The median price per sf for drug stores sold in the region in the first three quarters of 2002 was $253.87 versus $113.18 for other single-tenant properties.

"Drug stores typically fetch a higher price per sf than other single-tenant properties because they bring strong credit and a reliable sales base to the negotiating table," M&M's Steven M. Ekovich, vice president/regional manager, Florida, says in the report.

He says buyers are willing to take a reduced cap rate in buying single-tenant, net-leased properties "in exchange for what they perceive to be a stable and worry-free commercial real estate investment."

Through third quarter 2002, the average cap rate on retail investment transactions in Tampa and Orlando was 10.2% on multi-tenant properties but only 8.9% on single-tenant properties.

"A free-standing location is very attractive to drug store chains, as they net greater revenue per sf when compared with strip center locations because access is made easier by more convenient customer parking," Ekovich says. Net-lease properties for drug stores "should continue to be a good investment for years to come."

He attributes much of the drug store industry's growth to aging baby boomer generations who need increased health needs.

Orlando is surpassing Tampa in single-tenant property sales, the report says. Tampa sales volume through the third quarter of this year was down from the previous year due to a shortage of "attractive properties" on the market.

In Orlando, about two-thirds of the retail investment transactions through the third quarter involved single-tenant properties. "In past years, the sales activity was more evenly divided," Ekovich says.

At the end of the third quarter, fast-food restaurants were selling at an average $279.62 per sf, up from $239.72 per sf in 2001. Drug stores are generating $244.05 per sf compared with $224.80 per sf last year.

Instant Insights /

Central Florida Retail Investment Market Holds Up

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