14th St. metamorphosis nearly complete.

Poor cousin 14th Street is losing its reputation as a downscale place to shop and is becoming a mecca for nationwide retailers.

At one time, the street was considered the Northern boundary for the city's fanciest homes, and the society occupants amused themselves with forays to their great opera house - the Academy of Music - that is now a nightclub and potential development site.

But as the elite crowds moved their residences uptown, the streetscape deteriorated and the area became synonymous with the labor movement and union meetings.

Over the past 50 years, 14th Street continued with its plebeian orientation and became known as an affordable place for working people to buy clothing. The clientele was catered to by shops such as S. Klein and Mays.

But by the 1980's, those great department stores were shuttered and a series of low - priced vendors and bazaar-type outlets had created a mecca for even cheaper merchandise and electronic marts that stretched across the Street.

In 1982, the city's first Business Improvement District (BID) was formed as the businesses of 14th Street faced the problems of litter, security and graffiti - overcoming them shop by shop, street by street.

When Paragon opened in the 1970's near 18th Street at the North end of Union Square Park, they were looked at askance. But they drew from the Sixth Avenue Barnes & Noble down the street and managed to hang in. And now Herman's, Nordic Track and another Barnes & Noble have opened across Broadway and facing the park on 17th Street.

Union Square Park, the great union rallying point, had become a haven for drug peddlers and was consistently avoided by neighborhood residents and visitors alike.

That was cleaned up through extensive efforts of the 14th Street business Improvement District, the Local Development Corp., and community boards.

This month, residents formed the Union Square Conservancy to raise dedicated funds and help maintain the park permanently. A Conservancy doesn't have to only help a very large park like Central Park or Battery Park, explained Rob Walsh, executive director of the 14th Street BID.

"It can also be used when it plays a key economic development role in the neighborhood," said Walsh. "You could easily argue that this neighborhood started turning around when the park was renovated."

The renovation of the park was followed by the construction of Zeckendorf Towers that has since brought in hundreds of middle and upscale residents.

"It's a development that was destined to happen," said area property owner Alan Cohen, pointing to the subway network and transfer center that has most lines stopping somewhere along the street.

"When we cleaned up the park and had the Zeckendorf development, it was inevitable that both retail and entertainment - the heartbeat of Manhattan - would move there."

The area is already home to thousands of college students who populate the New School, New York University, Parsons, Cardozo and NYU Law Schools, Baruch and others. There are three college dorms near 14th Street on the Third Avenue corridor and NYU has just decided to build another dorm on the former Luchow's site, that only too recently was slated for a new homeless residence.

The change from homeless to student is symblematic of the transformation of the neighborhood from downscale to fashionable.

The Related Company, that has won awards for its restoration at the 17th Street Barnes & Noble store, recently razed older properties on a key comer of Broadway and is about to start construction on an exciting retail, entertainment and housing complex.

Toys "R" Us and Nobody Beats the Wiz are selling on opposite sides of the park; Staples is open in the Amalgamated Building; PC Richards, the Long Island appliance biggie has opened its first Manhattan store, K-mart is poised to move in slightly down Broadway and the retail consultants are crowing the street's benefits as the next frontier.

"Wait, you ain't seen nothing yet," said Robert Greenstone of Garrick-Aug Store Leasing. "You have such development possibilities on 14th Street, it's not funny. The smaller owners between Broadway and Sixth Avenue haven't a clue as to what they own and how they can market the space to affect a positive change in the area."

The stretch that Greenstone referred to is the most notorious of the area's schlock stores: open fronted bazaar type stores with clothes and assorted plastics hanging from the rafters and large hand lettered signs proclaiming their one dollar generic merchandise. Other stores are notorious for primarily second rate cameras, recorders and other electronics.

"If you want to have Schlocky Sammy running electronics, or switch and bait, that's what 14th Street will remain for awhile," warned Greenstone. "But eventually, it will change."

That change is coming fast to 14th Street. Within the last three years, the Sixth Avenue Ladies Mile from 14th Street to 23rd Street has re-transformed itself into a retailing paradise, and 14th Street beckons with its East and West running welcoming arms.

"Just connect the dots," advised Green-stone.

The availability of the former large retailing spaces surrounded by commercial office entrepreneurs in the electronic and paper publishing fields, advertising agencies and musician support services in the lofts and apartment houses of Gramercy Park, Greenwich Village, and Noho make the area's new population very much like the that of the Flat Iron district.

"If you follow the art community and the restaurants, they are trend setters for neighborhoods," Greenstone explained.

Retail consultant Faith Consolo, also of Garrick-Aug, thinks that 14th Street is finally coming into its own.

"It's much more shi-shi than anyone wants to think," she said. "There are great restaurants on the side streets and artists in the lofts. The neighborhood is having a much needed renaissance. It was always a great shopping street but its image had been tarnished."

Now, the Related's retail project is "100 percent leased" and will bring a 14-screen United Artists flagship mega cinema on two-levels, the second Virgin superstore, a Circuit City and the Sports Authority to pep up the neighborhood.

The project, being accomplished with Principal, will hold a total of 275,000 square-feet of retail on five levels and will also provide 240 80/20 apartments in a 21-story tower. Ground will be broken later this summer after construction plans, by Davis Brody Associates on the exteriors and Peter Claman, on the working drawings, are completed.

