Duane Reade at 40 Wall Street. (Photo via Shao-yu Liu.)

It’s not every weekend that Kerri Gristina, a schoolteacher living in the Bronx, manages to round up her three daughters and load them into the car for a Manhattan outing. When she does, she’ll take them to a Broadway play, to a museum or just to frolic around Central Park. But no matter what else they do that day, the busy mom always manages to carve out some time for one special stop along the way.

“They have natural options, organic options,” Ms. Gristina, who writes a blog called Raising Three Savvy Ladies, told The New York Observer of her favorite place to buy beauty products in NYC. “It’s like a designer store. Maybe it costs more, but having more variety is worth it.”

No, it’s not the Laura Mercier or Bobbi Brown counter at Bergdorf’s. Ms. Gristina’s guilty primping pleasure is Duane Reade.

Seriously.

“I can’t always go to a Sephora with three kids,” she said, praising the chain store’s LOOK Boutiques, where quickie makeovers are provided for free by professionals. “At Duane Reade, I can still get a mom moment—a me-time moment.”

And Ms. Gristina isn’t the only one singing hymns at the altar of the mega-chain. “I have been in NYC less than a month and they recognize me when I go there. It’s like Cheers. It’s awesome,” reads one recent Yelp review. “A girl I dated once called Duane Reade her secret lover for all that he provided for her,” another enthusiast wrote about the franchise’s 42nd Street location. “At first a joke, I started to get jealous after a while.”

“They really are like a literal urban oasis,” said Mary Elizabeth Williams, a culture writer at Salon who has spent the past two years battling stage IV melanoma. “They have this neutral quality of an airport lounge,” she told The Observer. “When you’re in a real crisis moment of your life, the mundane becomes the most important.”

Duane Reade at 40 Wall Street. (Photo via Shao-yu Liu.)

But Duane Reade has done more than just master the mundane. This is a drugstore whose flagships offer everything from sushi and fro-yo stations to juice bars and in-store nail and hair salons. If you need assistance, you can ask a hologram floor greeter. Or you can help yourself at the digital makeup counter, where, via a computerized snapshot of your face, you can see what new products would look like without ever having to use a tester.

The 40 Wall Street location in particular, which opened in 2011, resembles a futuristic shopping mall or an underground Japanese city more than a place to pick up prescriptions. The reaction to a chain store opening in a landmark location could have gone either way, but this ribbon-cutting proved an unmitigated success: customers loved it, the store won a prestigious design award, and the critics were raving. The New Yorker and Women’s Wear Daily both gave the store high marks, but really, the litmus test was the fact that such publications wrote about the opening of a franchise drug store in the first place.

The party thrown for the opening of the 40 Wall Street flagship—attended by bloggers, journalists (The Observer included), design students and busy attorneys alike—wasn’t just a game-changer. It was a mood-changer.

Duane Reade's juice bar. (Shao-yu Lin.)

If ever there was a store in need of a makeover, it was Duane Reade. The problems the franchise faced—both before and after it was acquired by Walgreens in 2010 from Oak Hill Capital Partners—have been well documented. Former CEO Anthony Cuti and CFO William Tenant were sentenced to three years in prison for fraudulently misrepresenting the companies finances. The pharmacies were ranked dead last in customer satisfaction, according to J.D. Power and Associates, and the stores frequently received low health grades. (Duane Reade was once forced to pay $200,000 out in civil court for peddling drugs and products past their expiration date.)

The blog I Hate Duane Reade, founded in 2007, served as a mouthpiece for customers and employees who had complaints about the mega-chain—and they had many. The combination of photos of the understocked, overcrowded stores and relatable tales of misery made the site a viral hit, garnering mentions in The New York Times, Gawker, USA Today and The Wall Street Journal. It was the quintessence of what was wrong under the old regime.

The most damning bit of criticism came from Martha Plimpton in a 2007 New York magazine interview. Asked what she hated most about the city, she replied: “The dead-eyed pharmacy people at Duane Reade ... It’s always a journey into the heart of darkness.”

