In recent years there has been an explosion in the number of
free standing Drug Stores or pharmacies. They have muscled into spots
previously reserved for the fast food industry, paying large sums for land to
occupy a premium spot. It could be said that these stores have become the
convenience store for drugs, as many also have drive-through windows while
being located on high traffic corners. In some cases there will be two and even three at a four corner
intersection. Consequently the cost of the typical Drug Store has increased
substantially in recent years.
The larger chains including, Walgreens, CVS and Rite Aid,
have dominated this expansion. They have learned that they can sell all types
of household items previously unavailable in most Drug Stores, while benefiting
from the high margins on prescription drugs. The rents on these properties have
increased substantially over and above those of the small local Pharmacy, which
mostly stuck to drugs and medical supplies.
Valuing Drug Stores has become more challenging, as these
properties have in some cases taken over some of the most valuable land in
town. They are hybrids of sorts, having
qualities of the Pharmacy, convenience stores and even general merchandise
stores.
ELLIOTT® has the ability to evaluate any Drug Store anywhere in
the United States with its national panel of commercial appraisers. We understand the market for Drug Stores
particularly, as it relates to the recent trend to higher profile
properties.