An old Rite Aid can be lots of things — but they mostly have to do with cars

Credit: Amy Barczy/Crain’s Detroit Business
Clean Express Auto Wash opened this new location in July at a former Rite Aid store at 25100 Harper Ave. in St. Clair Shores.

As Rite Aid shuttered its 232 Michigan stores last year in the wake of its bankruptcy, its real estate portfolio quickly caught the attention of investors.

It all comes down to their location.

Rite Aid stores tend to be in high-traffic locations on major street corners. For convenience-based businesses like car washes and gas stations, that’s prime real estate.

Ohio-based Express Wash Concepts is intentionally keeping an eye out for former Rite Aid stores as it mounts its expansion into metro Detroit. The company recently opened a car wash in a former Rite Aid store in St. Clair Shores.

“(Rite Aid) drug stores were based on convenience,” Express Wash Chief Development Officer Craig Van Bremen told Crain’s. “Car washing is a convenience purchase as well.”

In addition to their high-traffic locations, Rite Aids share other common features, including large parking lots and a footprint of about 10,000-15,000 square feet.

These specs can cause some challenges — it is difficult to split up a Rite Aid building into usable space for multiple businesses, for example — but the characteristics can also make them a good home for businesses able to take advantage of their features.

Credit: Abigail VanderMolen/Crain’s Detroit Business
A former Rite Aid store on Packard in Ann Arbor remains vacant.

A variety of uses

The go-to use for a former Rite Aid store is “definitely petroleum,” according to Simon Jonna, founder of Birmingham-based Jonna Group, who estimates he’s worked on roughly 500 Rite Aid real estate transactions nationwide over his career.

Outside of gas stations, car washes, dollar stores, auto supply shops and specialty grocers are also common.

In Michigan, Dollar General stores have opened in former Rite Aids in Farmington Hills and Battle Creek, and the Plum Market in Bloomfield Township is expanding into a vacant Rite Aid next door, The Detroit News reported.

Many uses are more creative. Indoor golf simulator Hosel Rockets opened in a former Rite Aid on Dixie Highway in Waterford, and in Detroit, Sapphire Beauty Supply opened in a former Rite Aid on Livernois Ave. Jonna said he’s seen pet stores in Rite Aids as well. In Owosso, Memorial Healthcare Health System turned a former Rite Aid into an urgent care and pharmacy.

How long a former Rite Aid building stays on the market depends on a variety of factors, according to Deno Bistolarides, managing partner at West Bloomfield-based Encore Real Estate Investment Services, who estimates that the company is one of the top brokers of vacant drugstore sales nationwide.

“Some are scooped up right away,” Bistolarides wrote in an email to Crain’s. “Some take longer as the owners might have the staying power to be more selective on who they want to lease to. Some might stay vacant because the owner owes too much and the rents needed are not attainable in the market — in this case, it’s a war of attrition and it could come back to the lender taking it over.”

Credit: Dustin Walsh/Crain’s Detroit Business
Sapphire Beauty Supply opened in a former Rite Aid at 13939 Livernois in Detroit.

With the cost of construction being high, repurposing buildings is an industry-wide trend, according to Jason Miller, chief investment officer for developer Grand Sakwa Properties, LLC.

“Over the last several years, new construction really hasn’t worked for a variety of reasons,” Miller said. “Some of it is demand-driven. A lot of it’s the cost associated with new construction and not matching what tenants are willing to pay.”

Still, it takes time to fill all the former pharmacies.

Andrew Schmidt, financial analyst at Jonna Group, estimates around 90 remain vacant statewide, although Bistolarides notes the exact number is difficult to know, as many Rite Aids that look empty could be leased and in the approval process to be developed into something new.

Credit: Amy Barczy/Crain’s Detroit Business
Clean Express Auto Wash opened this new location in July at a former Rite Aid store at 25100 Harper Ave. in St. Clair Shores.

Express Wash expansion

In the case of an Express Wash car wash, the dimensions of the Rite Aid stores are ideal. The company reuses as much of the former Rite Aid as possible during their remodels, Van Bremen said, filling the shell of the building with a car wash tunnel, equipment and car interior vacuums.

Such conversions typically take five months and $3 million to $3.5 million, with finished car washes netting the company around $2 million to $3 million in revenue annually, according to Van Bremen. The company has a total of 122 car washes across its five brands nationwide, with ten open in metro Detroit.

Of those, Express Wash has five car washes operating in former Rite Aids and one in a former CVS nationwide, with more on the way. 

In Michigan, the company is working on locations in a former CVS in Westland and a former Rite Aid in Flint in addition to its new St. Clair Shores location.

A challenge to expansion, Van Bremen said, is getting approval from local municipalities, a process he says involves educating local governments on the benefits of an additional car wash.

“We’re not just a car wash. We’re a company that gives back,” Van Bremen said. “We do a lot of charity events. We give back. We invest in our employees. We create this great experience. We are creative in our reactive reuses of the building.”

At a larger scale, zoning approval from local governments can often pose a barrier to Rite Aid repurposing, especially gas station developments. Jonna said the city of Sterling Heights told an investor that a Rite Aid that Jonna had sold there could not be turned into a gas station. In January, the Livonia City Council rejected a proposal to rezone a former Rite Aid so it could be developed into a Sheetz gas station. 

Grocers

Grocery stores, including upscale and ethnic grocers, can be good uses because they don’t require as much work to reconfigure the building, with the added benefit of not needing zoning approval from local governments, according to Bistolarides.

“A grocery store, that’s not going to take a lot of time because it’s already approved,” Bistolarides said. “But if you’ve got a redevelopment coming in that you have to go through city approval … that takes a long time.”

One such grocery store is an expansion of Ferndale’s Western Market, a family-owned store selling natural and sustainable foods. Owner Steven Selvaggio said the market is opening a second location at a former Rite Aid in northern Oakland County.

Selvaggio declined to share the exact location because leases have not yet been signed, but said he looked at several former Rite Aids in the area, which were attractive because of their size and location.

Still, Selvaggio said Western Market plans to demolish and reconstruct the building, a move he says will give the store the specific look and layout it needs.

Credit: Atko Market and Bakery
Eastern European bakery and grocer Atko Market and Bakery has a location at a former Rite Aid in Livonia.

Damian Tevdovski, who opened the second location of his Eastern European store Atko Market in a former Rite Aid on Eight Mile Road in Livonia in 2021, took a different approach. He said the building was older and needed some updating when he bought it, but otherwise did not need heavy renovations to become an imported goods store and bakery.

“You don’t have to do a big gut job,” Tevdovski said of converting a Rite Aid into a grocery store.

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