The Rite Location Rite Aid Is Making Its Mark At Prime Locations

Rite Aid is on the move, and that’s having big ramifications for Spokane’s commercial real estate market.

The drugstore chain has embarked on a citywide strategy of moving from large, shopping center stores to smaller, free-standing stores at some of Spokane’s best corner locations.

So far, those include the intersection of Sprague and Sullivan in the Spokane Valley, Francis and Division and the North Division `Y,’ where Rite Aid replaces the Skipper’s and Chapter 11 restaurants.

Because Rite Aid is buying or leasing premier locations, the Pennsylvania-based chain also is paying premier prices and is signing leases at rates that may be significantly higher than what the market had previously commanded.

“The appearance is that they’re paying a very high rental rate,” said Joe Ward of Pinnacle Realty.

The consequence, Ward said, is that virtually every Spokane landlord with commercial property is now looking for tenants to sign leases for the prices Rite Aid is paying.

“It starts changing the market out there, in terms of what landlords are asking and what tenants are paying,” Ward said.

Rite Aid spokesman Craig Berman denies the company is paying inflated prices, but said that Rite Aid is committed to relocating to the best locations.

“We try to cut the best deal we can,” said Berman. “It is accurate to say that when we identify a location that suits our criteria, we’ll do what it takes to get the deal through.”

But while Rite Aid is creating a frenzy in the Spokane real estate market, it may be based in part on an illusion of high prices, created by its unusual lease-signing practices.

Rather than agree to a deal that includes 5 percent or 10 percent bumps in rent every five years, Ward said, Rite Aid is signing at a flat rate for the life of the lease, usually 20 years.

The idea is that the company pays more up front, but saves in the long run, Ward said, while the landlord is guaranteed a strong revenue stream from an attractive, stable tenant.

Because Rite Aid pays more up front, it’s feeding the impression the company is overpaying, Ward said.

“The hubbub in the (real estate) community, that they’re paying ridiculous prices, might not be true,” he said. “But they are paying well above market.”

Rite Aid, with 3,500 stores nationwide, entered the Spokane market in fall 1996 when it purchased Thrifty PayLess and its 12 Spokane stores and one Coeur d’Alene store.

While Rite Aid bought one of the nation’s largest drugstores, it also inherited a less-than-ideal store format of large, 20,000 to 30,000 square-foot stores in strip centers.

Rite Aid’s goal is to relocate from those strip centers to free-standing stores of about 16,500 square feet, Berman said.

“We want to make it easier to get in and out,” he said. “It’s a real convenience to have our own parking. It’s been proven on the East Coast to be quite successful and quite popular.”

Eventually, all 12 of Spokane’s Rite Aids could move during the next 10 years, as better locations become available, Berman said.

With Wal-Mart apparently willing to consider alternate sites for its controversial North Side store, Walter Knopp’s property is back in the running.

Knopp, a retired taxidermist, owns about 31 acres on the Newport Highway, a site that Wal-Mart originally considered for its store before it settled on a 40-acre site across the road owned in part by the Nelson family.

The decision resulted in a 2-1/2-year tangle of rezoning requests, neighborhood hearings and lawsuits, and only in the past few weeks has Wal-Mart indicated any interest in finding a new site.

Knopp said he was informed his site is back in the running, along with several other properties.

But Knopp isn’t convinced the Arkansas corporation has given up on the Nelson land.

“It seems when they put their finger on a site, they don’t give up on it,” he said.

The Globe Bar and Grille opens Friday in the former home of Bountiful Foods grocery store at 204 N. Division.

The new restaurant is the next step in the evolution of the old Globe Hotel, a 1908 building owned for three years by Julie and Owen Clarke.

With the ground floor leased by the restaurant, a bookstore, hairdressers and an architecture firm, the Clarke’s are now focusing on renovating the upper two floors into 18,000 square feet of office space.

Margins: Spokane Wall Systems, distributor of Dryvit siding, has bought a 51,100-square-foot lot on Buckeye Lane in the Valley from Bill Wagstaff. Owned by Doug and Christine Cosette, the property will eventually house a 10,000-square-foot warehouse and office building. … The McGraw-Hill Construction Information Group reported a 103 percent increase in construction activity for Spokane County, measured in dollars, in December of 1998 compared with December 1997. The figure jumped from $17.8 million to $36.2 million. For the year, construction activity climbed 44 percent, from $369 million to $531 million. … The Spokane Home Builders Association is considering the Canyon Bluff development, formerly Mission Springs, as the site for the 2000 home show.