Upper East Side Retail Co-op Occupied by Duane Reade Hits Market for $23M
By Mack Burke July 19, 2021 5:41 pm
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A retail cooperative along Lexington Avenue in the Upper East Side, currently occupied by a Duane Reade, has hit the market for around $23.3 million, Commercial Observer has learned.
The 12,225-square-foot retail space is located at 1235 Lexington Avenue, between East 83rd and East 84th streets, just blocks away from Central Park and the Lexington Avenue-86th Street subway station that serves the 4, 5 and 6 trains.
JLL (JLL)’s Hall Oster and Bob Knakal, alongside Jonathan Hageman and Paul Smadbeck, are currently marketing the space, which includes 6,875 square feet of ground-floor space and another 5,350 square feet below-ground level, sources said. Kellogg Gaines, also of JLL, is the financing lead.
“1235 Lexington represents an opportunity to acquire a stable, high cash-flowing trophy asset backed by credit tenancy on a long-term lease,” Oster said. “The property will appeal to passive investors and 1031 exchange purchasers looking for a fully leased, investment-grade asset with limited landlord obligations and 189 feet of wraparound frontage on a premier Upper East Side retail corridor.”
The property sports about 102 feet of frontage along Lexington Avenue, as well as 87 feet of frontage around the corner along East 84th Street. The retail property sits at the base of a roughly 98,000-square-foot residential co-op building owned by 84th Street Tenants Corp., records show.
Duane Reade’s lease runs through February 2029 and includes a 10-year extension option, according to JLL. Walgreens Boots Alliance (WBA) — the publicly traded holding company of pharmaceutical chains, wholesalers and clinics like Duane Reade, Walgreens, Boots, Alliance Healthcare and Take Care Health systems — is the lease guarantor.
WBA bought Duane Reade in an all-cash deal for $620 million in early 2010 in what was then the company’s largest-ever retail acquisition. Duane Reade provided Walgreens with a very robust position in New York, where Duane Reade began in the early 1960s as a local drugstore located on Broadway in Tribeca, between Duane and Reade streets.
In the next several years following Walgreens purchase of Duane Reade, it began to wind down its national footprint, which included scaling back a chunk of its Duane Reade outposts. The store at 1235 Lexington is the only one on Lexington Avenue between 77th and 125th streets, although there are a number of other locations scattered throughout the Upper East Side.
Mack Burke can be reached at mburke@commercialobserver.com.
