Side street retail is big business.

In the past, retail real estate on the side streets of the commercial districts in both Midtown South and the Fashion Center primarily consisted of second-rate storefronts leased by wholesalers who lent an afterthought to retail operation.

With the infusion of residential buildings in these new residential neighborhoods, we are witnessing dramatic changes. Recently, the side streets in these commercial districts have ceased to be "9 to 5" communities. This trend is particularly apparent in the Flatiron District in areas other than the 23rd Street, which is a bustling two way thoroughfare.

Consider the retail space located at 30 West 24th St., which Thai 212, Inc., an upscale restaurant, recently leased. It is approximately 3,700 square feet.

Adams & Co. represented the landlord of the building. The previous occupant of the store was a printing company and the use of the premises could best be described as light manufacturing, stock & distribution with an insignificant portion of the space dedicated to retail purposes. 24th Street has historically been strictly a commercial district, but the neighborhoods recent residential additions have made it an "around-the-clock" spot.

Last year, our firm helped the music artist Jay-Z add 5,000 s/f to his 40/40 Club at 6 W. 25th St. to nearly double its original size. Adams & Co. also assisted New York Kitchen and Bath, a retailer of kitchen and bathroom cabinets and fixtures secure a retail showroom at 8 W.25th St. These side street retail stores that were once unimportant have taken on a new prominence. Brand-name tenants occupy spaces once only considered by smaller less-known tenants. As the new stores have arrived on the side streets, existing occupants as well as building owners have taken notice. Because of their new 24-hour status, these locations are now better suited to attract the "new" destination retailer.

When a retailer is operating in an around-the-clock market, the market rules are different.

Because retailers are open for longer hours and are generating significantly more revenue, they can afford to pay higher rents--as opposed to those who close shop at 5 p.m. after an eight-hour business day.

In almost all instances, the capital improvements to these retail establishments are provided by the incoming occupant.

The results are newer, more fashionable and more valued neighborhoods. The Flatiron District retail market and the Fashion Center retail market, once thought of as undesirable, are in the process of change.

Despite the higher rents, choosing to set up shop in both the Flatiron District or the Fashion Center is still a relative bargain when compared with Midtown.

A newly renovated ground floor space on a Flatiron side street costs a retailer about $70/sf, while the same space on a Midtown avenue will cost a significant multiple of that rate, depending on the specific location.