SoHo retail still soaring despite bump in overall economy.

In the face of a wavering economy and shaky office market, the retail sector in Soho is holding its own and displaying the strongest leasing numbers and most stable rents of any retail submarket in Manhattan. The strong retail scene is a manifestation of the dramatic transformation the neighborhood is experiencing, its third in 30 years. Presently, asking rents range from $200 per sq. ft. to $300 per sq. ft. for prime retail space. They can soar up to as much as $400 per sq. ft. for smaller prime spaces. That compares to just $100 per SF just two to three years ago.

Soho's incarnation as an art and gallery center took over from the warehouse, storage and manufacturing uses of the 1960s and 1970s. More recently, ground floor art galleries have given way entirely to some of the world's most established brands. In the past six months, Soho landlords have continued to sign one blockbuster deal after another. These deep-pocketed, international brands are snapping up space in prime locations, and are behind much of the current strength in the Soho market. Their competition for space is giving landlords new leverage and forcing up rents.

The result is a three tiered market. First is the Broadway corridor, which attracts national and international mainstream retailers. These include Zales, Fossil, H&M, Banana Republic and Club Monaco.

The second tier is the fashion side streets -- namely Wooster, Greene and Mercer -- which attract tenants such as Helmut Lang, Louis Vuitton, Stephane Kelian and Joseph. More international fashion and design companies are using their Soho locations to launch new lines and to experiment with new merchandising concepts. Soho is the perfect environment for these companies to implement a younger line, or take a more trendy and edgy approach. In addition, the larger, loft-like spaces in Soho give retailers an opportunity to create dramatic stores that can serve as international flagship locations. To further take advantage of this unique architecture, many retailers also use their Soho stores as showrooms.

The third tier is Soho's southern edge, between Spring and Canal Streets. This area has become a design and furniture destination, with tenants such as Kartel, Boffi, Troy, Dakota Jackson and USM. These tenants are coalescing into a Soho contemporary design district.

In a relevant transaction, innovative Swiss furniture giant USM acquired the $6.75 million "Queen of Greene Street," 28-30 Greene Street, for its US headquarters.

USM has been an innovator in design since its inception, developing broad product lines for both the residential and contracts markets. The Queen of Greene Street is a 35,000 sq. ft. building and a classic example of late-19th century cast iron architecture. USM always admired the building and liked it so much they stopped looking at other space as soon as it became available.

In an environmentally conscientious gut renovation, USM plans to restore the stunning structure's faded elegance, and construct a glass and steel penthouse to house executives visiting from Switzerland, private events and showroom space.

While there is no question that retail is strong in Soho, not every retailer is right for the market. For example, despite a prime location at the corner of Prince and Greene Streets, Restoration Hardware was not the right concept for Soho. The space, however, was snapped up by Apple computer before Restoration Hardware had even vacated the premises.

The Soho retail submarket is among the strongest and most stable in Manhattan. Look for still more of the world's best brands in retail, design and other sectors to establish themselves in Manhattan's cast iron district over the next two years.