Walsh says real estate brokers are now marketing their spaces while stressing views of the park, or being a minute or two away from the park's now institutional Green-market.

"We can't underestimate the park's relationship to economic development," Walsh stressed.

But since city park workers leave by 3 p.m. Walsh said he is disturbed by full trash cans in the evenings and that is another reason a Conservancy will help. For instance, a Conservancy could ensure that money raised from the popular year-round Greenmarket could go right to park projects and pay for evening sanitation pick-ups.

"I'd like it if people don't even question sitting on a park bench after a nice dinner at Union Square Care or one of the other restaurants," Walsh said.

Restaurants in the area include the Union Square Cafe at 21 East 16th; Provisions coffee bar at 24 Union Square East operated by the same people that run the restaurant in Grand Central Station; Barocco Kitchen at 42 Union Square East, its third location; and the Corrado Bakery & Gramercy at 15th and Irving Place. The Heartland Brewery at 35 Union Square West is the largest in the tri-state area while The Republic Restaurant, a 300-seater, can be found on the West side of the Park. The Blue Water Grill has just opened at 31 Union Square West.

One restaurant isn't making it. The House of Blues and its live music component was resisted so long by the community that its operations outgrew the space and will no longer be going into the old American Savings Bank building. The building is quietly on the market through Robert Futterman, a partner with Garrick-Aug Store Leasing. [see sidebar].

The Union Square subway station, the city's third busiest with 250,000 people a day passing through, is undergoing a $42 million renovation at the south end of the park and that is helping with the commitment to the area.

"Good retail is slowly but surely creeping over to the corner of 14th and Third," said Walsh.

The new PC Richard & Son store has located itself next to the Genesis apartments at 14th and Irving Place in 25,000 square feet.

NYU's new dorm at the former Luchow's restaurant site will contain street retail.

Next door, the Palladium, the former Academy of Music opera house, and an adjacent parking lot on Third Avenue comprise a potential development site. But part-owner Cohen is not sure which direction he wants to take with the property. He is a fan of the theater and its history and even recalls the first Palladium nightclub conversion with relish. "That was something to see," he remembered.

But that nightspot is currently rented to club mogul Peter Gatien, who is still in jail and facing drug trafficking charges and its future is uncertain.

It is also home to Julian's Famous Poolroom, a staple for the neighborhood.

Cohen says he has been approached by many parties, including the local hospitals and universities that want to create apartments and other complexes on the sight.

Con Edison, that has a major site at Third Avenue plans to turn its former Energy exhibit area into retail space.

Russ Chinnici, a broker with Williamson Picket Gross is marketing the 20,954 square-foot street level space that runs from the north corner of Irving Place and goes eastward with 320 feet of frontage to a parking lot.

"We have prime retail space in one of New York's fastest growing retail areas," said Chinnici. "We would like a tenants that our client would benefit from and we've been getting a good response. It's a great space on a great block and we're looking for great tenants."

The space, that boasts picture windows and 15 foot ceilings, has an asking rent of $40 a square-foot.

Chinnici recently completed a 2,500 square-foot deal with a futon furniture store in the ground floor of the Teamster's Building at 126 University Place. "They wanted a non-food tenant and there was high demand for the space because of the transportation and the changes happening in the neighborhood."

Even East of Third Avenue, Walsh says "there is a lot of hope." A number of buildings have been sold and upgraded. The Powerhouse Gym opened at 242 East 14th Street between Second and Third Avenue. There is a new luncheonette, the funky Beauty Bar, and several other new little shops.

"At one time there were 20 empty shops," said Walsh. "Now you can count the vacancies on one hand."

Heading further east, the YMWHA is going through a rehabilitation program, and New York Eye & Ear opened a facility.

"The key is to connect the other block starting at the corner with the Sahara Hotel," explained Walsh. The empty residential hotel and its mixture of retail shops have been a sore spot for the neighborhood as one hosts an X-rated video shop. Under zoning, that hotel could double in size and is a prime investment candidate. The owners did not return a phone call requesting a comment on the area.

On the West end of 14th Street is the state owned Armory that Walsh calls "a critical linchpin" in the street's economic revival. The 174,000 square-foot structure is across the street from the Salvation Army headquarters and has been used by the city for welfare administration. The community has prodded the city to vacate the premises when its lease is up.

Meanwhile, the State has had over 200 inquires for the Armory site although an Off-Broadway theater proposal is favored by community groups.

"It's become a valuable piece of property," said Walsh.

The theater representatives met with the State's economic developmentczar, Charles Gargano, Peter Delaney who heads the state office of General Service and Brad Reiss, the governor's counsel last week and sources said the State reps were very responsive.

If a sale is contemplated, that number has to go into the budget and politically would be hard to do without opening the process up to other bidders. A theater company then would have trouble matching the clout of Big Box retailers.

Jack L. Lester, the attorney representing the Armory Action Committee said the theater plan is what they support at this moment. "Sherman Gross has made an effort to communicate with everyone," explained Lester. "He's sold us that this would be the most desirable plan."

After the State pulled out and the city's central workfare processing unit pulled in, the community united to get the city program dispersed into smaller offices around the city.

If the theater proposal becomes a reality, Lester says, it will prove that Mayor Rudolph Giuliani "has transformed the process to a symbiotic relationship with the community."

Democratic politicians are warning the truce will fall apart and are waiting to pounce, but community activists are watching what happens on 14th Street and hoping that their new reality comes true.