CVS and Walgreens are in a constant battle for the biggest share of the market. CVS acquired Omnicare and Target's pharmacies last year and Walgreens is in the process of acquiring Rite Aid by the end of this year. Both, in total, dominate the Drug Store industry. A recent Cap Rate Report released by Calkain shows quarter-by-quarter average national cap rates.
Q4 2015 cap rates stayed in the high 5% range for both pharmacies. Walgreens showed a stable uptick in cap rate for Q1 2016 with an average of 5.68%. The slight increase is a result of REITs maturing and an influx of Walgreens hitting the market. Meanwhile, CVS's average cap rate for Q1 2016 was at 6.03%, due to the limited sale of CVS deals in the data set, and some outlier transactions resulting in a higher average cap rate. The national average cap rate for Q2 2016 remained constant for both retailers, with CVS at 5.60% and Walgreens at 5.62%.
As we see increasing numbers of Americans growing older and in need of health care, both CVS and Walgreens should make for stable, income-producing net lease investments.
CVS and Walgreens are in a constant battle for the biggest share of the market. CVS acquired Omnicare and Target's pharmacies last year and Walgreens is in the process of acquiring Rite Aid by the end of this year. Both, in total, dominate the Drug Store industry. A recent Cap Rate Report released by Calkain shows quarter-by-quarter average national cap rates.
Q4 2015 cap rates stayed in the high 5% range for both pharmacies. Walgreens showed a stable uptick in cap rate for Q1 2016 with an average of 5.68%. The slight increase is a result of REITs maturing and an influx of Walgreens hitting the market. Meanwhile, CVS's average cap rate for Q1 2016 was at 6.03%, due to the limited sale of CVS deals in the data set, and some outlier transactions resulting in a higher average cap rate. The national average cap rate for Q2 2016 remained constant for both retailers, with CVS at 5.60% and Walgreens at 5.62%.
As we see increasing numbers of Americans growing older and in need of health care, both CVS and Walgreens should make for stable, income-producing net lease investments.
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Jonathan Hipp
Jonathan Hipp began his career in real estate over 25 years ago. In his early years as a broker, he ventured into the net lease industry and quickly began leading the US net lease market, closing over $3 billion in transactions. In 2005, Jon founded Calkain Companies, a company focused solely on net lease investment services. As President and CEO, he has been instrumental in building the firm into one of the leading Net Lease real estate companies, transacting over $12 billion of net lease deal volume over the past 13 years. He has expanded Calkain’s services to include brokerage, advisory, asset management, capital markets, and industry research. He has become a well-known resource, panelist, and speaker at various Net Lease and Industry conferences and is a regular contributor to GlobeSt.com on real estate trends. In June 2015, Jon’s passion for the real estate business was again recognized as he was nominated for the Top Real Estate Player in the DC area by SmartCEO magazine.
