A Farewell to “Banks” and An Inviting Smile to “Food”

“Banks are giving way to restaurants.”–

An owner of C building in Guro-dong, Guro-gu, Seoul changed his first-floor tenant from a bank to a Pizza Hut outlet not long ago. When the owner asked for a rent raise, the bank expressed difficulty. Hence a new tenant for the “face spot” of his property. The proprietor did not hesitate to make the change.

The building proprietor said, “With the bank gone and the restaurant in place, it is the other business owners of my building who are happier. The truth is that my building is now called the “Pizza Hut building.”

Coffee Bean Korea has shops in Myeongdong, the Myeongdong Tower and Gwanghwamun, places once occupied by financial institutions. At those locations, Coffee Bean has set up a big, 200-pyeong chains.

The trend of taking out cups of coffee was started by Starbucks. The company placed some of its shops in the heart of the banking industry. Those Starbucks shops are in the lobbies of the buildings that accommodate Korea Exchange Bank headquarters (Euljiro, Jung-gu, Seoul), Kookmin Bank headquarters (Yeoui-do, Yeongdeungpo-gu, Seoul) and other major institutions.

Why are building owners not enthusiastic about banks as tenants? -

Up until now, the buildings with banks in them were rated as the most valuable properties in the commercial areas to which the bank-accommodating buildings belong. However, things have changed.

First, the combination of the five-day workweek and thriving Internet banking services have put downward pressure on the number of people who go to banks in person.

In addition, with their closing hours set at 4:30 in the afternoon, banks have a notably weaker power to attract customers and people after that time. Evening hours are important in raising profits. Property owners argue that “turned-off light switches” on the first floor in the evening badly affect other businesses in the same buildings.

Another factor is that with interest rates hovering near the bottom, owners have grown to prefer monthly payments. But banks insist on yearly contracts and hence have a downward curve of renewing contracts.

Out of the efforts to restructure, banks have cut down on the number of chain outlets. Even though they open new branches, they set up “ATMs on the first floor” and “offices on the second floor” to reduce costs.

On the coattails of restaurants–

Kim Hye-mi (female, 27 years old), an office worker, said, “Once I am in Myeongdong, I meet friends at the Starbucks and go shopping in neighboring malls.” Starbucks has become, in a sense, a “public square of get-togethers and shopping.”

In fact, the Myeongdong Building on Chungmuro 1-ga, Jung-gu in Seoul that has a Starbucks shop in it has overtaken the site on Myeongdong 2-ga, Jung-gu, on which the Myeongdong branch of Woori Bank is placed, as the most expensive piece of land in Korea since 1990.

There are cases of newly opened restaurants reviving the economy in their commercial districts.

After Outback Steakhouse newly opened its Namyeong branch in Seoul and a Shinbu branch in Cheonan, both of which were once where old theaters had been, the mobile population to those properties grew bigger and so did the sales of adjacent stores.

Yoo Yeong-sang at Sangga 114 pointed out, “Myeongdong as a commercial area in the past was formed around “Myeongdong-gil” in front of the Myeongdong branch of Woori Bank. Now it’s “Jungang-ro” along which Starbucks and others are lined. It’s the most crowded area there. In that respect, dining businesses are more helpful than banks.”

Kang-Woon Lee woon90@donga.com kimhs@donga.com