The founder of IHDR (who wished to remain anonymous) told The Observer that the idea came while sitting with friends and comparing horror stories about the drugstore. “[We] realized that we all had the same issues. We wondered if everyone else felt the same way. Turns out they did.”

Duane Reade at 40 Wall Street. (Photo via Shao-yu Liu.)

The Walgreens buyout had an immediate effect, curbing the criticism. IHDR published its penultimate post in February 2010. And four months after the purchase, Walgreens boasted in a quarterly meeting that sales were up, with Duane Reade contributing 2.8 percent to the total increase.

Still, altering the essence-du-Duane took more than a quick-fix change of ownership. It’s been a long road back to Gotham’s good graces for the store that boasts the most sales per square foot in the industry.
While still under the aegis of Oak Hill Capital Partners, Duane Reade began its facelift, courtesy of the strategic branding firm CBX. The mission: redesign its stores and rehabilitate its personal brand. No easy task.

(Photo via Shao-yu Liu.)

Joe Bona, president of the retail division at CBX, worked closely on the in-store redesigns and in-house brands. “People need to still walk in and recognize that it’s a Duane Reade,” he said of the new and improved stores. In other words, it was all about atmosphere. Or as the franchise’s revamped slogan put it, “New York Living Made Easy.”

“One of things we know through research,” Mr. Bona said, “is that when you create a wider aisle, [customers] feel less pressured and they tend to linger a bit longer.”

And relaxation is a key theme at the new Duane Reade: a luxury that hints at the store’s new upscale aspirations. After all, as any New Yorker knows, time equals money. So if you have time to meander and browse instead of rushing to the express lane, you must have minutes—and therefore cash—to burn.

When Ms. Williams ducks into her favorite Duane Reade location, right next to Sloan-Kettering, where she receives cancer treatment, for example, she is always amazed to see how many customers just seem to be loitering. “At least 50 percent of the people are just hanging out,” she marveled.

“I guess that’s what’s in it for me too,” she added. “I need to regroup.”

Ms. Williams’s reaction to Duane Reade is no accident: through wider aisles and warmer fluorescent lighting, landscape windows and perfumeries, Duane Reade represents the latest triumph of psychographics, a research field specifically tailored to the psychological states of customers in retail environments.

The nail bar. (Photo via Shao-yu Liu.)

Dr. Archana Kumar, an assistant professor in the department of marketing at Montclair State University, might be described as a psychographicist. In a phone call with The Observer, she broke down this almost-subliminal messaging.

“Blue, green and violet are calming colors,” she said, explaining that to create a “calming effect,” a store like Duane Reade would have to change its color palette from “agitating” colors, like red, to warmer ones that are “associated with feelings of peacefulness and happiness.”

Is it any coincidence that Dr. Kumar’s calming colors are the exact three that Duane Reade happened to choose for its redesign? Probably not.

Other subtle changes have been effective as well. By designing and promoting the Duane Reade food-and-beverage brand DR Delish as a more expensive alternative to its other off-label brand, Cityscape, for example, CBX was able to convince customers that the store’s self-made tiers correspond to product quality. It sacrificed one label to the hordes of coupon-clippers so that DR Delish might fare better against the big-name brands.

But here’s the weird thing: sales of both DR Delish and Cityscape doubled between 2009 and 2011. People, it seemed, were ready to pledge allegiance not only to Duane Reade as a store, but to its products as well—and across all price points.

Some of Duane Reade’s newfound fans may also be attributed to the store’s vastly improved social media presence. On Ms. Gristina’s blog, she’s penned such lyrical posts about the Walgreens-owned chain that you might believe she was being paid by the company.

Duane Reade at 40 Wall Street. (Photo via Shao-yu Liu.)

In fact, she attempted to become one of the store’s 10 “VIP NYC Bloggers”—a contest whose winners would receive $200 a month in store credit in exchange for blogging, tweeting and Facebooking their love for the store.

While some might read this contest as part of a cynical branding attempt by a faceless corporate entity, Duane Reade seems to be investing a huge amount of time and considerable effort to draw in digital consumers, most of whom are happy to receive the love and give it back.

