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Rite Aid a major force in midstate

More than 2,800 workers, 70 stores in region

Walgreens may be America’s largest drugstore chain, but Pennsylvania is Rite Aid country.

Illinois-based Walgreens Boots Alliance Inc. has more than 13,100 stores around the world, with 8,200 of them in the U.S.

But only a handful of those are located in the midstate region, where East Pennsboro Township-based Rite Aid Corp., which Walgreens has agreed to buy, clearly dominates.

Tracing its origins to a Scranton discount store opened in 1962, Rite Aid has about 4,600 stores nationwide, with Pennsylvania’s 537 stores a close third behind New York (607) and California (577).

More than 70 of those stores are located within a 50-mile radius of downtown Harrisburg.

Jobs, properties

Corporate operations employ about 2,250 people in the midstate region, Rite Aid spokeswoman Ashley Flower said, with 600 more in the 33 stores immediately surrounding Harrisburg.

Rite Aid tends to lease rather than own its stores, Flower pointed out. According to its most recent annual report filed with the U.S. Securities and Exchange Commission, Rite Aid leases 4,310 of its 4,570 stores, with original terms of 10 to 22 years.

Rite Aid also leases 451,500 square feet of space in various buildings near Harrisburg for document warehousing use and additional administrative personnel, the report states.

But the crown jewel of Rite Aid’s midstate presence is its 205,000-square-foot corporate headquarters at 30 Hunter Lane, East Pennsboro Township, which is assessed at just over $11 million.

According to Cumberland County assessment information reviewed by CPBJ, that property’s 2015 tax liability is $127,336 to the East Pennsboro Area School District, $25,720 to Cumberland County and $11,551 to the township.

Rite Aid’s annual report says it also owns additional unspecified buildings in the area, totaling 105,800 square feet, which house a model store and additional administrative personnel.

Looking ahead

So far, Rite Aid and Walgreens officials aren’t saying how the sale would affect Rite Aid’s presence in the midstate region, or anywhere else.

Statements made Wednesday by Walgreens indicated that Rite Aid initially will continue to operate under its existing brand name after the $17.2 billion sale, which is expected to be completed in the second half of 2016.

Decisions about integrating the two companies “will be made over time,” a Walgreens corporate statement indicated.

Those future moves are on the mind of Jonathan Bowser, CEO of the Cumberland Area Economic Development Corp.

“There are some major concerns, long-term, in terms of what it means in East Pennsboro Township, and how many jobs will be affected,” Bowser said. “Right now, we just don’t know.”

Bowser did say Rite Aid has a history of working closely with local officials.

“They’ve been a good community partner,” Bowser said. “They’ve always been very cooperative.”

As for the Hunter Lane building, Bowser said brokers he has been speaking with about other vacancies in the area are confident that the business real estate market remains strong, should the merged company ever decide to vacate the property.

But Bowser also sent out a message to members of the community stressing that he and CAEDC “will work with the state and other local, regional agencies to advocate for a continued presence” in Cumberland County.

“I have a call into the Governor’s Action Team (GAT) to understand their position and how we collectively position ourselves to retain a strong Rite Aid/Walgreens presence here in terms of corporate jobs and opportunities,” Bowser wrote.

“As we all know, any loss in jobs and tax base (revenue) would have a significant impact on our community,” he continued. “We need to protect these jobs and tax base!”

Bowser was not alone.

“My basic concern is if they close down the building,” said John Kuntzelman, president of the East Pennsboro Township Board of Commissioners.

“If we lose that building, it’s going to be a big hit to the township,” Kuntzelman added. “We’ll have to wait and see what the plans are.”

But such moves could be months, or years, down the road.

“It’s business as usual for the time being,” Rite Aid’s Flower said when asked about changes to staffing levels and properties in the midstate.

Roger DuPuis
Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at [email protected].

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