Historic Low Cap Rates in Drug Store Sector, Data Reveals

Originally published by The Boulder Group in Q3 2021.

Cap rates in the single-tenant drug store sector decreased by 59 basis points to a new historic low rate of 5.80% in the third quarter of 2021. New historic low cap rates levels for CVS and Walgreens of 5.15% and 5.40% respectively were the primary driver of the compression. Rite Aid cap rates were compressed by 40 basis points to 7.40% but did not reach their prior historic low (2008). Investor demand for essential retailers carried over from 2020 into 2021, propelling cap rates for all three major tenants in the single-tenant drug store sector lower.

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