Last year, the Duane Reade Twitter feed—which often promotes local events like readings at Housing Works—surpassed even its parent company’s by skyrocketing from 15,000 to 390,000-plus followers in seven months, making it the most popular drugstore on Twitter. (Pretty impressive when you consider that Duane Reade only has stores in the New York City area.)

(Photo via Shao-yu Liu.)

There have been celebrity endorsements too, like when Glee actor Cory Monteith, who is based in L.A., tweeted “Yeah, I actually started following @DuaneReade. so what? what if I need a heads up on everyday products I need.” That comment has been retweeted more than 350 times.

As silly as this all might sound, these efforts have translated into revenue: when the store put forth another Internet-based contest last year as part of its “Show Us Some Leg” campaign, sales of Duane Reade-brand hosiery jumped 40 percent.

Still, none of this Web 2.0 magic would work if people had a negative impression of the stores themselves. But the rehabilitation is working, and once again Duane Reade feels like an integral part of the city. What’s more, individual store locations have taken to embracing the character of different NYC neighborhoods.

At the Soho location (on Spring Street, another repurposed former bank), for instance, you can find obscure art and fashion magazines. The Times Square location sells a ton of “I Love New York” memorabilia. Wall Street has its shoe-shine parlor and nail salon. And in Brooklyn, as much as they fought it, hipsters have found the growler bar and walk-in beer fridge in Williamsburg a highly persuasive reason to shop at a chain.

As Ms. Williams put it, “Duane Reade provides a safeness: If you’re picking up your cancer medication while someone else is picking up tampons and there’s a guy picking up a six pack, it’s like this great big circle of life.”

And that’s something you can’t put a price on.

Public Financial Management, which does business as PFM Asset Management, is taking 9,263 square feet of turnkey space on the entire 49th floor of 40 Wall Street, brokers involved with the transaction exclusively told The Commercial Observer yesterday. Asking rents were in the low $40s.

40 Wall Street

A Cushman & Wakefield team lead by Jeffrey Lichtenberg that includes Jared Horowitz, Gabe Whitman, Courtney Adham and Andy Peretz represented the Trump Organization in the deal.

Jonathan Mayeske and Jonathan Fein, also of Cushman and Wakefield, represented the tenant.

Leasing activity continues to flourish in 40 Wall Street, which just years ago faced daunting vacancies and unsteady management. Donald Trump, Jr., who has had 40 Wall Street under his stewardship for the past few years, helped turn the asset into an appealing office tower by offering favorable deal incentives. PFM Asset Management received 5 months free in its lease deal with 40 Wall Street, said those close to the deal.

Mr. Trump is the brother-in-law of Jared Kushner, who owns The Commercial Observer.

Mr. Lichtenberg, who heads the exclusive Cushman and Wakefield leasing team for 40 Wall Street, said the building had three more deals in the pipeline, all for pricier space at a higher part of the tower, that is was close to finalizing.

“There’s a lot of activity,” Mr. Lichtenberg said. “Everybody’s bitching that activity’s dying, and we’re as hot as can be."

Companies like Duane Reade, the Harry Fox Agency, and Leslie E. Robertson Associates have all inked big office leases at the building. Duane Reade also inked a deal this year for ground-floor retail.

While activity is picking up, there are challenges that lay ahead for Mssrs. Lichtenberg and Trump.

Insurance firm CNA is set to move out of its office space (at a size of up to 135,000 square feet) on March 31st, two years before its lease expires.

But there are a few deals afoot for the building, including a couple of deals in the soon-to-be-vacant CNA space, and the aforementioned deals in the tower portion of the building.

The post office will be moving out of its former location at 1 Peck Slip Station, which is currently being renovated into a school, said officials close to the deal.

116 John Street. (Courtesy Property Shark)

The new, full-service facility at 116 John Street is slated to open sometime late 2012.

Darrell Rubens and Annie Shinn, both of Winick Realty Group, represented the USPS and Metro Loft Management, the landlords of 116 John Street.

