Just two blocks from the Kohl Center and within walking distance of the State Capitol, the one-acre site is considered a prime redevelopment location in the Bassett Neighborhood.

But rather than cashing out, the Meier family, who owns Badger Coaches, decided to go it alone. They researched land use plans, talked with downtown Ald. Mike Verveer and started pursuing a mixed-used apartment project of their own.

"We figured if guys like McGrath or Alexander figured it was such a good site maybe we should just do it ourselves," says Dave Meier, one of three cousins involved in the venture, in reference to Madison developers Todd McGrath and Randy Alexander.

Before breaking ground on the "Depot Apartments," however, the Meiers needed a big-name tenant to anchor the retail portion of their $15 million project which features luxury apartments aimed at professionals and graduate students.

Enter CVS/pharmacy, the Rhode Island-based chain which has been looking to expand its presence in the Wisconsin market. The pharmacy opened a location in Middleton at 6210 Century Blvd. in 2008 and had eyed a spot at Union Corners on Madison's east side.

When the Union Corners project at East Washington Avenue and Milwaukee Street failed to materialize, CVS turned its attention to the Depot site. It was the final piece in the puzzle.

"Once CVS became part of the project, everything flipped to a go for us," says Meier.

CVS last week opened a new 12,000 square foot store in the bottom floor of the Depot - its first location in the city of Madison. The store shares the same tightly-packed design of the retailer's other big city locations, with grocery aisles mixed in with the aspirin, heating pads and tampons.

"These smaller footprint stores have been very successful in other urban settings," says CVS spokesman Mike DeAngelis. "We've found a lot of customers tend to use us like they would a convenience store."

Has 31 stores in state

CVS entered the Wisconsin market in 2006 with its purchase of the Osco drugstore chain. It now operates 31 stores in the state and is looking to expand further.

"We're pursuing a couple of other Madison locations right now, although I can't release any details," says DeAngelis, adding the retailer will open 300 stores nationwide this year.

With over 7,100 stores nationwide, CVS is the second largest national pharmacy chain behind Chicago-based Walgreens, which counts over 7,500 locations in all 50 states and Puerto Rico. Walgreens has more than two dozen stores in Dane County and 200 statewide.

Chris Decker, executive vice president of the Pharmacy Society of Wisconsin says CVS is only beginning to create a name for itself here but expects the competition to heat up.

Aurora Pharmacy, with about 100 locations mainly in southeast Wisconsin, is the second largest drug store chain in the state behind Walgreens. Wal-Mart has about 70 pharmacies and Shopko another 45.

"CVS has only a small presence here but I can already see that changing," says Decker.

Decker, whose organization represents pharmacies of all sizes, says all retailers are feeling the effects of a down economy. "The economic pressures facing the industry today are tremendous,' says Decker. "Everybody is trying to get costs down while prices for drugs keeps going up."

CVS recently reported second quarter profits of $822 million, down 7.5 percent from the same period in 2009. Walgreens reported second quarter profits of $463 million, down 11.3 percent from a year ago.

To improve their bottom line, more of the chain pharmacies are branching out into food and liquor sales. Walgreens, for example, recently applied and received permits to sell beer and wine at three of its Madison stores.

But there's already been a backlash against the proliferation of alcohol sales in the Madison area, with the Dane County Coalition to Reduce Alcohol Abuse opposing the Walgreens liquor license application.

"We are already awash in alcohol outlets, far higher than the national average," the group says in a recent letter to the Common Council.

CVS sells alcohol at its Middleton location and plans to seek a liquor license for its current Madison location and any additional stores. "We will apply as the local regulations allow," says DeAngelis.

Pharmacies of all sizes, including the roughly 300 independently owned drug stores that still operate in the state, have learned to adapt to a changing marketplace,

Mike Flint of Mallatt Pharmacy at 3506 Monroe St. says competition from the big chains is nothing new but says Madison customers are somewhat unique. The drug store, which was started in 1924 on State Street by Adolph Mallatt, moved to Monroe Street in 1941. Mallat's son, Bill, operated the store there for years.

"We're just glad to be in a place like Madison where people are happy to support a local business," says Flint, who started at Mallat as a pharmacist in 1982 and purchased the store in 1992.

Mallatt has remained viable thanks in part to its costume department and liquor sales, which include weekly Friday wine tastings hosted by Bill Mallatt.

The locally owned pharmacy has its own expansion going, too, with the recent purchase of the Shafer Pharmacy at 1255 Williamson St. The name change will be effective Sept. 1, with the new east-side Mallatt offering costumes as well as regular drug store items.

"I want to get involved in the business community over there," says Flint, 52. "They've got a good group of people." Flint says he doesn't intend to pursue liquor sales at the Williamson Street location.

‘Great for tenants’

For his part, developer Meier is thrilled about having CVS on the bottom floor. The store is open 8 a.m. to 10 p.m. on weekdays; 9 a.m. to 6 p.m. on weekends.

"This isn't just great for us to have a partner like CVS, it's great for our tenants," says Meier, who took over the family business in 1991 with cousins John and Jim. Badger Coaches traces its history in the area to 1920 and founder Herman Meier, grandfather of the current owners.

The Depot Apartments feature 82 residential units and 104 bedrooms in 65,000 square feet of space; all but two of the units have been rented. Parking is provided underground for 97 vehicles with another 26 surface spaces reserved for CVS customers. There is also a drive-through pharmacy window.

Architect Randy Bruce designed three separate buildings to complement the existing neighborhood which features several new condominium projects, including the 4th Ward Condominiums directly across West Main Street from the Depot. The new buildings feature "tumbled brick" to give it a more weathered look to match the old buildings nearby.

The project was developed with financing through Park Bank along with New Market Tax Credits, a federal program to develop affordable housing. Sixteen of the units are available to tenants who meet low-income requirements.

The buildings are also certified "green-built," featuring a solar assisted hot water system; a highly sophisticated and efficient heat pump system that both heats and cools the buildings; and green roofs featuring succulent plants designed to hold rain water.

While the city of Madison often gets rapped for making developers jump through hoops, Meier says the approval process made for a better project. He credits the city with having a long-range view and working to make sure projects stand the test of time.

"No question the process could be tweaked a little so it is more user-friendly," he says. "But it's not as bad as usually advertised. Almost without exception we found people with the city, like Brad Murphy, to be very helpful and very competent."

The loss of the Badger Bus depot, which opened on the site in 1968 and closed last year, was an inconvenience for some passengers. But Meier says most customers now buy their tickets online and prefer to grab the bus at the Memorial Union on the UW campus. In addition to the Memorial Union, Badger Bus also picks up passengers at the Kelly Williamson market on West Washington, just across from the old bus depot site.

Greyhound had also used the Bedford Street depot but now picks up local passengers at Madison Metro's North Transfer Point at 1213 Huxley St., a block off Aberg Avenue, between Packers and North Sherman avenues.

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