Soho office market for small users blossoms.

The Soho office market for small space users is maturing into a place that companies want to be, said Stephan F. Anfang, who is managing partner of a major Soho office building.

The Soho era of artist lofts mixed with galleries and crafts stores is progressing to a mixture of museum spaces, specialty food stores, furniture shops and business entrepreneurs.

Soho is generally thought of as an area South of Houston Street, ergo its name with Broadway on the East; Sixth Avenue on the West; and Canal Street at the bottom. As prices in the East Village and Greenwich Village began to creep up in the late 1960s, artists flocked to deserted manufacturing floors to set up live-in loft galleries. Within a few years, artist's representatives had opened ground floor retail galleries and the gentrification of Soho began with a bevy of bars, restaurants and clothing stores right behind. While there were some small office users the general trend was gallery, gallery, gallery.

Two years ago, Scholastic Inc. consolidated its offices from the upper reaches of Broadway's Noho section, down to 555 Broadway between Prince and Spring Streets, taking 211,000 square feet. They are now looking for additional Soho space, said Dick Robinson, Scholastic's president, and are in negotiations with a couple of Soho buildings. Brokers said the company is looking for another 35,000 square feet.

"It's the environment for our staff that we like the most," he said.

That environment, a lively mix of cutting edge creatives working in an atmosphere of distinguished cast iron architecture and unique shops, is also drawing more establishment types such as attorneys, who benefit from lower rents and accessibility to the courthouses.

Jay Caseley, the Soho office leasing agent for Newmark & Co. Real Estate Inc., said, "The difficult times for Soho are over." All of the Newmark buildings at 560 Broadway, 594 Broadway and 379 Broadway are full and Caseley is looking for other building to hustle.

Not only does he have his share of attorneys clamoring for offices, he admitted there is one broker begging him for a corner space for a Rockefeller Center tenant, "which is quite a surprise."

Steven Tarter, a partner in the area brokerage Tarter Stats, said the Soho market has never been as tight as it is now. "In buildings that we used to show ten to fifteen spaces, it's one or two," he said. "Prices are basically where they were about eight years ago, but in many ways better."

In the last year or two, Tarter noted that second generation gallery loft spaces have come onto the market and are appealing to office users. "They used to be raw spaces or clean vanilla boxes but are now renting at the same price as six to eight years ago," he added.

Anfang believes the market has finally matured into a desired location for office users. "The people who know it are the people who want to go to Soho," he said. "It's a preferred area and a lot of the brokers are telling people they want to be there."

Allan Cleary, associate director of Julien J. Studley, who represents the Ise Group that owns 555 Broadway, said the biggest deal in Soho was, and will remain, Scholastic. "There is no other building that big," he explained.

But Cleary agrees that Soho provides an interesting backdrop for corporate people. "It's not a glass box canyon," he remarked. "A lot of people who are afraid of going there, are afraid of falling off the edge of the earth at 14th Street. But once they commit, they find a great home. The bottom line is better, the lifestyle is better, their people are happier."

Discussing a transaction that is still being finalized, Bruce E. Surry, managing director of the Downtown office of Edward S. Gordon Company, said the new computer services tenant is taking 13,000 square feet on the corner of Prince Street and Broadway. "They literally could be anywhere and wanted to be in an eclectic environment," he explained.

Because most Soho buildings are held by owners who are off-premises, the level of tenant attention also varies from building to building. "There's still a little bit of disparity about the way buildings are run," observed Caseley. "You can't be absentee."

A few years ago, when Anfang wasn't getting much tenant interest in the Soho Building at 100 Greene Street, he moved in his own offices and began a personal marketing campaign. That included calling on the city's film liaison office to promote its practicality for independent film makers, and luring a series of alternative music companies, Generation X start up magazines and even clothes designers to the 13-story mecca.

Bucking the trend in other Soho buildings that have relied heavily on numerous galleries for high floor users, Anfang also kept the number of galleries in the building down to one or two at any point in time.

"We were all in the doldrums for several years," noted Caseley. "It will never be the 80s, but it's viable market and is more harmonious as an office and design place. The galleries are being replaced."

Anfang said prime Soho office space is getting $15 to $20 a square foot, with some owners on the periphery coming in at $13 a square foot. "It's the hottest area in New York," he said. "For prime Soho buildings, the thirteen dollar days are over."

Cleary said asking rents for the larger 10,000 square-foot floors in Soho, where the owner 'will polish and sand the floor and put in new bathrooms and new windows," are $11 to #12, as is. If the tenant is financially qualified, Cleary added, the owner could contribute more installation and therefore receive more, up to $16 to $18 a square foot.

Gross rents range from $10 to $15 a square foot, added Surry, and could go higher depending on whether it's a gross deal or not.

But there is a limited attractiveness for large tenants, said Surry, "because you don't have large floorplates that tenants like Scholastic require."

Tarter noted, "Five years ago rents were pushing $18. It dropped down slowly because initially, Soho got the benefit of the cheap space because it was sexy to be in Soho when it was $36 uptown."

Anfang finds that 85 percent of his small office users come to him directly. "Now I'm finding more uptown brokers calling me."

To keep his lobby and building "fresh" Anfang is also employing the services of local artists. A sidewalk are project, created by Francoise Schein, led to the building receiving a New York City Arts Commission Award. A five-panel mural for the outside was commissioned from Joel Longenecker while a 16 x 9 foot lobby mural by Lima, Peru native Rico Fonseca was unveiled last month.

Fonseca came to Greenwich Village in 1961 and watched as Soho went from a manufacturing district to the center of the art world. His mural depicts the history of Soho from the 1970s to the present, along with its galleries, shops and people. This is a history that undoubtedly will be updated, because the future holds great promises for Soho.