Banks, food halls and new chic march into Manhattan.

Da, da, da, da--ta da--charge?

That's the sound of the new chic retailers that are marching into Manhattan. Following the momentum of 2004, with a surge in retail activity finishing off the year on the right note, 2005 has seen more and more retailers charging into New York.

New stores are opening with every passing day, existing shops are expanding in an effort to keep up with their neighbors and others are relocating to the next up-and-coming neighborhood. The luxury retail sector is robust as ever and the proof can be found in the overwhelming number of chic retailers now calling Manhattan home.

In addition to the usual influx of fashion, accessories and specialty stores, there are banks and food halls aplenty, who are looking to replicate the European hyper-market concept and seeking out the best retail space Manhattan has to offer. Banks are turning into food halls and food halls are turning into banks.

Bank activity is at an all time high, in fact, as the key players vie to become bigger and more dominant within the city. Throughout 2004 Bank of America went head-to-head with Wachovia, opening new locations left and right. Commerce Bank also held its own, as did Washington Mutual and Independence Community Bank, and I believe we'll see more of the same during the remainder of 2005. In fact, new retail branches can be expected from Citibank and Chase, both of which haven't opened new locations in a number of years.

The second trend I predict for the next three quarters of 2005 is more fancy food halls. Whole Foods is everywhere, including its new location in Union Square, as well as existing stores in Chelsea, the West Side, and the base of the Time Warner Center and another soon-to-open store on the Lower East Side. Fast on their trail is Trader Joe's, which is making its Union Square debut just steps away from Whole Foods on 14th Street.

Balducci's, which has a super store location on 14th Street and Eighth Avenue, at a former bank site, is coming to Brooklyn, along with Fairway and yet another Dean & Deluca. On the Upper East Side, in Bloomberg's project, Dean & Deluca will soon open for business and another location is planned for the Upper West Side. The food hall surge will continue well into this year and heading into 2006.

So, why is there an increased demand for banks and food stores in Manhattan?

It's really a simple case of supply and demand. New York's residential market is booming. Home prices are still climbing and even more product is entering the market as a result of new developments and residential conversions.

For instance, the conversion and closing of hotels including the Plaza, Mayflower, Olcott, Regent Wall Street, Intercontinental, Sheraton Russell, and Empire led to approximately 3,000 rooms being converted to residential condominiums. Even the other four boroughs have gotten in on the act, creating homes where there were once hotels and office spaces.

All of these new residential communities have created a call for places to shop and to bank. The banking institutions and gourmet grocers have been quick to address their needs and expect more to rush in behind those that have already leased space to compete for the increase in business from river to river.

Last year saw the largest number of restaurant openings in the past 10 years, including exciting dining options from some of the world's most famous celebrity chefs, including David Bouley, Daniel Boulard, Danny Meyer and Tom Colicchio. Tourism in New York City in 2004 also provided a boost to their business and restaurateurs reaped the benefits. Food has truly become the fashion of 2005 and dining at these glamorous establishments is as stylish as donning the finest designer clothing.

Fashion and beauty will surely follow closely behind and, if the residential market continues at its present pace, I believe this is only the beginning of things to come.

FAITH HOPE CONSOLO, CHAIRMAN,

RETAIL LEASING AND SALES DIVISION

PRUDENTIAL DOUGLAS ELLIMAN