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Posted on Thu, Jan 17, 2013 : 6:30 p.m.

CVS building in downtown Ann Arbor listed for sale for $6.7M

By Lizzy Alfs

cvs.jpg

The CVS building on South State Street in Ann Arbor is listed for sale.

Melanie Maxwell | AnnArbor.com file photo

Two years after CVS completed a major renovation of a historic building in downtown Ann Arbor, the company has listed the property for sale.

The pricetag: $6,675,207.

Robert Arbour of Triple Net Equities Inc. listed the two-story, 13,040-square-foot building, located at 209-211 South Street.

“Two-story historic building, extensively renovated for CVS in 2011,” the listing says. “Only pharmacy serving the downtown and college areas.”

City records show CVS purchased the building in 2010 for $2.6 million from Blue Star International LLC. The drug store chain then started the difficult construction process for building an $8 million store on the site, which involved demolishing the existing building and restoring the historic facade.

The project was the largest private redevelopment on the South State commercial corridor next to U-M’s campus since Corner House Lofts was built in 2003.

The property has an assessed value of about $1.41 million for the 2012 tax year. According to the marketing materials, the CVS lease won’t expire until March 2036 under the sale terms.

Just down the street from CVS, Farmington Hills-based Agree Realty recently purchased the former Michigan Book & Supply building for $5.8 million. The company announced it has already leased the space to a retail pharmacy store and it submitted a request to Ann Arbor’s Historic District Commission to install Walgreens signs on the building.

Lizzy Alfs is a business reporter for AnnArbor.com. Reach her at 734-623-2584 or email her at lizzyalfs@annarbor.com. Follow her on Twitter at http://twitter.com/lizzyalfs.

Comments

lefty48197

Sat, Jan 19, 2013 : 6:36 p.m.

If they own the building, then they're continuing to leave millions of dollars on the table in the form of Real Estate capital. They're not in the real estate business. They sell products off the shelves and they already have a ton of money invested in inventory. Selling this store allows them to stock the shelves of a few more stores. The decision makes business sense to me.

Andy Piper

Sat, Jan 19, 2013 : 1:26 p.m.

My first thought when I heard about Walgreens is that they will kill CVS since they are in a better location. I would guess CVS has a larger, better location in mind.

Sparty

Sat, Jan 19, 2013 : 9:24 p.m.

They have a lease in that building until 2036 as the article says. It doesn't sound like they'll be moving unless they have a lot of $$$$ to break that lease.

hipster56

Fri, Jan 18, 2013 : 8:56 p.m.

Unfortunate that bland national chains are transforming what used to be a very local and very unique area-- I always heard referred to as part of 'downtown', btw.

lefty48197

Sat, Jan 19, 2013 : 6:42 p.m.

It all started with that MacDonalds back around '74. Soon we had Burger King. Of course. I guess Walgreens is next?

Goofus

Fri, Jan 18, 2013 : 4:56 p.m.

The solution here is build more of these type of stores in the area. Oh snap. That's what they are doing...

An Arborigine

Fri, Jan 18, 2013 : 3:38 p.m.

Sounds like a Big Pharma throwdown! The prices those two companies charge for prescription meds is outrageous, they can make up those millions in a matter of weeks. Note the CVS on Jackson and Zeeb, CVS was able to raze the former Wendy's, build them a new Wendy's down the block and build their own store on the corner. That kind of money isn't generated by selling cheap Chinese-made impulse purchases.

Angry Moderate

Fri, Jan 18, 2013 : 6:49 p.m.

I don't think that retail pharmacies have much control over drug prices.

newsboy

Fri, Jan 18, 2013 : 2:29 p.m.

Aging student population?

Ms1215919

Fri, Jan 18, 2013 : 2:19 p.m.

"Two-story historic building, extensively renovated for CVS in 2011," the listing says. "Only pharmacy serving the downtown and college areas." Not true. The Village Apothecary Sav-Mor on S.Univ. has been our pharmacy for decades. And, it is often the case, that I learn more from the posts than the article.

