The building at 209-211 S. State will be demolished - though the facade will be preserved - to make way for a new CVS drug store. The property, shown here between the Corner House Lofts high-rise and a two-story retail building, represents more retail changes along the corridor as U-M opens North Quad (far left) this fall.

Paula Gardner | AnnArbor.com

Plans are proceeding by a national drug store chain to build a store in Ann Arbor on the edge of the University of Michigan campus.

CVS finalized the puchase of the buildings at 209-211 S. State this week.

Now the drug store chain appears prepared to start the construction process for building an $8 million store on the site.

When completed, the project will continue the transformation of South State Street from the University of Michigan Diag to North Quad, the new dorm in the final stages of construction between Washington and Huron.

The corridor, already the location of some of the city’s highest retail rental rates, is gaining prominence among retailers as the U-M development promises even more pedestrians and nearby residents.

The CVS project brings a high-traffic national retailer to the street, now where chain and local restaurants and clothing stores fill most of the storefronts.

The deal was complex, said seller Alex Hurst of New York-based Palatine Capital Partners.

“It took a tremendous among of work,” Hurst said. He credited “motivated parties on all sides.”

The purchase price was not disclosed. Hurst bought the property in February 2008 for $2.1 million. Its assessed value is $608,000.

The facade of 209-211 S. State will be preserved as CVS builds its new store behind it.

Paula Gardner | AnnArbor.com

The city’s Historic District Commission and City Council approved a plan to leave the historic façade but demolish the building behind it and construct the new store area.

Unclear is the timetable for construction. John Baumann of the West Bloomfield-based Velmier Companies, developer of the site for CVS, did not return calls seeking comment.

However, city officials said activity has picked up on the property.

“They’re now working on getting their permits,” said Alexis DiLeo, city planner.

Utility work and adding a fire hydrant will have to take place before any working on the building, DiLeo said.

They’re also going to have to coordinate with city staff to coordinate sidewalk and lane closures on South State Street, DiLeo added.

The final tenant in the building, Conde Electric, has been relocated to a new office, said Newcombe Clark of Jones Lang LaSalle and a member of the city’s Downtown Development Authority.

The CVS deal, he said, “is a good use for the building.”

CVS Caremark Corp., based in Rhode Island, operates more than 7,000 retail drug stores in 41 states and employs 211,000. With its stock selling at $34.95 per share at market close on Wednesday, the company’s market capitalization was $47 billion.

Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.