Another change is in store for one of downtown Richmond’s busiest intersections.
Walgreens is planning a new pharmacy and convenience store at the Hess gas station site at West Broad and Belvidere streets, across from VCU’s upcoming arts center.
Charlotte, N.C.-based commercial development firm Morgan Property Group is under contract to buy the property. Company President Trey Morgan said he expects the purchase to close by the end of the year.
The planned store will be the 12th Walgreens that Morgan Property Group has built in the Richmond area, Morgan said, and the pharmacy has been eyeing downtown for several years.
“We have been looking in this corridor for a long time– this has been a long pursuit,” he said.
Morgan Property Group plans to begin tearing down the gas station around March of next year. If demolition and construction run on schedule, Walgreens would fill its first prescription next fall.
Morgan declined to give an exact budget for developing the new store, but he said construction costs for a Walgreens tend to run about $125 per square foot in addition to site work expenses. The Broad and Belvidere store will be a 12,000-square-foot, two-story building.
Walgreens will have a 20-year lease on the property, Morgan said, with extension options spanning another 55 years. He declined to disclose rental rates for the property.
A pair of Richmond-area Walgreens stores sold at premiums earlier this year. The pricier of the two brought in $10.5 million, or $725 per square foot.
Jonathan Hipp, president of Reston real estate firm Calkain Cos. that handles many long-term leases, said investors and developers like Walgreens because the stores provide a steady, fixed-rate income on rents with little risk. The buildings, he said, essentially become bonds backed by real estate.
“Walgreens is probably one of the most popular tenants in the net lease world because of its brand street retail name and its credit,” Hipp said. “It’s where Main Street shops; everybody knows Walgreens.”
Hipp was not familiar with the exact terms of the deal for the Broad and Belvidere store, but he said Walgreens lease rates tend to be flat for the initial term of the lease but may increase as the company exercises its renewal options.
The Hess station sits on about half an acre and is currently owned by Hess Retail Stores. The property is assessed at $1.1 million, with most of the value in the land.
A traffic count provided by local real estate firm Cushman & Wakefield | Thalhimer shows 60,000 cars pass the site on Belvidere Street each day and another 30,000 come by on Broad Street.
When the Walgreens begins to take shape, it will be the second construction project at work at that intersection. VCU is building its $35 million Institute for Contemporary Art on the other side of Belvidere Street, and the facility is slated to open sometime in 2016.
Walgreens will be able to see its competition from the shop’s front door. A Rite Aid pharmacy sits right on the other site of Broad Street. A 410-bed VCU dorm building is on northwest corner of Broad and Belvidere streets.
On the eastern side of the Hess station, a former New York Fried Chicken & Biscuit is for sale after the restaurant shut down last year.
“This area of Broad Street – just in the decade or so I’ve been working in Richmond – has changed so much,” Morgan said. “I think it definitely has a need for additional retail and additional services as it continues to grow and as VCU continues to grow.”