Metro Loft Management purchased the Art Deco building for $25 million in April 2011.

Avinash K. Malhotra Architects supervised the building's plans to convert the building from an office building to 418 rental units.

The post office is moving into the former site of Andrew's Coffee Shop, which had been in the space for 20 years. Asking rent was $110-per-square-foot. The lease is for approximately 10 years.

"It's a corner, it has almost 100 feet of frontage and it will be just a new space for them at a much better location," said Mr. Rubens, who estimates that this his tenth deal on John Street. He had worked on two Duane Reade deals, Crunch Gym, and Bon Chon Chicken retail deals on John Street in the past decade, he told The Commercial Observer.

There is one remaining retail space at 1,900 square feet that Mr Rubens is currently fielding offers for.

"When I heard the 1 Peck Slip location was closing, I immediately reached out to the Postal Service, with whom I had done a deal seven years ago at 63 Wall Street," said Mr. Rubens in a prepared statement.

The city Department of Education announced in November 2011 that it would be opening a K-5 elementary school in 1 Peck Slip in 2015.

Neither he nor Ms. Shinn were immediately available for comment.

Last September, U.S. Postmaster General Patrick Donahoe said that the agency was facing losses of $8 billion, and proposed ending Saturday deliveries and shuttering 3,700 local post offices to help stave off further financial difficulties.

Drosen@observer.com

Freshly tanned from a recent visit to Mexico, where he was overseeing a new project, the slicked-back scion grew steadily more enthusiastic as he discussed 40 Wall Street, an office tower that, with its rising and falling tenant roster, has contributed to the Trump Organization executive vice president’s growing reputation as a competent steward of the family name, a reliable fixer and successful dealmaker in his own right.

Donald Trump Jr. (photo credit: Hannah Mattix)

“When I took over the building, there was a lull in the market,” recalled Mr. Trump, who said the address remains one of his well-known father’s favorite properties. “By the time we fixed everything up and got it going, there was a high. It was certainly a unique experience. My focus had been on residential development as well as some resort hotel development, so to learn that part of the business and to spend time with that part of the business was fascinating to me. So I got involved and made it a big part of my day-to-day life.”

Indeed, 40 Wall Street had languished in the Trump portfolio since the mid-’90s, when family paterfamilias Donald Trump purchased the building from Kinson Properties, a Hong Kong-based company. Back then, internal discussions raged on whether to convert the office tower into residential property or to keep it as offices, according to insiders. The senior Trump eventually settled on keeping it as an office tower, and nearly 20 years after that decision, 40 Wall Street’s fortunes fell on his oldest son, who until then had never managed an office building.

(Disclaimer: Mr. Trump is the brother-in-law of Observer Media Group owner Jared Kushner.)

The junior Trump had spent much of his career overseeing a stretch of luxury developments along the West Side rail yards. He then jumped from project to project, working on construction of Trump International Hotel and Tower in Chicago and handling Trump licensing deals across the world.

But managing an office building as storied as 40 Wall Street, until recently known among tenant brokers as a difficult place to do business in part because of at least one Trump executive’s heavy involvement with leasing at the address, was entirely new to Mr. Trump.  

Now faced with his first-ever office-building management assignment, Mr. Trump made a strategic play to woo brokers, who, perhaps more than anyone else, had the leverage to sell 40 Wall Street to potential office tenants. “I look at the brokerage world as your unpaid sales force until they perform,” he said. “What I wanted to do was befriend those people, get to know the players.”

He reached out to Jeffrey Lichtenberg, an executive vice president at Cushman & Wakefield who had worked with the Trump Organization in the past. Mr. Lichtenberg and his team were eventually brought on as the exclusive leasing agents for 40 Wall Street, and from there, they courted other big brokerage firms to rouse up business.

“What we did was, instead of having one big party, we had a series of lunches with each firm,” said Mr. Lichtenberg. The message, brokers on both sides of the table said, was simple: 40 Wall Street was open for business. It wanted to work with brokers and it wanted new tenants.

