With merchandise that includes shot glasses saying “Hangovers are for amateurs” and T-shirts that list “15 reasons why a beer is better than a woman,” this Walgreens isn’t your usual neighborhood pharmacy.
Then again, it’s not in a typical neighborhood. It’s on the Strip, and investors have again paid big money for the building in America’s gambling and party mecca.
The 1.6-acre property, on Las Vegas Boulevard at Convention Center Drive, sold for $37 million on Friday, up 33 percent from what the sellers paid in 2012.
Property records indicate that the buyer, backed by a $20 million loan, was New York home-curtains manufacturer Elyahu “Ely” Cohen.
The sale is the latest investment in Strip pharmacies, which do a booming business slinging sinus relief, cosmetics, booze, food and Vegas-themed paraphernalia. Investors pay hefty amounts to own the space, pharmacies pay a fortune to rent it, and more drugstores have been opening.
It also comes amid a hoped-for turnaround on the north Strip, which in recent years has been blighted by mothballed casino developments and large swaths of empty land where other projects never materialized.
Resorts World Las Vegas, across from the Walgreens, is poised to be a multibillion-dollar megaresort, although owner Genting Group, which bought the 87-acre property in 2013, appears to have made little progress transforming the once-abandoned, partially built site into its Chinese-themed destination.
Meanwhile, the Walgreens deal is another apparent bet by Cohen on a Strip retail building this year. He teamed with other New Yorkers, property records indicate, to buy a 97,500-square-foot section of Showcase Mall, next to MGM Grand, in January for $139.5 million.
Cohen, head of Regal Home Collections, did not respond to requests for comment.
The seller, Virginia-based Harbor Group International, bought the Walgreens property in 2012 for about $28 million. Its payment of around $1,740 per square foot reportedly set a U.S. record for single-tenant drugstore properties.
Since then, commercial real estate prices around the country, especially in pedestrian-packed urban areas, have climbed, the economy has improved and business has picked up on the Strip, Harbor President T. Richard Litton said.
Brokerage firm Marcus & Millichap announced in January that the 16,000-square-foot building, at 3025 Las Vegas Blvd. South, was up for sale. There was no asking price, but the listing brokers said they expected to sell in the “mid-$40 million range.”
On Tuesday, Litton said his group initially planned to own the property for five to seven years before selling. He indicated they were surprised to book such a high return after only three years.
Harbor has owned Walgreens and CVS buildings around the country, but the store on the north Strip “has a lot bigger reliance” on non-pharmacy retail sales, offering “all the typical tourist stuff,” Litton said.
It sells prescription and over-the-counter medicine, as well as soda, food and other items found in most mainstream pharmacy outlets. But it also sells an array of Las Vegas-themed shot glasses, clothing, ash trays, flasks, margarita cups and, right near the front entrance, 100-ounce, yard-long cups that casino-hopping tourists fill with alcohol.
“You don’t do that in Birmingham at the local Walgreens,” Litton said of the merchandise.
Real estate is far more expensive on the famed Strip than in the valley’s suburbs, and drugstores are no exception.
Walgreens is paying about $120 per square foot in annual rent at the north Strip property, Litton said. That’s more than $1.9 million a year.
Pharmacies pay about $300,000 a year in rent for a typical residential store, Harbor’s listing broker Ray Germain has said.
Litton sold his building for $2,310 per square foot. By comparison, investors in August bought a 15,000-square-foot Walgreens in east Las Vegas for $7.53 million, or about $500 per square foot.
A Walgreens spokesman did not respond to a request for comment Tuesday.
Pharmacy chains pepper the Strip. Walgreens has five locations there, and it also opened a store this year just north of SLS Las Vegas in a new retail plaza at the northeast corner of Sahara Avenue and Las Vegas Boulevard.
Meanwhile, rival CVS has three locations in the resort corridor, including in the new three-story mall at Treasure Island. A company spokesman has said another CVS is being planned for the Strip, and that it could possibly open next year.