Pharmacy Daily | Brace for rent increases

PHARMACY owners are being urged to prepare for rental rates to jump by 7 to 8%, in line with current inflation figures.

Speaking on the latest edition of the Sirianni Market Update, Medici Capital Managing Director and pharmacy economist, Frank Sirianni, noted that rising inflation is set to hit pharmacies with leases linked to the Consumer Price Index (CPI).

"From my point-of-view it is best for most pharmacies that they don't have a CPI-indexed lease, [but] most landlords would want something like that for various reasons," he said.

"CPI has been fairly benign over the last 10 years or so... so it's not been a problem.

"[But] now we're looking at CPI getting close to 7%, and whilst many pharmacies have had solid growth, the number of pharmacies that would see their overall business growth beyond 7% is fairly limited.

"There are obviously cases that are the exception to that, but from my point-of-view, now is the time to start talking to their landlords and perhaps [start] thinking about having the discussion about the abnormal, or the extraordinary, aspect of these price rises, particularly where they pertain to supply chain issues or the Ukraine war.

"It is an issue that you really now need to factor in a 7 to 8% [increase in rent].

"That will be fairly short-term - the expectations are that we'll get [inflation] between 3 and 5% in 2023, and that's on the expectation that the issues in Ukraine are resolved in some way in the next year."

While there has been a significant jump in inflation levels recently, Attain Business Brokers Director, Natalie Sirianni, noted that CPI-indexed rental increases have been "quite low" in recent years "compared to historic levels".