“Because Don was cooperative and helpful to me and then we were cooperative to the brokers, the brokers realized that the best place for them to bring a tenant to get a deal done was 40 Wall,” added Mr. Lichtenberg. “Don helped turn around the image of the building.”

What also helped spur leasing activity was Mr. Trump’s willingness to sweeten the deal by offering incentive packages. He also kept a simple pledge: if a broker brings in business to 40 Wall Street, he would make honoring that broker’s commission a top priority.

“If I tell them I am going to do something, I am going to do it,” said Mr. Trump. “If I tell them that they’re going to get their commission check on this moment, they are going to get it on or before this moment,” he added, hitting the table with an index finger for emphasis.

That pledge worked. Jones Lang LaSalle broker Dan Suozzi, who had lunch with Mr. Lichtenberg and his team at Bobby Van’s during that recruitment period, estimates he has brought four tenants to 40 Wall Street in the past two and a half years, the most recent being John Carris Investments for roughly 13,000 square feet. (Former New Jersey Governor Jon Corzine was rumored to be subleasing space from John Carris.)

“Don Jr. was a pleasure to work with and he does the right thing and is very personable,” said Mr. Suozzi. “It makes a difference when you’re bringing a tenant through the building.”

Once they had the ears of intrigued brokers, Mr. Trump and his team focused on redefining 40 Wall Street’s image as a financial services asset. “With the Wall Street address 10 years ago, it was all financial industry,” said Mr. Trump. “Today, in the digital age, the street location is less critical.”

Mr. Trump also honed in on what his family’s building could offer that his competitors couldn’t. He targeted a crowd that didn’t fit the traditional mold of a Wall Street tenant, selling them on 40 Wall Street’s “impeccable” management services and attractive deal incentives. The Trump Organization has a “fungible” balance sheet that enabled it to offer value propositions, he added.

Wall Street address aside, 40 Wall Street had the charm of a Midtown South building with Midtown South amenities. It had recently renovated tons of turn-key space, and it had a Duane Reade megastore, the first of its kind that, with its sushi bar and a hair salon, could give the average customer a new ’do with her bottle of Kaopectate.

“With the Condé [Nast] deal and with everything that is going on downtown, I think it’s an opportunity for buildings to have boutique space they can do something with and offer that value proposition to tenants that are going to be the guys who are going to feed off those megadeals,” said Mr. Trump.

The offer worked. Midtown mainstays like the Harry Fox Agency and Duane Reade committed to the building for substantial office space, each with square footages in the five figures. Wiedlinger Associates and Leslie E. Robertson Associates also moved into the building.

“I had never done a deal with the Trumps in my 18-year career,” said Greg Taubin, a senior managing director at Studley who represented the Harry Fox Agency in its 47,144-square-foot sublease on the fifth floor. “You would always hear different things about having to deal with the organization, but those days are over. The reason is because of Donny Jr. getting involved and making decisions.”

Now faced with tenable vacancies in the base of the building, nearing a total of 100,000 square feet, Mr. Trump is enjoying his time at 40 Wall Street while also working on the development of Trump International Golf Links in Scotland.

“What makes my job interesting is that on any given day I can work on something that’s totally different,” he said. “It keeps things very interesting and fluid.”

drosen@observer.com

Mr. Corzine has set his sights on sharing space with John Carris Investments, a full service investment banking firm whose corporate headquarters are located inside the Trump Organization-owned office tower, The Wall Street Journal reports.

40 Wall Street (Courtesy Property Shark

A spokesman for John Carris did not respond to a request for comment.

A person close to the building said they were unaware of Mr. Corzine’s plans.

“We certainly didn’t know anything about it until we saw it in the paper this morning,” said the person. “It’s not like he’s [Corzine] renting space from us,” the person added.

40 Wall Street, located near the New York Stock Exchange, has seen a flurry of leasing activity in recent weeks. NYC pharmaceutical giant Duane Reade relocated its corporate headquarters to the 72-story building, where it already has a sushi and hair-styling megastore inside the building. Music publishing company The Harry Fox Agency also moved to 40 Wall Street from its former offices at 601 W. 26th Street.

