New York City’s retail sector is experiencing a major shift as chain banks and pharmacies, once dominant, reduce their physical presence. This change is prompting landlords to rethink strategies, often by dividing large storefronts into smaller spaces.
From Big Box to Boutique: A New York Retail Evolution
The transformation is visible across the city. A former Rite Aid on West 97th Street and Columbus Avenue now houses the food-hall chain Wonder. Similarly, a once-busy Duane Reade on Eighth Avenue and West 42nd Street has been replaced by a McDonald’s and a sushi restaurant.
Several factors drive this downsizing trend. Steven Soutendijk, a retail broker at Cushman & Wakefield, notes that banks and pharmacies, which expanded aggressively from 2004 to 2014, are reevaluating their space needs. The number of bank branches in Manhattan has fallen by nearly 27 percent over the past ten years, according to an analysis from the National Community Reinvestment Coalition (NCRC).
The rise of online banking and fintech has reduced the need for physical branches. Jason Richardson of the NCRC explains that banks face pressure to justify each branch’s existence, leading to closures and consolidations.
Pharmacies Face E-Commerce Challenge
Drugstore chains are also under pressure. CVS announced in 2021 it would be closing 900 stores nationally over three years, followed by the additional closure of 271 stores announced in 2025. The number of chain pharmacies in New York City declined by 16 percent between 2024 and 2025, according to data from the Center for an Urban Future.
E-commerce and mail-order pharmacies have significantly impacted their business model. Additionally, locking up merchandise to prevent theft has created a less appealing shopping experience, as noted by Walgreens’ former CEO Timothy Wentworth.
Soutendijk’s experience at a Duane Reade store highlights the challenges these retailers face in maintaining customer satisfaction.
As large retailers vacate, landlords face a dilemma. Chain pharmacies typically occupied 8,000 to 12,000 square feet, while bank branches took up 6,000 to 8,000 square feet. Finding single tenants for such large spaces at similar rents is difficult.
The solution often involves dividing these spaces into smaller units. This approach helps landlords maintain rental income by attracting smaller businesses. However, converting large spaces requires significant investments in infrastructure, including HVAC systems, restrooms, and utility separations.
While large institutional landlords can manage these conversions, smaller landlords and co-op boards may struggle with the necessary investments.
This transformation results in a more diverse streetscape. Smaller grocery stores, like Whole Foods’ Daily Shops, are moving into former drugstore and bank locations. This shift benefits consumers by offering more options and provides landlords with a stable rental base, reducing dependence on a single tenant.
Critics of the former dominance of banks and drugstores now see their wishes realized, as these spaces are replaced by smaller retailers like Starbucks and Naya.
A More Diverse Retail Market
The transformation of large spaces leads to a more varied streetscape. In the outer boroughs, two former Rite Aids are being converted into a Whole Foods and another retailer, respectively.
