The State of Florida’s Walgreens Market

Walgreens is undergoing a major restructuring, planning to close up to 1,200 underperforming U.S. stores—including 500 in 2025—due to mounting financial pressures, operational cost increases, and a shift toward a more healthcare-focused model in response to changing consumer habits and online competition. Florida, with about 800 locations (9% of Walgreens’ national footprint), stands out for its rapid population growth and strong demand for retail and healthcare services, particularly in metros like Orlando, Tampa, and Jacksonville. While roughly 25% of Florida’s Walgreens stores are underperforming and at risk of closure, the state’s demographic trends create both challenges and opportunities, as some properties face closure risks while others in high-growth areas remain attractive for investors seeking value-add potential or stable long-term returns.

Closures and Downsizing

Walgreens is executing a significant store rationalization plan, beginning with the closure of 500 underperforming U.S. locations in fiscal 2025, part of a broader strategy to shutter about 1,200 stores nationwide by 2027. This represents roughly 13% of its 8,500-store portfolio, with approximately 25% of Florida stores identified as underperforming.

Florida has already seen closures in key metros such as Jacksonville and Miami, with more expected as Walgreens pivots toward healthcare services and away from traditional retail pharmacy. These closures are redrawing the retail investment map, creating both challenges (increased vacancies, potential rent loss) and opportunities (redevelopment, re-tenanting with higher-paying users) for property owners.

Cap Rate Trends

Cap rates for Walgreens properties in Florida have risen modestly over the past year, reflecting higher borrowing costs and broader economic uncertainty. In Q1 2025, national industrial cap rates averaged around 6.29%, while national retail cap rates were higher, averaging approximately 6.53%, reflecting the greater perceived risk and softer demand in the retail sector compared to industrial assets.

Investor sentiment remains cautiously optimistic. Many are betting that potential interest rate declines in the latter half of 2025 could compress cap rates further, particularly for trophy assets and those with below-market leases that offer future upside.

Florida Demand Drivers

Population growth and tourism remain the primary engines of retail demand.

Florida’s population continues to swell, especially in metros like Miami, Orlando, Tampa, and Jacksonville, driving up retail sales and supporting the stability of well-located Walgreens assets. New Walgreens developments including Sundy Village and Atlantic Crossing in Delray beach aid in enhancing property appeal.

Retail sales in Florida surged by 35.8% year-over-year in 2024.

Miami retail volumes more than doubled, with the food and pharmacy sectors proving particularly resilient.

Demographic shifts, including growing populations.

Rising Latino and Caribbean populations boost demand for pharmacies, helping stabilize Walgreens sites in diverse, high-traffic Florida corridors.

Limited inventory of quality commercial properties.

Limited Walgreens supply in Delray Beach drives investor competition for assets with below-market rents and strong tenant profiles.

Exit Strategies

• 1031 exchanges remain a preferred exit strategy. Investors trade Florida Walgreens assets early to capitalize on demand and reinvest in passive net-leased properties for higher returns.
• Properties in prime, high-visibility locations with below-market leases (e.g., Delray Beach’s \$25.46/sq ft rent vs. area averages) present strong value-add potential through re-tenanting, lease renegotiation, or redevelopment—particularly appealing if Walgreens vacates and national retailers or healthcare providers with stronger credit profiles and higher rent tolerance are targeted.
• Sale/disposition of the asset entirely is a common exit strategy for owners seeking to capitalize on current market demand or to reallocate capital to other investment opportunities, especially as Walgreens’ footprint rationalization and corporate restructuring present both risks and opportunities for property owners.

Top Florida Walgreens Submarkets

Del Ray Beach

The market is experiencing robust economic growth. Median home prices rose 6.2% YoY (2024), supporting commercial valuations. Below-market Walgreens rents in the area paired with a limited inventory have resulted in strong demand for retail.

Tampa

Tampa’s market is bolstered by ongoing suburban expansion, with over 950 homes currently under construction near Walgreens locations. These sites also benefit from long-term leases featuring rent escalations, enhancing their investment stability.

Jacksonville

Despite a high number of strategic closures, the market has retained value in high-traffic corridors.

Miami

Store closures in the area have had little effect as overall retail volume surges. The area boasts multicultural demand drivers.

Strategic Considerations

Corporate restructuring, such as a potential acquisition by Sycamore Partners, may create opportunities for lease renegotiation or property redevelopment. Target submarkets with population growth and below-market rents, while monitoring interest rates to optimize exit timing and investment returns.