‘Zombie’ Pharmacies Plague UES, May Remain Empty For Years: Report

UPPER EAST SIDE, NY – Pharmacies have closed all over the Upper East Side in the past few years.

CVS shuttered locations at 1241 Lexington Avenue and 1223 Second Avenue; Duane Reade closed a location at 1675 Third Avenue; and Rite Aid let go of its location at 1849 Second Avenue.

According to the New York Times, commercial spaces that previously housed pharmacies are especially at risk of turning into ‘zombies’, or empties that stay vacant for years, “because of ironclad leases, the difficulty of finding new tenants for the sprawling spaces, and seismic shifts in the drugstore business.”

Why Are Pharmacies Closing?

Many New Yorkers are concerned about an epidemic of retail theft, and it seems like almost every product, from toothpaste and deodorant, to laundry detergent, is behind lock and key these days, making for an irksome and time-consuming shopping experience.

While theft is a problem, the Times suggests that this concern has been overplayed.

The simple explanation for the closures? Online shopping, or e-commerce.

CVS, which operated more than 9,000 locations as of earlier this summer, is in the midst of a years-long effort to “pare down its retail footprint.” Investors believe Walgreens, which owns Duane Reade, overexpanded, and about a quarter of its roughly 8,600 stores “aren’t profitable.” Rite Aid is in the middle of bankruptcy proceedings.

A more complicated story – and one favored by the drugstores – involves falling prescription reimbursement rates, which essentially means that pharmacies are now making less on the medications that they sell.

But neither of these pressures will result in the disappearance of brick-and-mortar retail pharmacies altogether – at least, not anytime soon – and data reviewed by the Times indicates that there were 2,568 pharmacies in the city as of July 2024, which is about the same number of locations as were in operation before the COVID-19 pandemic.

What Happens To The Empties?

Retail is actually doing well in Manhattan, according to the Times, and the large spaces that shuttered pharmacies left vacant are an outlier.

One reason? These locations are typically sizeable – and thus pricey. Duane Reade once occupied a full block between 93rd and 94th Streets at 1675 Third Ave, and such a big space isn’t easy to fill.

But a more common reason is what’s called “dark rent.”

Even if a store is closed, chain pharmacies are often locked into lengthy leases – which can be as long as 20 years – at “rents that often exceed today’s rates,” brokers told the Times. Simply put, a store may be empty, but that doesn't mean somebody isn't still paying rent.

The incentive is clear: if you were a landlord receiving above market rent to keep a space empty, why would you look for a new tenant?

Is There Hope?

In short, no.

The City Council passed a major zoning plan, City of Yes, in June, and some of the changes included the addition of exotic “experiential” uses, which “could allow a pharmacy to be converted into a children’s play center, laser tag venue, or an ax-throwing bar,” according to the Times.

Rules around light manufacturing have also been loosened, and in some neighborhoods, beer brewing and coffee roasting are now permitted.

If you’re thinking that laser tag and coffee roasting – or temporary Halloween stores, which we'll all be seeing very soon – aren’t going to solve the zombie pharmacy problem, you’re probably right.

Meanwhile, it’s hard to quantify the ambient blight that large vacant storefronts nurture.

Is there an empty commercial space you’re concerned about? Got an address you’d like us to look into? Email michael.mcdowell@patch.com.