, banks are not just competing with other banks but retailers and fast-food companies who continue to pay more for sites, he said.
"We are very excited about overall demographics in South Florida," Mr. Witter said. "It’s a key market for us."