Recently Sold: CVS Pharmacy in Plantation, FL

At the beginning of September 2021, Ground + Space announced the sale of a CVS Pharmacy property in Plantation, Florida. Michael Zimmerman exclusively marketed the property on behalf of the seller, which received multiple offers and was sold to an all-cash buyer. This asset produced a superior cap rate (thanks in part to its extremely high rent-to-sales ratio) and featured a seven-day closing period.

Prime CVS Pharmacy Retail Asset

This corporate-guaranteed STNL asset has been in place at this location since 1996. The tenant recently exercised its second five-year option, signaling CVS’s long-term commitment to this site. The property boasts a drive-thru pharmacy—a sought-after feature due to COVID-19—and a MinuteClinic. Two options remain on the current lease, and there are no landlord responsibilities for ease of ownership.

Situated at the signalized intersection of West Broward Boulevard and North Job Hill Road, this CVS Pharmacy is across from Hawks Landing, one of South Florida’s premier luxury communities. Visitors to the site are also minutes from Westside Regional Medical Center and Westfield Broward, a shopping center anchored by Macy’s and Dillard’s.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. During these uncertain times, Ground + Space remains dedicated to providing best-in-class services and results to our clients. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. Contact us today to find out more!


Just Sold: CVS in Hagerstown, MD

Ground + Space recently announced the sale of a CVS Pharmacy property in Hagerstown, Maryland. Michael Zimmerman exclusively marketed the property, which received multiple offers. JRW Realty facilitated the all-cash acquisition of the net-leased property on behalf of ExchangeRight, a vertically integrated real estate company with over $3.8 billion in assets under management. This asset produced a superior cap rate and was sold within one percent (1%) of the original asking price.

This corporate-guaranteed STNL asset has been in place at this location since 1998. The tenant recently extended the NN lease for an additional 20 years, signaling a strong commitment to the site and the greater Hagerstown community. The property benefits from its position at a signalized intersection near two of the area’s major shopping destinations: Hagerstown Premium Outlets and Valley Mall.

In addition to its exceptional access and visibility, this CVS Pharmacy is located within one of the fastest-growing metropolitan areas in the United States. More than 96,000 people live within five miles of the property. The area includes a labor force of 400,000 highly-skilled workers at the crossroads of the Mid-Atlantic corridor.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. During these uncertain times, Ground + Space remains dedicated to providing best-in-class services and results to our clients. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. Contact us today to find out more!

About JRW Realty

JRW Realty is a commercial real estate brokerage firm that has closed over $2.7 billion in transactions across over 750 properties on behalf of its clients. JRW Realty’s team places special focus on due diligence, reviewing over 100 properties each week and only choosing to source for clients the best three to four percent (3-4%) according to their rigorous acquisition criteria. For more information, visit www.jrwrealty.com.

About ExchangeRight

ExchangeRight pursues its passion to empower people to be secure, free, and generous by providing REIT, fund, and 1031 DST portfolios that target secure capital, stable income, and strategic exits. The company strategically acquires and manages long-term, net-leased assets backed primarily by investment-grade corporations that successfully operate essential businesses in the necessity-based retail and healthcare industries. Please visit www.exchangeright.com for more information.


Good News: Retailers Grow Despite Pandemic

Economists expect retail sales to increase approximately 1.9 percent this month. While any increase is good news, it’s a significant drop off from June’s increase of 7.5 percent. Not all hope is lost, however, at least not for some major retail tenants. Today, we take a look at some of the retailers who are making moves and shattering records, even amidst a global pandemic.

7-Eleven

7-Eleven recently entered into a definitive agreement with Marathon Petroleum Corp. (NYSE: MPC) to purchase the Speedway convenience store chain for $21 billion in an all-cash transaction. The arrangement is expected to conclude in the first fiscal quarter of 2021 and includes a 15-year fuel supply agreement for 7.7 billion gallons per year associated with the Speedway business. This large-scale deal includes approximately 3,900 convenience stores. These additional stores will bring 7-Eleven’s retail footprint to roughly 14,000 locations throughout the United States and Canada.

At Home

At Home’s CEO recently told CNBC that the company has been slowly expanding its store count by roughly 20 percent per year over the past seven years. The home décor and furnishings retailer currently has 219 locations but may expand to as many as 600 thanks to record-breaking net sales in its second fiscal quarter. Thanks to its listing as an “essential retailer,” At Home boasted net sales of $515 million in its most recent quarterly filing. What’s behind the increase? At Home is a one-stop-shop for a broad range of home goods, and the store’s open, spacious layouts and the brand’s omnichannel platform allowed the company to easily accommodate COVID-19 regulations.

Chili’s and It’s Just Wings

Brinker International, Inc. (NYSE: EAT), the parent company of Chili’s and Maggiano’s, recently introduced a delivery only-service called “It’s Just Wings.” Since launching in late June, this concept is now on track to exceed $150 million in sales during its first year. So, how does It’s Just Wings work? Brinker International is utilizing what it calls “ghost kitchens”—restaurants with a delivery service instead of a dining room. The “ghost kitchen” concept involves setting up kitchens that only make food for customers who order online, through mobile apps or via third-party delivery services. Instead of using independent kitchen space, It’s Just Wings now operates using separate, dedicated kitchen areas in 1,050 of Brinker’s U.S. Chili’s and Maggiano’s restaurants. This new concept—along with the established pick-up and delivery services already in place under the Brinker International umbrella—have generated strong bottom-line results.

