Buffalo, N.Y. (WBEN) - An already fragile regional retail-related commercial real estate market is now reeling from the addition of 68 former Rite Aid locations that have been added to a glutted market place.
And prospects for finding buyers or tenants for these buildings is slim, given the current unstable retail market with stores - both independent and chain sites - constantly being added to the growing portfolio of available space.
"Tough time, to be sure," said Bob Schell, Pyramid Brokerage Co. of Buffalo president.
The glut is a direct byproduct of the Rite Aid filing for bankruptcy protection and shuttering its stores nationwide.
Most Rite Aids average between 11,000-square-feet and 15,000-square-feet, with the median store size approximately 13,000-square-feet. That means, the combined 68 Rite Aids will add nearly 900,000-square-feet into a regional market place extending from Chautauqua County through Niagara County. That's nearly the size of the Eastern Hills Mall in Clarence.
And the Rite Aids are hitting the market at a time when retail vacancy continues to rise. According to a CBRE Upstate New York retail market report, the Buffalo Niagara region had a 10.8% retail vacancy rate, as of this past winter. Last year, CBRE reported a 10.4% retail vacancy rate.
In hard numbers, the Buffalo Niagara region has slightly more than 2.5 million square feet of available retail space --that's equal to twice the size of the Walden Galleria.
"Rite Aids are tough because they are hard to subdivide," Schell said. "You need a specific buyer."
William Paladino, Ellicott Development president and CEO, said he has received some offers for the 40 Rite Aid locations in his company's real estate portfolio. Some are close to moving towards a contract and closing date.
"People are interested," Paladino said.
One East Side store, on Bailey Avenue, was sold this spring by Ellicott Development Co. to local businessman Abdulla Ahmend while another on Route 5 in Akron was leased to Akron Community Pharmacy.
One of the few positives that come with Rite Aids is that most have ample, free parking adjacent to the store. That can be a key selling point, Schell said.
Many, especially in the more densely populated urban areas, are located in busy neighborhoods. Rural sites may be more isolated.
The bottom line, Schell said, is that it will take a long time before all of the Rite Aids find new owners and a new life.