Retailers last-minute gold rush.

New Yorkers created a last-minute gold rush that helped boost holiday retail sales, according to some industry experts.

According to Faith Hope Consolo, chairman of retail sales and leasing at Prudential Douglas Elliman, the transit strike that forced many New Yorkers to walk to work the week prior to Christmas may even have helped hike up the numbers.

"It's Christmas," said Consolo. "If they had to walk, ride their bike or go on their skateboard, people were shopping.

"I looked out the window and there were so many people. We had more feet on the street and more feet means more money, which means more sales."

Jonathan Krivin, senior managing director at Garrick Aug Worldwide, said the strike was not the big setback that everyone thought it was going to be. "Fortunately, it was only two days. It was negative, but not fatal," he said.

The International Council of Shopping Centers reported a 2.8 per cent jump in sales for the Christmas week from last year, with December 23 showing the strongest numbers.

The strike did contribute to a hike in online sales, according to ComScore Networks, a global market research provider of e-commerce data. The share of total U.S. online spending generated by the immediate New York area during the strike jumped 28%, from 3.4% to 4.4%, according to its figures.

And, Mayor Michael Bloomberg said the strike that disrupted the city for three days the week prior to Christmas cost businesses throughout the five boroughs $1 billion.

"Retail, especially in Lower Manhattan, [was] hit the hardest," said the mayor. "Hundreds of stores [weren't] able to open and some that did had practically no business. Along one stretch of 8th Avenue, 40% of the stores weren't open."

Bloomberg reported that crowds were down 50% on Fifth Avenue, according to some reports, and at Brooklyn's Fulton Mall several stores reported a 90% dip in sales. At Fordham Road, one of Bronx's premier retail hubs, a 60% drop in sales was reported.

Although the official retail sales numbers have yet to be compiled, New York's retail brokerage experts have mixed opinions about what they'll hold.

Consolo predicts that the numbers will be up 7-8%. However, Corey Zelnick, president of Winnick Realty, said, "Shy of luxury and electronics, I think everyone else is going to come up a little short this year."

Gift cards are expected to have a major impact on the final sales numbers this year. Many retailers relied on people to redeem gift cards during the final week of December in order to boost holiday sales. Stores only record gift card sales when they are redeemed, not at the time of purchase.

"People who got them as gifts are eager to use them the next day," Krivine said. He warned that customers redeeming gift cards so soon after Christmas might have more of a negative than positive effect on businesses.

"Store cards have really made life complicated for retailers because the gratification is deferred and the final gratification isn't as great. When those things are cashed in [so soon after the holidays because of the] dramatic discounts, the effect is going to equalize the gross revenues this year to last year. However, the margins for the retailers are going to suffer. The actual cost to the consumer is going to be down dramatically because of sales."

As predicated, luxury retailers are tipped as the seasons big winners this season with discount stores also expected to do well.

Mid-level department stores, however, are expected to see a dip in sales. Explained Alan Bonett, senior managing director at Adams & Co, "People who want the fast gifts are going to buy the inexpensive gifts at discount stores. Luxury people want the names. Middle brands are not doing as well because there are more decisions to be made."

And the department stores ploy of deeply discounting good post-Christmas could deal them a further blow.

"On the surface, they appear to be drawing in a lot of people," said Krivine. "But they are victims of this gift card phenomenon. On a gross level they'll be okay, but their bottom line is going to suffer because so many people are taking advantage of post-holiday pricing."

How well the department stores fare this holiday season could have an effect on which stores are around in 2006.

According to Karen Bellantoni, senior managing director at Robert K. Futterman, "The department store business is still in flux. They all have a future that they're already starting to look at."

Zelnick believes that many of the stores owned by Federated Department Stores Inc.--which owns Macy's and Bloomingdales--could be turned into Macy brand stores when the year-end numbers are evaluated.

Big box stores in Manhattan, from Home Depot and Bed Bath and Beyond, to electronics based chains, such as Best Buy and Circuit City, did well this holiday season, possibly paving the way for other chains to move into the city. Manhattan has typically been a challenge for big box chains because of the price of New York City real estate and the difficulty of operating a multilevel store.

"I think a lot of these guys, when they go around the city and see how well those already here have done, will start to find a way [to open stores here,]" Zelnick said.

"[In 2006] big boxes will start to penetrate into the outer areas and eventually work their way into the city."

Regardless of the sales numbers, retailers can expect rents to continue to rise in 2006 and available space to continue to tighten.

"Rents this year were up 15-18% across the board," Consolo said. "By year end, rents will be up 20% and we'll know better in the first quarter how high they are pushing. If this momentum continues, they could rise 25% in the first quarter [of 2006.]"

Bellantoni added, "Rents are just going up based on supply and demand. There are not a lot of great retail spaces out there. We're in a place where a lot of people are looking for space and rents are maintaining very well.