Harlem now hotter than ever.

Harlem is about to get hit with a luxury wave as retailers clamor to catch up with the condo-buyers who now call the neighborhood home.

"There have been a lot of changes in Harlem and it has been lacking retail in general," said Andrew Katz, director of development for the Blumenfeld Development Group which built the $23 million Gotham Plaza on 125th Street in East Harlem which opened in 2003.

"When we first started developing up here, there wasn't even a supermarket. Now you've got stores that people were typically traveling down to 86th Street to. It's catching up, and people are seeing how incredible it is."

According to Faith Hope Consolo, chairman of the retail sales and leasing division at Prudential Douglas Elliman--which recently opened an office at 2169 Frederick Douglass Boulevard--the newly arriving retail will be well worth the wait.

"In addition to some of the national tenants on 125th Street, we're going to see some more of the New York kind of tenants that are typically only south of 125th Street, such as fashion and accessories retailers and some very chic food purveyors," said Consolo.

She predicts that not only will Fairway head north to Harlem in a big way, but Balducci's, Dean & Deluca, a whole flurry of Starbucks, plus local fashion and travel retailers will all converge on the area.

The retail explosion began with the 2000 grand opening of Harlem U.S.A., a 285,000 s/f retail development located at the intersection of 125th Street and Frederick Douglass Boulevard. This Grid Properties Inc. development drew in such retailers as Old Navy, Nine West, HMV Records and the Magic Johnson Theaters. It also attracted even more retailers, such as H & M and Starbucks, to that part of 125th Street.

Now, with the development of two large-scale retail projects, major retailers will be coming to East Harlem for the first time, connecting the west to the east. East River Plaza, a 500,000 s/f retail project on multi-Levels, is set to begin construction this spring. The development, which is being carried out by Blumenfeld in conjunction with Forest City Ratner, is located between 116th and 119th Streets between Pleasant Avenue and FDR Drive. The project has already signed on Home Depot and Costco as retail tenants. Katz said the project has already attracted a plethora of other tenants, mostly big box style retailers. "It's really in our hands," he said. "There's been a ton of interest. It's a timing issue when we want to sign the other tenants. Our main anchors are there and we know everyone else will follow."

Another major retail development is the planned Harlem Park, which will feature a Marriott Courtyard Hotel, a 167,000 s/f Class A office building and 62,000 s/f of retail space. The Majic Development Group is working on this project and it has been reported that Vornado is interested interest in working on the retail.

General Motors Corporation has recently opened an Auto Mall in Harlem--the first new car dealership in the community in over 40 years and Harlem's first bowling alley in 30 years, the Harlem Bowling Center, just opened.

There's also been a a rash or new restaurants and upscale coffee shops. Dinosaur Bar-B-Que, a steakhouse, recently opened up on the corner of 126th Street and Twelfth Avenue. Ginger, a Japanese restaurant, opened on First Avenue last fall.

According to Shimon Shkury, partner in Massey Knakal's North Manhattan/Bronx office, "Residential developments are driving this retail market which is going to get even hotter in the next 12-18 months."

Consolo agrees. "The new residential development in both east and west Harlem, the high-end luxury condos, bring new untapped spending power that's never before been seen in Harlem. That means new residents and more families that have not been seen in Harlem before."

The 125th Street corridor, one of the busiest retail areas in Harlem, will see more of this high-end residential, but it also is extending well beyond this well-known street. According to Massey Knakal Harlem specialist, Andrew Salomon, the brownstones on Strivers Row between 137th and 139th Streets--where two townhouses recently traded for over $2 million each--is just one of the booming residential areas bringing more spending power to Harlem.

"When people are paying those kinds of numbers, it won't take long for retailers to take notice that they're dealing with an affluent community with affluent community needs," he said.

People often have the misconception that Harlem is only 125th Street. But with high-end residential going up all over Harlem and the new projects in East Harlem, new retailers should be springing up all over.

"Retailers are looking all over Harlem," Consolo said, "from Frederick Douglass to Third Avenue to 118th Street right up to 149th Street. There are no boundaries any more."

Retail prices are skyrocketing with all of this new interest. Shkury said that even the smaller, 'Mom and Pop' stores along Third Avenue and Frederick Douglass Boulevard are paying between $60 and $70 per s/f for the same space that cost them only $35 per s/f a few years ago.

National retailers can expect to pay around $100 per s/f, maybe even more along 125th Street. Starbucks, which signed its lease five years ago, is currently paying $125 per s/f, and Shkury believes that if they were signing that lease today that space would probably cost closer to $175 per s/f.

"There's no ceiling to where retail rents can go in Harlem," said Consolo. "I think they'll be catching up with Midtown."