The second life of America’s shuttered pharmacies

admin  /   February 2026

Growing supply of dark drugstores provides redevelopment, backfill prospects

The U.S. pharmacy sector is undergoing one of the most significant contractions in modern retail history, reshaping corners, intersections and neighborhood stores nationwide.

Since 2022, the unwinding of pandemic-driven demand and long-standing structural pressures has led to thousands of drugstore closings from the sector’s three primary operators.

Walgreens is executing a plan to close 1,200 stores over three years, including 500 that were closed in fiscal 2025. CVS has shuttered roughly 1,170 locations since beginning its strategic pullback in 2021, with nearly 270 of its stores closing in 2025.

Rite Aid’s trajectory has been even more severe. After filing for bankruptcy in late 2023 with more than $3 billion in long-term debt and mounting legal liabilities, the chain ceased operations entirely in 2025, closing its remaining 1,300 stores.

The focus for owners and investors of these more than 3,600 retail locations has shifted from why the closings occurred to how best to reposition the real estate left behind. Despite the challenges retailers face, the underlying locations for many former drugstores remain among the most desirable sites in the country.

Pharmacies historically targeted signalized corners with high traffic counts, prominent visibility and proximity to dense residential trade areas. Many functioned as shadow anchors within grocery-anchored centers or as freestanding pads along primary traffic corridors. These are precisely the sites expanding retailers continue to pursue, particularly in an environment where new space is limited or unavailable.

Utilitarian design supports wide range of second-generation uses

The buildings that formerly housed pharmacies are often more functional than specialized. Most range from 7,000 to 14,000 square feet, with a typical footprint of around 10,000 to 12,000 square feet. Basic rectangular layouts and minimal interior obstructions allow for efficient reconfiguration of the space to suit a number of retail uses.

Back-of-house areas can be adapted for storage, healthcare services, or food preparation, while drive-through lanes add flexibility for quick service, financial services or medical uses.

The utilitarian design supporting a wide range of second-generation users gives owners two competing options: backfill the existing structure or demolish and redevelop the site.

Backfilling is often the faster and lower-cost solution. It avoids demolition costs, accelerates lease-up, and leverages existing entitlements. With retail vacancy averaging well below historical levels and construction starts muted, demand for second-generation space remains strong.

In many U.S. markets, backfilled rents at former pharmacies meet or exceed rents under the prior lease. Backfilling also avoids lengthy permitting tied to access, traffic circulation and site design, an increasingly important advantage in today’s higher cost environment.

And, fortunately for landlords, a diverse tenant mix has emerged as a potential source of suitors to backfill these spaces. Dollar and discount retailers are the most common backfillers, with Dollar Tree, Dollar General and Five Below collectively occupying hundreds of former pharmacies.

New uses vary

Healthcare users are also active in this space, including urgent care, dental, dialysis, plasma and senior care operators. Thrift and donation retailers, independent and ethnic grocers, and specialty uses such as veterinary clinics and pet supply stores have also absorbed shuttered pharmacy space, reflecting both the retail market’s tight availability and resulting creative reuse.

Ground-up redevelopment is more common on high-value parcels where the land value exceeds the utility of the existing building.

In dense urban corridors and affluent suburban intersections, owners may pursue redevelopment for such uses as multifamily, QSR, convenience, or mixed-use concepts that better align with highest and best use of the site.

While teardown and rebuild strategies involve higher costs, longer timelines, and entitlement risk the returns can be quite compelling for the right locations.

Over the next several years, backfill activity is expected to remain steady as retailers compete for well-located second-generation space, while redevelopment will remain concentrated in dense, high-income markets where land values justify higher intensity uses.

While the era of the neighborhood pharmacy is fading, the real estate beneath it remains durable and poised to enter a new phase.

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