A person close to John Carris Investments said that Mr. Corzine is looking for office space, not to join the firm itself, the paper reported.

MF Global Holdings filed for bankruptcy protection last October after bets it had made on euro zone debts led the company to financial ruin.

Mr. Corzine stepped down as the chief executive of MF Global Holdings in November.

But his MF Global Holdings hangover continues. Yesterday, a group of 38,000 Montana farmers who were customers of MF Global Holdings filed a class action lawsuit against Corzine, claiming the former Goldman bigwig had used money from their accounts to pay off debts.

Duane Reade will be taking the 21st and 22nd floors, for a total of 54,500 square feet, inside the 72-story building. The lease is for 15 years, with asking rents in the mid-$30s per square foot, several brokers said.

40 Wall Street. (Courtesy Property Shark)

Jeffrey Lichtenberg of Cushman & Wakefield represented the Trump Organization in the deal. Thomas Murray and Joseph Artusa, both of the Lincoln Property Company, handled Duane Reade.

Duane Reade’s current lease at its corporate headquarters at 440 Ninth Avenue was nearing its August expiration, prompting the pharmacy to look for new space in midtown, midtown south and Lower Manhattan, said Mr. Murray.

It was sometime after Duane Reade opened up its approximately 22,000-square-foot flagship at 40 Wall Street—which has a grocery space for smoothies and sushi and a special salon section that offers hair blow-outs and manicures—when it dawned on the company that having its corporate headquarters and superstore under one roof was the most logical choice, according to those familiar with the deal.

“The location is perfect, it laid out well for them and then, on top of that, there was the superstore,” said Mr. Murray.

Dealing with 40 Wall Street’s well-known landlord also helped seal the deal, said Mr. Artusa.

“Donald Trump Jr. was a complete gentleman throughout the entire process and was helpful in expediting the deal,” he said.

This has been a busy leasing period for Mr. Lichtenberg and his team, which have brought in the structural engineering firm Leslie E. Robertson Associates, financial consulting firm Huron Consulting and Weidlinger Associates, another structural engineering firm, in the past six months.

“The vacancy [rate] right now is about 18 percent,” said Mr. Lichtenberg. “It was close to forty percent when we took control [two and a half years ago],” he added.

Daniel Edward Rosen, Staff Writer, is reachable at DRosen@Observer.com and can also be followed at Twitter.com/Dedwardro.

Walgreens has reached a deal to lease the space for about $2 million in annual rent according to sources with knowledge of the transaction. The drug store giant will either operate its own store in the location or use the space for a Duane Reade, the New York City based pharmacy that the company purchased last year for $1.1 billion.

The space, which is about 22,000 square feet in size, formerly was home to a Borders bookstore but sat vacant after the company declared banruptcy at the start of the year and in July subsequently opted to liquidate its national portfolio of about 400 stores, including nine locations in the city according to reports.

The real estate investment company Madison Capital acquired 100 Broadway in 2010 after buying debt on the property and foreclosing on the roughly 375,000 square foot building’s prior owner, the Japanese real estate firm Hiro Realty. Madison Capital used the technique to move in on another Hiro asset as well according to written reports, 655 Fifth Avenue.

The firm installed a team from the real estate services firm CBRE to handle leasing the building’s office space. It selected a group from the rival firm Cushman & Wakefield to lease the retail space.

Though the deal with Walgreens will fill a prominent vacancy at 100 Broadway, in some retail circles, the deal may come as a bit of a letdown. Some leasing experts and neighborhood advocates had hoped the space would attract a tenant that would add to the neighborhood’s rise as a shopping district with destination retail. Though drug stores fill a large niche in the city for food and snacks on the go, prescription drugs and as a convenient stop for other odds and ends, most retail experts concede that the use is generally an un-sexy addition to the streetscape.

Jeff Winick, chief executive of the retail brokerage Winick Realty, handles leasing for Duane Reade. Mr. Winick could not be reached for comment. Executives as Madison Capital also could not be reached.

(Illustration: Joel Kimmel).

It seems there will be no true end to Duane Reade’s manifest destiny.

