Q225 Florida Drugstore Tenant Report

Florida’s drugstore retail market has undergone noteworthy changes within the past year. These developments underscore the influence of high-profile transactions, framed with an overarching resonance of broader national trends. Asset allocation strategy is moving beyond brand-driven comfort to a more nuanced emphasis on regional demographics and property-level performance. Fluctuating cap rates, elevated vacancies, and deliberate major operator repositioning characterize the ongoing dynamics within the drugstore sector.

 

Cap Rate Dynamics

Over the past year, cap rates for pharmaceutical retailers in The Sunshine State have fluctuated within a narrow one percent range, ranging from 6.5% to 7.5%.

 

Walgreens cap rates have consistently traded on the lower end compared to the rest of the country due to varying factors, including location, performance, and lease duration. CVS assets follow suit, generally impacted by short lease terms at the time of sale. A distinct bifurcation is emerging across the Floridian sector.

 

Coastal metros experience higher valuations and sustained investor demand, while tertiary markets like Ocala and Lakeland offer higher yields.

 

Walgreens: Sales and Market Implications

The national drugstore operator has made major strides in 2025, most notably its $10 billion sale to Sycamore Partners. Announced in March 2025, the acquisition is set to close in the second half of the year at a steep discount. The deal values Walgreens at 90% less than its peak market value a decade ago.

 

In late 2024, Walgreens announced plans to close 1,200 stores over three years as part of a broader restructuring plan. The closures began in 2025 with 500 locations scheduled to shutter in the first fiscal year. Currently, over 400 of those locations are listed, with 40 of them in Florida.

 

CVS Strategy and Store Format Innovation

The pharmaceutical giant is nearing the end of its three-year plan to close 900 underperforming stores nationwide, announcing plans to shed at least another 270 stores in 2025. Not to be mistaken as signals of distress, this consolidation strategy is part of a deliberate shift toward a leaner, restructured growth model.

 

CVS is piloting “pharmacy-only” locations to reduce store footprints from 12-15K SF to under 5K to meet consumer and efficiency demands. The company plans to open 200 locations in 2025, including 30 in Florida.

 

Investment Trends

Investor behavior throughout Florida’s drugstore segment is redefining itself. Buyers and sellers alike are responding to changing risk profiles, becoming more meticulous in their tenant strategies, taking local demographics, market fundamentals, and property-level attributes into consideration.

 

Areas experiencing record-high populations and employment growth are attracting capital and outperforming statewide averages. Specifically, in the Tampa Bay area, Orlando’s urban and suburban cores, as well as Miami’s suburbs, are standout investment zones. Secondary cities attract value-seeking buyers drawn by high return potentials.

 

Key Takeaways

Florida’s pharmaceutical sector is entering a period of recalibration with large-scale Walgreens closures, tactical CVS repositionings, and rising vacancy trends. Top-performing core markets and key coastal regions across the state are maintaining resilient cap rates.

 

The retail segment remains fiercely competitive heading into Q3. Falling back on core CRE fundamentals is increasingly important, with regional demographics serving as a guide through a murky landscape marked by pricing gaps and cautious capital.