A Closer Look Into The Drugstore Investment Market

 

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JULY 7, 2017 | BY NATALIE DOLCE

GlobeSt.com chats with Tom Fritz, a senior director at Stan Johnson Co., about how buyers are becoming more cognizant of market rents and are typically cautious about acquiring properties that are above market.

For all things happening in the drugstore investment market, GlobeSt.com caught up with Tom Fritz, a senior director at Stan Johnson Co., who noted that, among other things, buyers are becoming more cognizant of market rents and are typically cautious about acquiring properties that are above market.

GlobeSt.com: What advice are you giving your clients about the drugstore investment market? 

Tom Fritz: Cap rates are up 25 to 50 basis points in the past 90 days, depending on the specific tenant. We’re in the middle of seeing the pendulum swing from a seller-favorable market to buyer-favorable. When advising sellers, we help them get out in front of a falling market so they aren’t playing catch-up later on.

GlobeSt.com: What noteworthy trends are you seeing across the single-tenant drugstore sector today? 

Fritz: As lease terms drop below 12 years, it’s all about rent compared to market. Buyers are becoming more and more cognizant of market rents and are typically cautious about acquiring properties that are above market. For drugstores, however, above-market rents are the norm. Tenants, too, are now becoming more aware of this, so many are asking for rent reductions of 30 to 50 percent at renewal time. This can be challenging for both the tenant and the landlord, though. Tenants may not want to go through the hassle of relocating a store if a landlord says no, while the landlord doesn’t want to go through a backfill scenario if the tenant chooses to leave.

GlobeSt.com: So, do you call the tenant’s bluff, or not?

Fritz: It completely depends on the individual situation. If the tenant can’t afford to give up the real estate because a competitor is next door, or because store sales are strong and the tenant lacks the incentive to relocate, the landlord can retain above-market rents and a sustained property value by calling the bluff. If store sales are too low and a relocation—or even a net closure—is a better outcome for the tenant, the landlord risks having a vacant building for at least six months, accompanied by a decline in property value of 25% to 50% based on new rents. In that situation, a 30% to 40% rent reduction may make sense.

 

Natalie Dolce ›

Natalie Dolce, national executive editor of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, Natalie was Northeast bureau chief, covering New York City for GlobeSt. Dolce’s background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer’s Budget Travel, FashionLedge.com, Co-Ed magazine and the Daily Orange newspaper. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.

More articles by this author ›

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SEE IT ALL: http://www.globest.com/sites/nataliedolce/2017/07/07/a-closer-look-into-the-drugstore-investment-market/?kw=A+Closer+Look+Into+the+Drugstore+Investment+Market&et=editorial&bu=REM&cn=20170710&src=EMC-Email&pt=Chicago

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How to Capitalize on Hot Phoenix Apartment Market

 

WHY PHOENIX? AMAZING!!!  POPULATION IN 1950 – 350 K PEOPLE; “NOW 5 MIL”. – “5TH. BIGGEST CITY IN USA”

 

ARIZONA FACTS – YEAR 1848 TO 2013

PHOENIX TOPS US IN POPULATION GROWTH (MORE THAN LA, NYC) AND WHY THAT’S GOOD FOR THE ECONOMY, BUSINESS

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DOWN TOWN PHOENIX IS HOT – MULTI-FAMILY HOUSING ANALYSIS  MAY 17-2017

  • DEMOGRAPHIC FACTS ABOUT MARICOPA COUNTY:
  • The average age of the population is 34 years old.
  • The health cost index score in this area is 102.1. (100 = national average)
  • Here are some of the distributions of commute times for the area: <15 min (22.7%), 15-29 min (36.8%), 30-44 min (25.1%), 45-59 min (8.6%), >60 min (6.8%).

 

PHOENIX PROJECTED AS NUMBER ONE US HOUSING MARKET FOR 2017

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2016 Official Arizona Visitors Guide

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Why Phoenix?  This is a very interesting article, you should read it, amazing, there were only 350 K people living in Phoenix in 1950

Timeline of Phoenix, Arizona history

Phoenix, Arizona

Facts of Arizona – year 1848 to 2013

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