UES Duane Reade Closing In November

UPPER EAST SIDE, NY – A Duane Reade at 1524 Second Avenue on the corner of East 79th Street will close on November 12, 2024, a Walgreens corporate spokesperson told Patch.

“Our retail pharmacy business is central to our go-forward business strategy. However, increased regulatory and reimbursement pressures are weighing on our ability to serve our patients profitably,” the spokesperson wrote, in a statement.

“We’ve reached a point where the current pharmacy model is not sustainable and the challenges in our operating environment require that we approach the market differently. We are making substantial changes to our store footprint, closing stores based on profitability including this store in New York which is not able to cover the costs associated with rent, staffing, and supply needs.”

“While it is not an easy decision to close a store, we will work to minimize customer disruptions. We intend to redeploy the majority of our team members and offer our dedicated team members new roles at other locations.”

Nearby locations include stores at 1091 Lexington Avenue, at East 77th Street, and 1498 York Avenue, at East 80th Street, according to Walgreens’ website.

Duane Reade was acquired by Walgreens in 2010 for about $1 billion.

What’s Going On Here?

“Increased regulatory and reimbursement pressures,” which Walgreens cited as driving the store’s closure in its statement, point to falling prescription reimbursement rates. In other words, pharmacies are now making less on the medications that they sell.

Brick-and-mortar pharmacies also face major competition from the digital marketplace and big players like Amazon. Investors believe Walgreens overexpanded, and as of earlier this year, about a quarter of the company's roughly 8,600 stores weren't profitable.

Walgreens isn't alone, and other major pharmacies face similar headwinds.

CVS, which operated more than 9,000 locations as of earlier in 2024, is in the midst of a years-long effort to “pare down its retail footprint,” and Rite Aid reportedly opted to close more than 500 of its 2,000 plus stores during a bankruptcy, from which it emerged in September.

Walgreens did not cite retail theft as contributing to its decision to close the 1524 Second Avenue location.

Another Zombie?

The closure of large chain retail pharmacies in New York City is a particularly visible issue, as the empty commercial spaces which once housed these pharmacies may remain vacant for years. Why? Pharmacies are often locked into lengthy leases at rents that exceed current rates, which means that landlords are still receiving rent even though the stores are shuttered and the spaces vacant. The large footprints of these stores means that they aren't easy to sublet, and command high rents.

So-called ‘zombie pharmacies’ plague the Upper East Side, and the New York Times counted 138 vacant stores during a citywide investigation in July.

Is there a commercial space in the neighborhood you’re concerned about? Got a vacant store you’d like us to look into? Email michael.mcdowell@patch.com.