La farmacia está cerca del ayuntamiento.

Because estar is used for location.
When you say where something is, Spanish normally uses estar:

• La farmacia está cerca... = the pharmacy is near...
• Madrid está en España. = Madrid is in Spain.

Ser is used for things like identity, origin, profession, and more permanent descriptions, not for physical location in this kind of sentence.

Cerca de is a fixed expression meaning near or close to.

So:

• cerca de la estación = near the station
• cerca del ayuntamiento = near the town hall

You need the de after cerca. You cannot normally just say cerca el ayuntamiento.

Because in Spanish, de + el contracts to del.

So:

• de + el = del
• a + el = al

That is why you get:

• cerca del ayuntamiento

But this only happens with el, not with la:

• cerca de la farmacia
• cerca de la plaza

In Spain, ayuntamiento usually means town hall or city hall, and it can also refer to the local council / municipal government depending on context.

In this sentence, it most naturally refers to the town hall building or the central municipal place people would recognize.

Spanish often uses the definite article much more than English.

So la farmacia is perfectly normal when talking about a specific pharmacy, or simply the pharmacy being referred to in context.

In English, you might say:

• The pharmacy is near the town hall

Spanish usually keeps the article here:

• La farmacia está cerca del ayuntamiento.

Yes, farmacia is a feminine noun, so it takes feminine forms like:

• la farmacia
• una farmacia

That is why the sentence begins with La farmacia.

Spanish often leaves out subject pronouns when they are clear from context.

Here, está is the él / ella / usted form of estar, but since the subject is already stated as La farmacia, you do not need a pronoun.

So:

• La farmacia está... = The pharmacy is...

The noun itself tells you what está refers to.

Está is pronounced with the stress on the second syllable: es-TA.

The written accent mark shows where the stress goes and also helps distinguish it from esta, which can mean this in the feminine form:

• esta farmacia = this pharmacy
• está cerca = is near

So the accent matters both for pronunciation and for meaning.

Yes, but the meaning changes slightly.

• cerca del ayuntamiento = near the town hall
• próxima al ayuntamiento = near / close to the town hall, a bit more formal
• al lado del ayuntamiento = next to / beside the town hall

So cerca de means generally nearby, while al lado de is more specific and usually means immediately beside.

This is the most normal Spanish word order:

subject + verb + location expression

• La farmacia = subject
• está = verb
• cerca del ayuntamiento = location phrase

It is straightforward and natural. Spanish can change word order sometimes for emphasis, but this version is the standard one.

Sometimes yes, but cerca de is the most common and natural everyday choice here.

Examples:

• La farmacia está cerca del ayuntamiento. = very natural
• La farmacia está próxima al ayuntamiento. = correct, but more formal or less common in everyday speech

For a learner, cerca de is the safest and most useful option.

Yes, it sounds completely natural in Spain.

All the vocabulary and grammar are standard Peninsular Spanish:

• farmacia is the normal word for pharmacy
• ayuntamiento is the normal word for town/city hall in Spain
• está cerca de is a very common way to describe location

So this is a good, natural model sentence.