Retailers, investors bank on 34th Street.

There may be less consumer banking in the 34th Street District these days, but that's where retailers and investors are putting their money.

In just the past two years, no fewer than four banks have closed branches in the district, and retailers have quickly moved into those top locations. CVS has taken over the M&T Bank space at 320 Fifth Avenue; what was Chase Bank at 40 West 34th is now Labels for Less; the Bread Market & Cafe snapped up The Bank of Central Asia's space at 180 Madison Avenue; and the district now has its sixth Starbucks in the former Citibank location at 330 Fifth Avenue.

"Banks have traditionally taken excellent locations, with lots of visibility from the street," said Benjamin Fox, executive vice president at New Spectrum Realty Services, Inc. He points out, too, that the conversion of these locations from banks - typically closed after 3 p.m. and on weekends - to stores is a great boon to the district.

"Retailers will keep later hours and stay open seven days a week, making the area much livelier," Fox said.

They already are - and it already is. Among the other hot newcomers to the district are Zara, Sweets from Heaven, and Skechers. Old Navy's dramatic flagship store, which opened last summer, is reportedly doing land-office business. Foot Locker, with two stores already in the district, has brought not only its flagship store but also its corporate offices to what Director of Operations Lew Kimble calls "one of the best retail streets in the world." The flagship offers shoppers "a dramatic, high-energy entertainment and sports experience," Kimble said, adding that "from opening day, people were lined up outside."

"There's a well-established magnet effect in retailing," noted Lisa Rosenthal, associate director of Retail Services for the 34th Street Partnership. "When you have strong local retailers and major nationals, you can attract more, even better retailing. Clearly, the district is way past the pioneer 'homesteading' stage now - this is prime retailing territory."

34th Street's retail energy isn't confined to the newer arrivals. Having purchased Manhattan Mall two years ago, Argent Ventures has recently primed that investment for major growth by turning management of the mall over to Urban Retail Properties, renowned for its successes with such upscale malls as Water Tower Place in Chicago, Boston's Copley Place, and Century City Shopping Center and Marketplace in Los Angeles.

In its Seventh Avenue building, Macy's continues its ongoing transformation with the opening last summer of MacySport, a 17,000 square-foot high-tech environment, merchandised with authentic athletic apparel. And Restaurant Associates has leased space in Macy's Cellar for two of their most successful concepts: Cucina & Co., which will sell salads, sandwiches, and prepared and made-to-order foods for take-out and delivery; and Naples 34, a 100-seat restaurant offering authentic Neopolitan cuisine. The target opening date is April 2000.

There's more good news for the hungry in the district. Restaurant Associates is also planning a summer 2000 opening for Nick & Stef's. One of the organization's California concepts, this contemporary steakhouse will be located in the former Charlie O's space at 4 Penn Plaza - convenient for Garden-goers. For those who can't wait, Holiday Inn Broadway is about to open a new restaurant just opposite Greeley Square.

"This district attracts an incredible diversity of market segments because of all the choices it offers for shopping, dining and entertainment," said Dan Pisark, vice president of Retail Services for the 34th Street Partnership. "When you have this high a density of foot traffic at all hours of the day and on weekends, it translates into astronomic sales volume.' That's what keeps bringing smart retailers into the area."

Hotels, too, are capitalizing on that magnetism. Holiday Inn Broadway is attracting executives to its new conference center, which features 15,000 square feet of state-of-the-art flexible meeting space, including an executive board room, several breakout rooms, and a ballroom which also hosts social functions.

Renovations are also well underway at the Vornado-owned Hotel Pennsylvania, where approximately 600 guestrooms are almost completed, and in the works is a new exercise facility on the 19th floor. "With these enhancements and our exceptional Seventh Avenue location," said General Manager Linda Jalbert, "the hotel is ideally suited to cost-conscious corporate business travelers."

Barry Mann, general manager of the New Yorker Hotel, now a Ramada Inn & Plaza, is equally bullish on the neighborhood. "The West Side, especially the 34th Street corridor, is in the midst of a tremendous economic resurgence," he said. Full renovations to the hotel's 1,000 guestrooms and suites are just about completed, he added, and construction will soon begin on The Trust, a combination supper club/night club/entertainment venue, to be located in 16,000 square feet of space on three levels in a former Manufacturers Hanover Trust branch. It is scheduled to open later this year, in time, Mann joked, "for the real millennium."

"If you ever needed proof that strong, exciting retailing is the catalyst for revitalization, just look at the 34th Street District," said Robin Abrams, executive vice president with Lansco Corporation. "Five years ago, when the 34th Street renaissance was more dream than reality, commercial vacancy rates were running between 13 and 19 percent. Last year they were down around 4.5 percent. Major companies know a good location when they see one."

That message has not been lost on major institutional investors - among them Emmes & Company, Max Capital, RFR Holding Corp., SL Green, Argent Ventures and Vornado Realty Trust - who have snapped up properties in the district in the past three years. Commented Mark Teitelbaum, principal of Argent Ventures, "Manhattan Mall, which we acquired a few years ago, has been an excellent investment. We believe the property will have unlimited potential as it, and the neighborhood, continue to rebound. The Penn Plaza area is constantly improving," he continued, "and we feel it's an exciting place to invest in."

William G. Cohen, executive vice president of Newmark, agreed. "The neighborhood was overlooked for a long time," he said, "but it's a transportation mecca. When you combine that with the successful efforts of the 34th Street Partnership and the vision of investors like Vornado, you get a real renaissance." He pointed out that, according to Newmark's research, commercial office space in the district - 2.6 million square feet in Class A buildings and 1.7 million in Class B buildings - is filling up fast. In just the past year, computer and telecommunications companies, law practices, finance and insurance firms, and state and city departments, among others, have signed new leases.

Now revitalization is moving westward, as evidenced by J.D. Carlisle's major new retail and residential project now in construction on the site of a former parking lot on 34th Street between 8th and 9th avenues. Said David LaPierre, associate director of Insignia/ESG, who is marketing the project, "We already have a signed lease for a 14-screen Loews multiplex with stadium seating, and we're talking to a national restaurant chain that is considering taking as much as 20,000 square feet of space."

Like many who have watched the district's progress in recent years, LaPierre is convinced that there's a very strong market west of Penn Station.

Daniel A. Biederman, president of the 34th Street Partnership, certainly won't argue with that. "When Kmart moved into the district, some people thought they were too far west," he said, "but look how successful they've been. The retail, office and residential growth, plus the potential for the conversion of the railyards and the eventual creation of a new Penn Station in the old Farley Post Office - all of this is continuing to pull people west."

Biederman is confident that "what is now considered the western edge of the district will become more central, as 34th Street's revitalization keeps picking up more momentum."