Earlier this week, the pharmaceutical behemoth inked a 15-year, 10,000-square-foot retail lease at 873 Broadway. The renewal, announced yesterday and boasting an asking rent of $100 a square foot annually, will feature 5,000 square feet on the ground floor and another 5,000 feet below street level, said Marty Meyer, a vice chairman with Colliers International who represented the landlord, 873 Broadway LCC, in the transaction. Steve Baker and Jeff Winick of Winick Realty, represented Duane Reade.

“Duane Reade is a valued pharmacy in the neighborhood,” said Mr. Meyer, who noted that the druggist has a highly visible presence alongside other retailers on Broadway, including Paragon and ABC Carpet & Home. “They have been a quality tenant, and we look forward to continuing the relationship.”

jsederstrom@observer.com

Via the U.S. Attorney for the Southern District of New York's office, basically:

From November 2000 through June 2005, CUTI and WILLIAM TENNANT, the former Chief Financial Officer ("CFO") and Senior Vice President of Duane Reade, engaged in a scheme to misrepresent Duane Reade's financial performance. The scheme involved: 1) the reporting of inflated income from fraudulent real estate transactions; and 2) the artificial reduction of expenses through fictitious credits from vendors who did work for Duane Reade.

Mr. Cuti was also hit with a decent tab, payable to Preet Bharara & Co.:

In addition to the prison term, Judge BATTS sentenced CUTI, 65, of Saddle River, New Jersey, to three years of supervised release. CUTI was also ordered to pay a $5 million fine and a $500 special assessment fee. Restitution will be determined at a later date.

Filed under "Things Your Club Card Won't Help With." Meanwhile, while Duane Reades across the city are shinier than ever, alas, they still have long lines. Though now, with one less person to wait in them.

UPDATE. Mr. Cuti's defense team writes in with their statement:

While at the helm of Duane Reade, Mr. Cuti led the growth of the company from a small drug store chain to a local institution

[...with long lines...]

in less than ten years, dramatically changing the landscape of New York City in the process.  Duane Reade became one of the largest commercial retail tenants in the City in terms of the number of stores and square footage.

Mr. Cuti is deeply disappointed with the sentence imposed by the court.  As the court determined, neither Duane Reade nor any investor could be shown to have lost money as a result of the transactions at issue.   Nor was it demonstrated that Mr. Cuti personally profited from the transactions.   Mr. Cuti plans to vigorously appeal the verdict.

fkamer@observer.com | @weareyourfek

We're right here! Above the bank! On the corner!

My colleague Emily Witt has an astute analysis of what should, like Walmart, be another lefty bogeyman in New York: Duane Reade. The ubiquitous claimer of street corners has grown aggressively in recent years under the direction of parent Walgreens.

But, like a lot of things in this town, the growth also has a lot to do with real estate.

I recall a conversation I once had with one of the city's top retail leasing brokers. It was during the condo boom of the last decade (speaking of being all over the place). It went something like this:

Me: Why are there bank branches and Duane Reades everywhere?

Broker: Because the ideal retail tenant for a lot of these new condo developments is a transient brand-name.

Me: I don't get it.

Broker: The ideal ground-floor block for a developer of a new condo would run something like this—a bank branch on one corner, a gym or a niche vendor like a Blackberry store in the middle, and a Duane Reade on the other corner.

Me: Why?

Broker [slightly exasperated]: Because retail tenants like banks and Duane Reade can be counted on to pay their rent; to be cleaner than, say, a restaurant; to be quieter than a club or a bar; to attract heavy foot traffic all the time; and to leave in a pinch in a few years if the landlord wants to raise the rent.

Me: So Duane Reades are essentially placeholders in a lot of spots around town?

Broker: Exactly.

And now you know. It's not necessarily that New Yorkers need Twizzlers or paper towels at 2 a.m. (or sushi on demand), or that Walgreens is insatiably capitalistic (though that may, indeed, prove the case). It's also that landlords need a rent check. Now.

tacitelli@observer.com :: Follow on Twitter @tacitelli