Duane Reade Shrinking Store Footprint With New Crop of Manhattan Stores
Ubiquitous drug store chain Duane Reade is thinking small about its future—small in store size, that is.
Commercial Observer has learned that Duane Reade is disposing of more than a dozen Manhattan stores (including some Walgreens outposts) while actively seeking smaller-format spaces in the borough.
One source familiar with the business said that the new locations will be in the ballpark of 6,000 to 8,000 square feet rather than the typical Duane Reade lease of 10,000 to 15,000 square feet.
“We have a strong presence in New York City and are proud to operate more than 250 Walgreens and Duane Reade locations across all five boroughs,” a Duane Reade spokesman said. “As a larger retailer, we continually evaluate our locations in order to best meet the needs of our customers.”
That evaluation has included tapping Patrick Smith, a retail broker with JLL (JLL), to market 15 Manhattan Duane Reades and Walgreens for sublease. The stores include 254 Park Avenue South between East 20th and East 21st Streets (3,646 square feet on the ground floor and 5,981 square feet below grade on a lease through Jan. 31 2026) and 1 Union Square South on East 14th Street between Broadway and University Place (12,790 square feet on the ground leased through Jan. 31, 2026). Smith declined to comment.
Another source added that there are too many drugstores, and the stores that Duane Reade is forgoing are too big, with too high a rent and/or are subject to redundancy.
Duane Reade and Walgreens have over 100 stores in Manhattan. In 2010, Walgreens snapped up rival Duane Reade Holdings, and its 257 Duane Reade locations in New York City. Four years later, Walgreens merged with Alliance Boots. And more recently, Walgreens Boots Alliance purchased a fleet of Rite Aid stores.
“In regards to Rite Aid, the transfer of ownership of 1,932 locations we acquired took place from the fall 2017 to early 2018,” the Duane Reade spokesman said. “The locations acquired in New York transferred ownership in February and March of this year.”
While Duane Reade is looking to downsize its store size, another dominant player in New York City, CVS, is still sticking with its existing floor plates of about 10,000 square feet, while the company readies to unveil new concept stores next year.
The model is to “make it more full service,” Jason Pruger, a retail broker at Newmark (NMRK) Knight Frank who represents CVS in Manhattan, said at MAPIC, the annual international retail real estate show in Cannes.
“We’re making the consumer experience, which will be an increasingly important competitive differentiator, and we are hard at work creating a plan to differentiate CVS Health in these patient journeys with the goal of making them simpler and more personalized while making care more accessible,” CVS CEO Larry Merlo said last November, per CNBC.
CVS has long had that one-stop-shop approach, as CO wrote about it in late 2015. And the nation’s largest pharmacy chain is upping its offerings with the imminent acquisition of one of the country’s largest health insurers, Aetna.
“New Yorkers are about convenience,” Pruger said. “New Yorkers appreciate convenience.”