Retail growth will be slow but sure.

Competition for prime retail space, especially in Manhattan, is still extremely tight. For every square foot of space, a couple of dozen retailers are ripping each other's hair out. This means that brokers stand to do great business over the next few months - if only they can avoid getting socked by a stray fist!

The tightness of space just forces brokers to be more creative in their deal-making. Anyone who wants badly enough to get in, is going to get in.

The luxury market and the power of the luxury labels will remain supreme. People not only want nice things; they also want to buy them at exclusive stores. This desire has made retail space on Madison and Fifth Avenues, and on 57th Street, more valuable than ever. The vacancy rate there is nearly zero, and this has driven up rents by about 20 percent in these areas.

Stores with brand-name attraction aren't confined to those neighborhoods, though. The Disney Store is doing just fine on Times Square and elsewhere; so are other mid-priced but youth-oriented chains such as The Gap, Swatch, Levis and many others.

"Big Box" stores are going to continue the move into all five boroughs, and the overall effect will probably be more beneficial than otherwise. They'll drive down prices a little bit, but they'll create excitement, which will drive volume up for their competitors as well.

I had thought at one time that the battle of the superstores would take place primarily in Manhattan, but it's looking now as though these retailers will spread themselves out more, making more of a play in the outer boroughs, which means that we'll see fewer actual showdowns than we might have anticipated. If these companies are smart, and pick their spots, they'll probably find that there's room enough for everyone.

On the whole, the retailing picture looks as good for the outer-boroughs as it does for Manhattan. Queens and Staten Island, especially, seem to be benefiting from the flush economic times on Long Island and in New Jersey. These accessible boroughs will attract shoppers from all over the tristate area.

As for other social and economic conditions that will affect retailing, it's a mixed bag, but the news is mainly positive.

The stock market isn't leaping upwards at the moment, simply because it's already as high as it needs to be. It's reflecting a steady economy, low inflation and steady growth. Interest rates have been locked in a narrow range, and baby boomers are saving a little more than their parents did.

The battle in Albany over rent controls has been a huge worry for thousands of New Yorkers for the past several months, and there's no question that retail sales have suffered as a result. Now, it's going to take us a couple more months to calm down and assess the situation. This brouhaha did contribute to the first construction of new residential space that we've seen in Manhattan for years, and that can only be good news for retailers.

Although retail sales were quiet in May, disposable income and low unemployment should lead to a solid retail environment over the next several months, with middle- to higher-priced items continuing strong. If I had to predict, I'd say that sales will be a bit laggardly through the summer, and will very slowly pick up steam in the fall, leading up to a somewhat stronger Christmas than last year. It'll take that long for people to convince themselves that the good times aren't just a mirage, and that they might as well have some fun.

I'd be surprised if the Mayoral elections had much of an effect on business. While it probably won't be a Republican landslide we've got too many "Yellow dog" Democrats to allow to happen - I don't see how Mayor Giuliani can avoid being re-elected. And if the current administration stays in place, the retailing community has a lot to look forward to. We have 39 Business Improvements Districts in New York now, and another 20 on the boards, not to mention great chemistry between the public and private sectors - all fostered by the current administration.

New York City is the Capital of the World, and every retailer wants to be here!

(Garrick-Aug's Faith Hope Consolo can now be seen on the Internet, including the popular retail column, The Faith Report, and listings with color photographs of storefronts and recent news articles on the retail market. Her home page is: http://www.faith-consolo.com. Her e-mail address is [e-mail])