Rental reprieve


$50 note sticks out of blue piggybank

Decade-long trend breaks with report revealing a decrease in average pharmacy rental costs

A new report has revealed that average pharmacy rental costs have fallen for the first time in more than a decade.

The Pharmacy Guild of Australia’s 2019 Pharmacy Rental Report, released just before APP2019 last week, reveals that both average pharmacy rentals and occupancy cost ratios have not just stalled, but actually dropped slightly, since the last iteration of the report was prepared.

The report, prepared by Lease 1 and Medici Capital, shows that from 2017 to 2018 “rental distribution by quartile showed a decreasing range for rent and outgoings per square metre in dollar terms…. indicating a smaller range of rents paid by pharmacies across all locations.”

Speaking to AJP, Phil Chapman from Lease 1 said: “the real news from the report is that rents are coming backwards for the first time in 10 years – average rentals came back 9.06%.”

“This is a fantastic result, and on top of that we’ve seen average occupancy cost rations move slightly south. This is really good news.” 

Mr Chapman said he believes the key factors are increasing landlord awareness of the financial situation of many pharmacies, and pharmacy owners actually doing their research, seeking help and negotiating more realistic rental agreements.

“The message is seeping through.. to both landlords and owners,” he said. “People are asking more questions and digging deeper when negotiating.”  

In his foreword, Guild national president George Tambassis said: “Sound commercial arrangements are essential for pharmacy owners. Not only are occupancy costs, including rent, a significant cost, but relocating to alternative premises can be costly and disruptive”.

“Pharmacy owners have a limited ability to pass on fixed underlying costs such as rent due to prices in the industry largely being regulated,” Mr Tambassis said.

“However members need to understand what would be reasonable rental costs for a business and this highlights the importance of reports such as the Pharmacy Rental Report undertaken by the Guild….” 

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