Harlem now seen as island's final frontier.

When developers were devising plans for the Harlem USA retail complex, they were confident that an HMV Record Store would fare well on 125th Street but were less certain about the prospects for a New York Sports Club.

So when the club pre-sold more memberships to its Harlem facility than to any other in the city, developers were pleasantly surprised.

It gives you an idea of the pent-up demand there is in the neighborhood," said Drew Greenwald, president of Grid Properties a co-developer of Harlem USA. "125th Street is not an unsafe place to be. It's only unsafe if no one goes there."

Greenwald was among the speakers at an Association of Real Estate Women luncheon called the "Rebirth of Harlem" that was held Oct. 11 at the Grand Hyatt Hotel. Jeff Levine, president of Levine Builders, was another speaker and Diane Phillpotts, president of Harlem Community Development Corp. was the moderator.

Harlem development dates back to 1658 when Dutch farmers incorporated the village of Nieuw Haarlem. The area attracted wealthy gentlemen farmers and merchants who built country mansions. When the real estate boom, anticipated by the 1901 opening of the IRT subway on Lenox Avenue, failed to materialize, a black realtor took over management of the apartment buildings and began renting to black tenants.

The 1920s were Harlem's "glory days" when artists, writers and performers came to Harlem, but prosperity faltered during the Depression of the 1930s. After the riots of the 1970s, which were devastating to Harlem, the neighborhood became known more for its high crime rate and abandoned properties than for its economic development potential.

It wasn't until the mid- 1990s that developers, with assistance and prodding from the city and state, began actively seeking opportunities in the neighborhood. With renewed interest, many are pursuing Harlem as the city's next economic development frontier.

Levine Builders is presently building a $16 million development on Lenox Avenue from 116th to 117th that will provide 10,000 square feet of stores and 241 moderately priced co-op apartments. The project was complex and required a broad mix of public and private funding, but it proved that Harlem is ripe for residential development, Levine said.

Levine received 4,000 applications for the apartments, which will be purchased with a 5 percent down payment, or about $5,000, and a monthly mortgage payment of less than $1,200, he said.

"We created two bedroom units of 850 square feet. There is a misnomer that affordable housing has to be inferior in quality," he said.

Greenwald pointed to several demographic statistics that are helping to fuel Harlem's business prospects. For instance, Harlem's population is about 500,000, which would make it the 44th largest in the country. The neighborhood's median income is $49,000, and has doubled each decade since 1970.

Harlem's income density per square mile is $868 million compared with $400 million for New York City as a whole. The spending power of Harlem residents is $5 billion per year, Greenwald said.

"This has occurred because there has been economic gentrification, not racial gentrification," Greenwald said. "It's a place where people want to be rather than are forced to be."

Phillpotts said the goal of the Harlem Community Development Corp. is to encourage private development of state-owned property. A redevelopment project, aimed at turning tenement buildings into 50 condominiums priced between $100,000 and $150,000, was recently completed.

The group's next project is the Mount Morris Park condominiums, a project that will convert nine brownstones into 36 market-rate condominiums.

Phillpotts said the city is also working on redevelopment plans for city-owned property.

"The city is very active in getting properties back on the tax rolls," she said. "HPD (the city's Department of Housing Preservation and Development and EDC (the city's Economic Development Corp.) have sites if you're interested."

Greenwald said he is optimistic that more developers will look beyond the negative image the neighborhood once had and pursue development opportunities.

"If we're back two years from now we hope to have good stories about 135th Street and 145th Street," he said.