Overview

With the stability of the retail pharmacy industry going strong, Walgreen’s remains a strong, valuable net lease investment with minimal risk. They usually go with choice corner real estate, and prefer parcels of over one acre. This might range up to two acres, given Walgreen’s building dimensions are often around 14,500 square feet on average. Though in some cases construction projects might be smaller or larger, anywhere from 10,800-15k sq. ft. In order to maintain market share against their biggest competitor CVS, they will also extend their initial lease terms to twenty five years, in addition to paying a premium to acquire a valuable real estate site. Recently, 8-10 separate options to renew every 5 years went into effect, even extending lease lengths upwards to seventy five year terms. Interesting to note that after year 25, a yearly right-to-cancel clause is being added to contracts. Now while providing flexibility for Walgreen’s, it was not looked upon favorably by leaseholders. Primarily knowing that financing might be pulled out from beneath them at any given time after the base term expires.