Trader Joe’s Buys Former Rite Aid In Santa Monica For $22M

Trader Joe’s just made a pricey Santa Monica land play, snapping up a former Rite Aid along Wilshire Boulevard as it continues to expand in Southern California and scoop up drugstore boxes left behind by bankrupt chains.

The Monrovia, California–based grocer paid $22 million for the 17,800-square-foot property at 1331 Wilshire Boulevard, or about $1,236 per square foot, according to public records cited by the Los Angeles Times. The site, which sits on roughly 1.4 acres with about 125 surface parking spaces, was sold by a private owner.

The deal is another example of the growing reuse of Rite Aid locations, which began to flood the Southern California market after the pharmacy chain filed for its second Chapter 11 bankruptcy in two years in May.

That month, Rite Aid put more than 1,200 owned and leased stores up for sale nationwide, including 59 in Los Angeles County alone, with A&G Real Estate Partners marketing the portfolio. At the time, brokers described the sales process as fast-moving, with grocers and value retailers among the most aggressive bidders.

Trader Joe’s has been one of the few brick-and-mortar retailers leaning into that churn. The company recently surpassed 600 stores nationwide and has steadily added locations in California, where competition for well-located grocery sites remains fierce despite broader retail softness. In December, Trader Joe’s opened a new store in the Orange County municipality of Costa Mesa, and earlier this year it disclosed plans to open nine additional locations across SoCal, from the San Fernando Valley to San Diego County.

Recent market trends explain the disconnect.

Santa Monica retail rents have eased but remain high in prime corridors, with average asking rents slipping from about $5.50 to $4.47 per square foot per month while deals on Montana Avenue, Main Street and Wilshire Boulevard continue to close north of $5 and as high as nearly $10 per foot, according to a CoStar-sourced report from Illi CRE. At the same time, vacant available retail space has more than doubled to roughly 635,000 square feet since it began rising in mid-2023, punctuating softer overall fundamentals while reinforcing that well-located, grocery-anchored sites still draw aggressive pricing.

Second-generation drugstores with parking, visibility and neighborhood-serving zoning that can be quickly converted into smaller-format grocery stores have fit that pattern. Those boxes have become especially valuable as ground-up retail development remains constrained by high construction costs and entitlement hurdles.

For landlords and lenders sitting on empty or soon-to-be-vacant Rite Aid sites, Trader Joe’s move is another sign that the best-located assets will clear, even at premium pricing. For everyone else, the scramble to backfill thousands of former pharmacies is still just getting started.
— Judah Duke