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For Rent: Prime Locations
By Sean Roth
Real Estate Editor
Real estate is not a one-size-fits-all business. What works for one business can leave another experienced entrepreneur an utter failure. You don't have to teach Stan Rutstein that business rule.
Rutstein, a commercial Realtor with Wagner Realty, is charged with handling five former Eckerd drugstore locations in Manatee County left vacant following Woonsocket, R.I.-based CVS Corp.'s purchase of the Eckerd locations in Florida and Texas last July.
Eckerd stores may have seemed ubiquitous, but from a real estate perspective the list of possible users for the drugstore sites is much more limited than one would expect. The stores at about 11,000 square feet are too large for a bank branch and with only 50 parking spaces, the sites are too small for a restaurant or religious institution.
On the plus side, the stores are in some of the most desirable high-traffic locations in the county. Rutstein, who had worked for about 40 years in the fashion retail industry before moving into semi-retirement and real estate brokerage, actively pursued them.
"When I heard early on that CVS was looking to acquire the southern tier, I started investigating it with some of my people," Rutstein says. "Some of the people who had worked for me in New England now worked for CVS. I also know CVS well; I've been following them since they were called Consumer Value Stores. I always had a great deal of respect for their growth (mainly) through acquisitions."
Rutstein discovered that CVS was keeping the Sarasota County stores, but the company planned to divest five locations in Manatee County, along with the 155 other stores in the Southeast using the Dallas real estate firm of Staubach Co.
So Rutstein called Staubach.
"I managed to convince them that real estate is more regional than national," says Rutstein, who was made the primary leasing agent for the five parcels late last year.
Then the serious work started.
"We did a market-analysis study and determined that the end user would have to have a very fast turnover because of the low parking ratios," Rutstein says. "It also couldn't have a very large staff for the same reason. In the end, we boiled it down to six to eight different users."
Possible uses include neighborhood-oriented medical practices (clinics or specialists), offices and low-customer intensity retail businesses, such as furniture or home improvement stores.
Rutstein also - in discussion with the building owners - determined what properties might be open to sale rather than a long-term lease.
"CVS doesn't own these buildings," Rutstein says. "Most of them were set up as 1031 tax exchanges. They just want the same income at the end of the day. These were triple net leases. At the same time, they are concerned about the quality of the replacement tenant; they want to protect their investment.
"As the listing contractor, the best move is to sell the buildings," he adds. "Although our signs say for lease we are willing to have a dialogue."
Further complicating the matter, national drug stores, such as the former Eckerds, usually pay a premium rent for their locations and sign long-term leases in the 25-year range. So while CVS Corp. is a $30 billion company, several high-rent stores staying vacant for a long period could certainly dent the company's earnings. The landlords for obvious reasons are also squeamish about subdividing the space.
Still Rutstein says the local market for retail is still good.
"There is virtually no commercial retail space available (in the two-county market)," Rutstein says. "It is almost impossible to get anything with street frontage. It's almost shocking how little there is. These are fairly unique pieces, but even so I have been getting a minimum of 15 calls a day."
Those calls have been a result of the most basic form of marketing, "For Lease" signs. In addition, the locations have been marketed via direct mail to potential users and listed in the Manatee County Multiple Listing Service. The sites have also been displayed at regional trade shows.
Like Rutstein, Barry Seidel, president of American Property Group of Sarasota Inc., is optimistic about how fast the properties will be leased or sold.
"What it always comes back to is that Eckerds and Walgreens chose the prime corners," he says. "I don't see how they couldn't sell; they are all in great locations. I'm just guessing, but the sale price is probably pretty expensive per square foot when compared to a traditional retail location."
Asked about the asking lease rate per square foot, Rutstein says it varies by location and market.
"It ranges from the mid-teens to the 20s," he says. "We are having a lot of discussions right now. At the end of the day, I really feel that we are getting close to getting these stores wrapped up. I should have two of them completed in the next month or two."
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