San Diego’s financial services industry continues to be among the biggest renters of Class A offices, and occupies nearly a fifth of this region’s most desired space, according to a recent report from commercial brokerage firm Jones Lang LaSalle.
While financial services makes up only about 5 percent of the area’s total employment, when it comes to leasing offices, the industry footprint is 9.7 percent of the overall office market. It also makes up 17.9 percent of the Class A office market, the report states. Class A is generally newer buildings in the top locations having all the best amenities.
Despite the financial crisis that rocked the industry several years ago, financial services has generally recovered and should continue to expand in the coming years, the report states. “As the economy improves and tenants begin to get off of the fence, their share of the office footprint is expected to grow, especially in the highly sought after submarkets like Del Mar Heights and University Towne Center,” the report said.
Banking and finance is concentrated in four main submarkets within the county: downtown, UTC, Del Mar Heights and Mission Valley.
Although there’s a clear trend by many consumers to use mobile banking services and avoid visiting branches, the report says banks realize they need to have both mobile and brick and mortar options available.
Banks are taking a more disciplined approach to managing their retail networks, the report said. “Poorly performing retail branches will close when lease expirations expire. Meanwhile, premium flagship branches will open in select urban locations to provide sophisticated services,” according to the JLL report.
Among the banks that are clearly betting on gaining market share by expanding their retail presence is JP Morgan Chase, which added four new branches last year to bring its total to 96, second most in the county, behind only Wells Fargo Bank, with 103 branches.
The localized report found that among the biggest lease transactions last year was a 39,000-square-foot expansion by Encore Capital Group in Mission Valley. Torrey Pines Bank, which has eight local branches, did a 28,000-square-foot lease renewal.
While financial services employment worldwide and locally took a major hit in the Great Recession, it’s been gradually on the upswing in recent years. In San Diego, through November, the sector increased by 1,500 jobs to total 68,000, according to the state’s most recent jobs report.
Nationally, the industry fell by 0.54 percent from 2007 to 2012, the report said.
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Borrego Springs/ Sterling Update: Sterling Financial Corp. is seeking a waiver on approval of its purchase of Borrego Springs Bank from the Federal Reserve Bank, the primary regulator of BSB, a nationally chartered bank. Sterling CFO Pat Rusnak said his bank is awaiting approval from the Federal Deposit Insurance Corp. and Washington state’s Department of Financial Institutions on the purchase. Sterling is actually buying American Heritage Holdings, the parent of BSB, which is owned by Viejas Enterprises, the commercial enterprise that operates Viejas Casino and other entities owned by the Viejas Band of the Kumeyaay Indians .
Rusnak said Sterling obtained a similar waiver when it acquired First Independent Bank in Vancouver, Wash., last year.
Spokane-based Sterling announced it agreed to purchase the Seattle operations of Boston Private Bank & Trust Co., which had aggregate loans of about $270 million. Sterling said it’s paying a franchise premium of $11 million for the assets. Sterling is paying $6.5 million, or about half of BSB’s book value as of September, for the bank with $142 million in assets, three branches, and seven loan production offices.
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Small Change: US Bank appointed Richard Shea as senior vice president and market manager for its community lending division in Southern California. Shea has more than 20 years of experience in affordable housing finance, all of it in San Diego … The California Bankers Association said annual contributions to charitable organizations were in excess of $110 million in 2011, with more than 19,000 groups benefiting. Employees of the banks also donated nearly 600,000 hours of volunteer time, the CBA said.
Send any news about local financial institutions to Mike Allen via email at firstname.lastname@example.org. He can be reached at 858-277-6359.