Investor demand continues for net-leased retail assets with pharmacy tenants in Southern California

NEWPORT BEACH, Calif., Oct. 13, 2021 – JLL Capital Markets announced today that it has closed $19.69 million in sales of two single-tenant retail buildings triple net leased to Rite Aid and Walgreens in Southern California communities, demonstrating investor appetite for durable, well-located assets with credit pharmacy tenants.

JLL marketed the Rite Aid property, which sold for $8.4 million, in the Riverside County community of Wildomar on behalf of the private seller who owned the asset since 2012. JLL also represented a separate seller in the $11.29 million sale of an 11,838-square-foot Walgreens-occupied retail building in Huntington Beach, which is in Orange county and was previously announced.

Rite Aid (NYSE RAD) is a leader in delivering healthcare services and retail products to more than one million Americans daily. Completed in late 2007, Rite Aid began operations in the 17,272-square-foot building in January 2008 shortly after it was constructed. 

The Rite Aid building, which has a drive thru and ample parking, is situated on 1.51 acres at 32450 Clinton Keith Rd. in a prime retail corridor in Wildomar, a community at the base of the Elsinore Mountains within the fast-growing Riverside County. The Rite Aid is at the signalized intersection of Clinton Keith Road and Palomar Street, which exposes the property to nearly 25,800 vehicles per day. The area’s strong demographic profile includes 120,841 residents earning an average annual household income of $107,799.

Walgreens is a leader in the pharmacy, health and beauty sector and is a subsidiary of Walgreens Boots Alliance, Inc., which has a BBB (S&P) credit rating. The Huntington Beach Walgreens property at 19001 Brookhurst St. is surrounded by some of the best demographics in Southern California. The sale closed at nearly $1,000 per square foot.

The JLL Retail Capital Markets team representing the seller was led by Managing Director Gleb Lvovich and Director Daniel Tyner.

“We continue to see high demand for absolute triple-net-leased drug stores throughout Southern California due to the well-located real estate and limited landlord responsibilities,” Tyner said. “We expect the strong demand to continue to drive pricing for these types of assets.”

“Investors are attracted to the recession resistance and durability of pharmacies as well as their strong locations on outparcels and hard corners,” Lvovich added. “Our team was able to sell through short lease terms and flat rents by highlighting the real estate value and the strength of each site. At the end of the day, while credit is important, investors are attracted to strong real estate.”

According to JLL Research’s most recent United States Retail Outlook, demand for neighborhood centers and stand-alone retail properties accounts for 90 percent of the net absorption seen since the beginning of the year.

JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm's in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales and advisory, debt advisory, equity advisory or a recapitalization. The firm has more than 3,000 Capital Markets specialists worldwide with offices in nearly 50 countries.

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