Hot 34th St. retailing puts premium on prime properties.

Any retailer who's thinking about setting up shop on 34th Street had better think fast. Not too long ago, when the district had a reputation as a retailing backwater, even prime space went begging. Today, thanks to the explosive retailing growth that has accompanied major revitalization efforts, that same space is at a premium, and brokers are scrambling to meet retailers' demands.

"It took me and my associate, Sylvia Haddad, the better part of two years to find the right space for the Children's Place," said Robin Abrams, executive managing director of The Lansco Corporation, of the national retailer of children's apparel that opened just west of the Empire State Building last November. "There's no question that 34th Street is now one of Manhattan's top places for retailers to position themselves."

Richard Cohan, Leasing Director of Manhattan for Staubach Retail Services, strongly agrees. "It's certainly the place to be for many nationals: dozens of them have laid claim to 34th Street locations since 1993," he said, pointing out that in just the last year alone, Banana Republic, Watch Station, Aldo, Starbucks, and eatZi's have joined previous arrivals such as Toys 'R Us, The Sports Authority, HMV, The Disney Store, Kmart and the Athlete's Foot. Opening dates in 1999 have been announced for Old Navy and a mega Foot Locker. And 34th Street has shown that it can support an extraordinary diversity, from Payless Shoe-Source, to the Gap's highest sales volume store, to the upscale Tourneau, which has had decades of strong sales.

What's going on here? For one thing, success always follows success, especially with the kind of publicity 34th Street has enjoyed as one of the fastest growing retail destinations in the country. And word of Macy's $150 million-plus investment in its flagship Herald square store has boosted investor confidence in the district even higher.

Partly, too, the influx of top retailers has been spurred by the efforts of the Retail Improvement Department of the 34th Street Partnership, which manages programs to revitalize the district. As Dan Pisark, director of Retail Improvement, explained "We've been engaged in an aggressive, proactive retail recruitment program, teaming up with leading brokers and property owners in the district to attract strong, successful retailers. It's really been paying off: prime space is filling up."

Those spaces are being snapped up by such retailers as Foot Locker Worldwide, which is transforming the old Woolworth's at 120 West 34th Street. Commenting on the company's major investment in the district, President and CEO Matt Serra said "Foot Locker regards 34th Street as one of the most exciting and highly recognizable areas of Manhattan. We are thrilled to open a state-of-the-art Foot Locker store this spring that invites customers to enjoy the energy and drama of sports through an exciting high-tech entertainment experience." Not only will the company be opening a new store, but Serra added "Foot Locker Worldwide is planning to move its corporate headquarters to this exciting area."

Given the continuing enthusiasm of retailers like Serra, the district shows no sign of having reached full maturity yet, which means that today's second-class space is tomorrow's hot property. One of the more intriguing and encouraging developments is new retail activity west of 7th Avenue. Construction is slated to begin in April 1999 on a new site between 8th and 9th avenues, developed by Jules Demchick.

According to David LaPierre, associate director of Insignia/ESG, who is marketing the project, the 35-story building will feature 330 residential units, a 14-screen movie theater, nearly 90,000 square feet of retail space with exceptionally high ceilings, and a below-grade parking garage. "We're speaking with multi-level big-box users," La Pierre said, "and we are confident that the project will be fully leased when it opens in the spring of 2000."

His confidence may owe something to the experience of others who found opportunity by looking westward. A couple of years ago, Joseph Gardner redeveloped the old Sloane House YMCA on 9th Avenue and 34th Street, as a residential and retail property. B&H Photo, an internationally-renowned photographic supplier and destination retailer, opened here in 1997. Business exploded, and in 1998, B&H took over all the remaining retail space in the building.

"Between the new and up-coming residential development, the Penn Plaza buildings, in which,office space is now in high demand, and Madison square Garden and Penn Station, the district certainly doesn't lack for shoppers," said Daniel A. Biederman, president of the 34th Street Partnership. "And excellent retail opportunities remain in two crucial areas: entertainment and restaurants," he added, noting that the former will get a big boost from the Demchick development.

The need for more restaurants in the district is attested to by the immediate success of eatZi's first New York City unit, in Macy's Cellar. Since it opened in October 1998, the 18,000 square-foot space has been packed, and eatZi's has also been in high demand for its catering services, especially for offices in the Penn Plaza area.

As a measure of the opportunity investors recognize in the 34th Street district, consider the example of the Holiday Inn Broadway (once better known as the infamous Hotel Martinique). Thurcon Properties has undertaken a total renovation of this landmarked building, which opened with 532 guest rooms in the first week of September 1998. Ten meeting rooms and a large ballroom will open early in 1999. According to Thurcon's Brad Thurman, much of the hotel's 50,000 square feet of prime retail space, which fronts on Broadway between 32nd and 33rd streets, has already been leased.

One investor who is credited with exceptional vision and foresight is the late Nikos Kefalidis, president of KLM Construction, who is responsible for bringing Old Navy to 34th Street, in what will be the first ground-up new construction on the street since One Penn Plaza opened in 1973. When the 78,000 square-foot Old Navy opens in August 1999, it will complete the "Gap family" in the district, making 34th Street "the premiere shopping street in New York," according to Robert Futterman, president and founder of Robert K. Futterman and Associates, LLC.

Benjamin Fox, executive vice president of New Spectrum Realty Services, noted that "there's been a ground-swell of other developments whose realization is imminent," including the Penn Station/Amtrak redevelopment. Fox and others in the real estate and retailing communities have been watching especially closely as Vornado has wrapped up a series of major acquisitions, including One and Two Penn Plaza, the Hotel Pennsylvania and other sites in the district.

Dan Biederman sees such developments as proof that the district has arrived. "When you have a powerhouse like Vornado, which is known for great vision, making very significant investments in the street, it tells you this is a smart place to be."