Elaine F. Owsley

Fri, Jan 18, 2013 : 1:48 p.m.

Battle of the drug stores?

Brad

Fri, Jan 18, 2013 : 1:22 p.m.

Assessed value of $1.41mil and sale price of $6.65mil? Sounds like the assessor needs to pay them a visit.

lefty48197

Sat, Jan 19, 2013 : 6:39 p.m.

The construction alone must have cost about 2 million bucks. What's that land worth? 3/4 million? Sounds like the assessed value is about right on. Where in the heck does the $6.65M come from?

johnnya2

Fri, Jan 18, 2013 : 8:24 p.m.

Assessed value will be half of market value. IF somebody pays that amount for the propery, it is by definition the market value. The only time that would NOT be market value is on a transaction that is not arms length. (sold to a family member, or another corporation that they have control of).

Brad

Fri, Jan 18, 2013 : 5:23 p.m.

"Sal" price is just one factor in assessed value. And value and assessed value are two different things as well.

johnnya2

Fri, Jan 18, 2013 : 2:31 p.m.

The assessor uses SAL price for their assessments. IF this sells for over %6 mil, the assessed value will be half the amount. Remember, you can LIST a property for any amount you want, but a sales determines the VALUE.

anti-thug

Fri, Jan 18, 2013 : 6:12 a.m.

this what they get for turning a historic building into a cvs.

Fester

Fri, Jan 18, 2013 : 1:10 p.m.

Yep, they get 6.7 million dollars.

Jamie Pitts

Fri, Jan 18, 2013 : 5:53 a.m.

Wow, time to build a grocery store!

Brad

Fri, Jan 18, 2013 : 1:37 p.m.

Because college students never use drugs or eat junk food.

Nadie

Fri, Jan 18, 2013 : 1:28 p.m.

I know! Drugs and junk food is not what the college kids need. They need some healthy groceries.

Fresh Start

Fri, Jan 18, 2013 : 1:58 a.m.

Look for someone wearing clown shoes because $6.7M is a joke!!!

David Frye

Fri, Jan 18, 2013 : 12:46 a.m.

Since when is State Street "downtown"? Maybe I've been living in Ann Arbor too long, but in my day State Street was the campus area (or State Street area) and Main Street was downtown.

Bob

Sat, Jan 19, 2013 : 3:03 p.m.

I'm with you, David. As a Michigan student in the late '60's it was as you described. My kids, however, have always referred to it as "downtown". Sighhhhh . . .

free form

Fri, Jan 18, 2013 : 5:19 p.m.

C'mon! Uptown? Midtown? Ridiculous. I have never heard anyone use those terms in reference to Ann Arbor. Most people call the entire area from State to 1st and William to Huron "Downtown Ann Arbor."

ThinkingOne

Fri, Jan 18, 2013 : 4:19 p.m.

I have read this area being called downtown only recently on AA.com. It may be the thing to do now because it is in the DDA boundary. And I have heard through the years - but only occasionally - people calling this area uptown. I was told that the division was... ready... Division St. Not counting the last few months with all the reporting on developments and sales in State & Liberty area, I would say that for every 10 times I heard that area called downtown, I would have heard it called uptown about once and campus area or State St area about 10,000. To me, someone calling that part of town downtown yells out 'I am not from around here'. No David, you haven't lived in Ann Arbor too long. Others haven't lived in it long enough. This brings up a question: is this an indicator that most reporters on AA.com are not long-time AA residents? They get their nomenclature from the DDA rather than from common knowledge? They have to look up on some map or chart to see what to call a common area of Ann Arbor?

pegret

Fri, Jan 18, 2013 : 3 p.m.

I agree with actionjackson. As kids back in the 60'a and 70's, if we were heading to the State St/campus area, we were going Uptown. If we were stuck going to Klines or Goodyear's on Main St. with Mom, we were Downtown. As a teenager, Uptown was way more fun, but as a geezer I now prefer Downtown!

daytona084

Fri, Jan 18, 2013 : 2:38 p.m.