CVS and Publix

Both of these leading retailers have seen a marked increase in year-over-year sales. Both companies benefitted from their status as “essential retailers” during the COVID-19 pandemic. CVS Health Corp. (NYSE: CVS) reported a 35.2 percent increase of $634 billion in the company second fiscal quarter of 2020. The company’s net income also rose to $5 billion (a 48 percent increase). Although CVS plans to close 22 underperforming stores, the remainder of its locations have remained open since the pandemic was first declared a national emergency on March 13, 2020. Publix has also remained open throughout the pandemic. Within its second quarter earnings report, Publix announced that sales have increased by 21.8 percent. Publix estimates that its second quarter sales increased by $1.5 billion due to the pandemic.

Starbucks

Although Starbucks Corp. (NASDAQ: SBUX) saw a decline in U.S. comparable store sales during its third quarter, the company still opened 130 net new stores. This marks a five percent year-of-year unit growth. The company currently operates or licenses approximately 15,243 locations in the United States and 32,180 worldwide. As of late July, Starbucks has opened roughly 97 percent of all its company-operated stores, both in the United States and China. Temporary closures affected locations in airport and college and university locations within North America.

Navigating These Uncertain Times

Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.

Stay Healthy and Safe

The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.


Just Sold: CVS in Lexington Park, MD

Ground + Space announced today the sale of a CVS in Lexington Park, Maryland. This property is a 10,125-square-foot retail asset prominently situated within a fast-growing retail corridor. Ground + Space Principal Michael Zimmerman exclusively marketed the property and represented the seller, an Alabama-based corporation. The property sold for an admirable cap rate of 5.48 percent.

The NN lease features a corporate guarantee and an extremely rare 20 percent rental increase within the first option period. The tenant recently extended the base term of the lease by 20 years. The current lease term will last through 2037, signaling a strong commitment to the site.

The property sits at a signalized intersection with nearly 23,000 cars passing daily. Visitors to the site benefit from easy connections to major highways including Interstates 95 and 495. The CVS is close to an expanding retail area along Route 236 and Great Mills Road that features a strong mix of national and local retailers. Lexington Park itself is an affluent area with a prominent military presence that provides a $3 billion impact to the local economy annually.

About Ground + Space

Ground + Space is a net lease brokerage firm that leads with an emphasis on personalized relationships. Michael Zimmerman and team have curated a brokerage firm and investment sales platform focused on boutique amenities and down-to-earth service. Ground + Space is rooted in more than 20 years of experience aimed at providing the best data, relationships and success rates in the business. Interested in commercial real estate investment? Contact us today to find out more about our current listings!


Why Drugstore Chains are Still a Good Investment

Drugstore industry giants like CVS and Walgreens are rethinking their expansion plans. Changing consumer shopping habits, tightened pharmacy reimbursement rates and increased tariffs on Chinese products are just a few of the factors drugstore retailers cite for the slowdown in new store development.

Changing Retailer Strategies

CVS Health announced in early August its plans to slow annual store expansion for the next two years as it makes changes to its business model and focuses on delivering high financial returns for investors. The company is set to open only about 100 stores in 2019—just one-third of its typical volume—and only 50 new stores in 2020. The company also plans to shutter 46 underperforming stores and reevaluate nearly 500 annual lease renewals.

Walgreens Boots Alliance is scheduled to close at least 200 stores across the United States as it begins to implement a new cost-management program aimed at cutting operating costs by $1.5 billion by 2022. In 2018, Walgreens added 1,932 Rite Aid stores and distribution centers to its portfolio for $4.4 billion. As of August 2019, the company has more than 500 surplus properties for sale.

The Future of Drugstore Retailers

Like most retailers, CVS and Walgreens are reacting to a change in consumer spending and shopping habits. As the e-commerce industry continues to boom, both CVS and Walgreens plan to invest in experiential retail solutions to attract and retain customers. CVS plans to roll out 1,500 HealthHUB store formats by the end of 2021. The additional 20 percent of floor space dedicated to health services will include everything from on-demand health kiosks to space for yoga classes. Walgreens is doing much the same as it adjusts its business model to place more emphasis on merchandise like beauty products and health equipment. The company also plans to expand its Partners in Primary Care centers within retail stores which offer specialized services for seniors with Medicare Advantage health care plans.

What Does This Mean for Investors?

In the grand scheme of things, these store closings and the scaling back of future development is insignificant. Those impacted most will be current owners of drugstore properties. In the wake of these announcements by CVS and Walgreens, some owners will need to find new tenants and face the possibility of having to accept less rent. (After all, banks and drugstores tend to pay higher-than-average market rental prices.)

With a dwindling stock of new properties on the market, the biggest challenge for brokers going forward will be selling properties with shorter lease terms. However, drugstore properties are still in high demand. Steady cap rate trends, strong corporate guarantees and minimal landlord responsibilities all factor into the success of drugstore transactions.

Interested in investing in a drugstore property? Ground + Space is a leading commercial real estate brokerage firm that specializes in single-tenant and retail NNN investments. Contact us today to find out more about our current listings!