Signature Associates

Why the local drugstore could become a plasma collection center, restaurant or even a dog park

Posted By: CoStar on September 25, 2024.  For more information, please click here to read the source article.

As chains close pharmacies in the US and Canada, conversions involve a variety of uses with retail space scarce.

To get a sense of what’s happening to shuttered drugstores as national chains streamline, take a look at one retail building in the affluent Atlanta suburb of Alpharetta, Georgia. Where pharmacists once dispensed pills and shoppers bought toothpaste, dog owners can now sip cocktails and nibble on appetizers as their pooches play in a fenced-in park adjacent to the restaurant.

Off Leash, a combination eatery and dog park, is one example of how developers are thinking outside the box in reusing former drugstores — and the challenges that can be involved in conversions. Other uses for closed pharmacies include car washes, plasma clinics, gas stations and thrift stores.

As CVS, Walgreens and Rite Aid close thousands of locations in the United States and Canada, developers will have plenty of opportunities to get creative in remaking drugstores, according to real estate professionals. The designs are already expanding to include a wider range of tenants beyond the dollar stores and urgent care clinics that are two of the most common new occupants.

Some of these conversions require significant investments in construction to modify the building or, in the case of a new convenience store near Houston, the installation of gas pumps. It’s considered worth the trouble to remake these boxy structures, Jason Miller, chief investment officer at Grand Sakwa Properties, told CoStar News. After all, drugstores are frequently located at prominent, high-visibility sites.

“Location is the big draw for a lot of these buildings because they are highly prominent,” said Miller, whose firm invests in drugstore properties.

At Off Leash, co-owner Wendy Newman thought the former Rite Aid in Alpharetta was a good spot for her restaurant-dog park idea. The building had been empty for years but was positioned at a high-profile intersection, and most importantly, an empty lot sat next to the former drugstore.

Newman acquired both the former Rite Aid and the empty lot. She then hired the Atlanta architecture firm Vickers Design Group to create a design.

It turned out to be a more expensive proposition than initially envisioned, said Will Jordan, an associate architect at Vickers who designed the new restaurant and dog park. For one, in some neighborhoods, once a drugstore, always a drugstore, Jordan said.

“When most people see these abandoned drugstores, they usually will only ever see it as that,” Jordan told CoStar News.

Vickers removed a portion of the building to create a partially covered outdoor space for a patio. They punched holes into the sides of the building to create large windows. They also added prefabricated metal canopies above the main entrance and installed garage doors for the transition area between the indoor and outdoor spaces.

The firm also ran into the issue of drainage for when dogs used the fenced-in park area to relieve themselves. The city of Alpharetta determined that the turf Off Leash planned to use for the dogs’ area was not an impervious surface. To prevent the runoff of undesirable liquids, the city required the installation of an underground drainage system. That was in addition to the property’s existing stormwater runoff collection area.

The effort reflects the economics that can be involved. Some drugstore landlords are wealthy individuals who bought their properties as a source of passive income with little involvement required on their part. If CVS, Rite Aid or Walgreens vacates a location, a landlord probably won’t be able to replace the drugstore with a new tenant paying the same level of rent, Daniel Taub, national director of the retail and net lease divisions at Marcus & Millichap, told CoStar News.

That’s where a conversion comes into play. It helps that available retail space is in short supply in many markets, according to CoStar data. About 4.5% of the total amount of retail space in the U.S. was available for lease at the end of August, a historically low level, according to Brandon Svec, national director of U.S. retail analytics at CoStar Group.

Drugstore buildings aren’t the perfect vehicle for conversion, according to architects who have converted them to new uses. At an average size of 10,000 square feet to 15,000 square feet, they are too large for retailers like auto parts stores or coffee shops. The rectangular shape of drugstores also makes them awkward to subdivide for use by multiple tenants.

Neighbors may balk at the proposed new tenant. Gerber Collision and Glass had planned to convert a former CVS in Darien, Illinois, to an automotive reconditioning facility, according to media reports. But Gerber backed out after the community balked at what they expected would be excessive noise and odors from an auto body shop. Gerber didn’t respond to telephone and email requests seeking comment.

Clean Express Auto Wash had more luck with its project to convert a former Rite Aid in East McKeesport, Pennsylvania. The car wash machinery is located inside the building, lessening the noise and making it more acceptable to the community, Miller said.

Former drugstores are typically located at heavily trafficked intersections with well-planned entrances and exits for car traffic, Taub said. That’s what attracted Now & Forever to convert a former Walgreens in Houston to a convenience store, Miller said. The project included the installation of 16 gas pumps covered by a canopy.

Retailers of different stripes have found that former drugstores are suitable for their uses. Savers Value Village, a U.S. and Canadian thrift store chain, in February converted a former Rite Aid at 1997 Tice Valley Blvd. in Walnut Creek, California, to a Savers-branded thrift store.

Healthcare providers also have converted former drugstores. Design-build firm Stough Group has converted more than a dozen drugstores to plasma collection centers for KedPlasma across the U.S. The conversions require a large room with space for dozens of reclining chairs for patients to donate their plasma.

The architecture firm DLR Group recently converted a former drugstore for Inland Empire Health Plan to operate a wellness center for members of a low-income community in Indio, California. DLR filled in the former drugstore’s loading dock, installed a canopy and turned it into a community garden space, Jeremy Reding, a principal with the firm, told CoStar News. DLR also added outdoor art around the main entrance.

Inside, DLR installed walls to create fitness rooms, a kitchen, a room for children and a small office. The high-profile location made it a good fit for IEHP, which provides fitness classes, benefits assistance and other services, Reding said. The Indio location will be IEHP’s fourth in Southern California and is expected to open next year.

“You want it to be easy to access for the community and you want it to be where people can see it,” Reding said.