State Street area is "Campus"... The Main street area is downtown. We have lived here 40+ years and I have never heard anyone refer to the U-M campus area as "downtown".

actionjackson

Fri, Jan 18, 2013 : 2:21 p.m.

Us old townies always called that area "uptown."

Youwhine

Fri, Jan 18, 2013 : 1:28 p.m.

I was born and raised in a2... Main St and State St are just parts of downtown. To think that downtown only refers no Main St seems pretty silly.

Brad

Fri, Jan 18, 2013 : 1:26 p.m.

Well if the unelected and highly-reviled DDA says so it must be true. Then again, as a long-time resident myself I also don't consider State St. to be "downtown". Also, how can Main St. and State St. both be "downtown" when the intersection of Liberty and Division is called "Midtown". Who exactly calls it that I can't tell you, but there is a sign that says "Midtown".

David Frye

Fri, Jan 18, 2013 : 12:01 p.m.

Kyle: Which begs the question, who died and made the DDA king of downtown? Somehow I don't remember ever voting for any of the members of the DDA board.

fjord

Fri, Jan 18, 2013 : 10:28 a.m.

It's definitely downtown.

Kyle Mattson

Fri, Jan 18, 2013 : 5:44 a.m.

Hi David- Here's a link to a map of the designated DDA zone which includes State Street: http://www.a2dda.org/downloads/DDAStreetMap.pdf

Chip Reed

Fri, Jan 18, 2013 : 1:38 a.m.

That was then... Real estate agents call a house five blocks up Liberty "downtown".

notnecessary

Fri, Jan 18, 2013 : 12:44 a.m.

@angrymoderate - They may just want to out themselves of being the owner of the real estate likely for some sort of tax avoidance or risk management purpose. For example paying capital gain tax now instead of later or they may see an indication that the market is particularly strong after a similar comp sold for nearly the same they're asking. I'm not a total expert in this field tho but I have spent some time around real estate investment firms.

EatKeyLimePie

Fri, Jan 18, 2013 : 12:40 a.m.

Any estimation on what the annual lease is to CVS? Seams like a smart move on the part of seller, held a property for 10 years and looking for a possible profit of about 4.2MM (plus whatever they collected in rent over the past 10 years) the potential buyer is guaranteed an additional 23 years of rent from CVS (they will probably be around anothe 23 years years, little risk here). The buyer will easily make their money back over time, meanwhile the seller makes out too.

dancinginmysoul

Fri, Jan 18, 2013 : 1:37 a.m.

The Lofts were built in 2003, not the CVS building.

notnecessary

Fri, Jan 18, 2013 : 12:50 a.m.

I'm confused by your numbers - cvs has only owned for around 3 years. They spend 2.6 million to purchase plus some unknown amount to renovate (high $$). So there is definitely some profit potential (maybe) but there's been no 10 year rent nor is the presence of a cvs that guaranteed with the opening of a walgreens just down the street that's gonna be closer and more convenient for 80% of the people that would go to that cvs anyways (students).

Angry Moderate

Fri, Jan 18, 2013 : 12:29 a.m.

I'm confused...why do they have a lease if they own the whole building? Or are they selling the building subject to the creation of a lease for the CVS store?

Gorc

Fri, Jan 18, 2013 : 1:50 p.m.

It's not whether they want to be in the real estate business. They purchased the building for $2.6 million and have it listed for $6.7 million. And depending on how they actually spent upgrading the property. They may have a nice return on the building.

Angry Moderate

Fri, Jan 18, 2013 : 2:19 a.m.

Got it, thanks. Sounds like they just don't want to be in the real estate business.

Jessica Webster

Fri, Jan 18, 2013 : 1:56 a.m.

Borders used to do that all the time when they were rapidly expanding.

GoNavy

Fri, Jan 18, 2013 : 1:54 a.m.

Sale-leasebacks are popular these days.

Lizzy Alfs

Fri, Jan 18, 2013 : 12:32 a.m.

The latter - it would be sold with those lease terms.

A2comments

Fri, Jan 18, 2013 : 12:23 a.m.

Lol