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How Will Retail CRE Weather The Wave Of Pharmacy Store Closures?

January 16, 2025

On Tap Today

  • Drug bust: The wave of CVS, Rite Aid, and Walgreens closures is shaking up retail real estate, leaving landlords and investors to navigate the challenges of empty, specialized spaces.

Retail Real Estate

Pharmacy giants like Walgreens, CVS, and Rite Aid were pillars of convenience retail in America for decades. Together they have thousands of locations serving as go-to spots for everything from prescriptions to household essentials. But today, these once-untouchable brands are grappling with a perfect storm of challenges: years of over-expansion, mounting government fines, strained insurer relationships, and the rise of e-commerce.

In response, Walgreens has already announced plans to close 1,200 locations over the next three years, while CVS has laid off nearly 3,000 corporate employees. The closures have ripple effects far beyond the companies themselves. As anchor tenants in retail real estate, their downsizing challenges landlords and investors who must navigate vacant properties and shifts in property values. The financial entanglements of commercial mortgage-backed securities tied to these stores add another layer of complexity, making the pharmacy giants' strategies closely watched by stakeholders across the real estate ecosystem.

Check out today’s featured story about how these pharmacy vacancies could reshape the retail landscape. Some properties may find new life through adaptive reuse, with discount retailers and medical centers eyeing the spaces. But with their large, specialized layouts and features like drive-throughs, finding tenants for these stores built for a bygone era of retail could prove tricky.

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