On Into The Millennium

Last year, it was so new; so hard to get used to - the 21st century. A year later, the 20th century seems a long time ago.

Last year, the retail market was flush: the birth of new markets and the re-birth of others continued from the year before. The retail centers of New York just kept getting bigger and better. It was, indeed, the most vibrant and active retail market in the world.

And now, a year later, dark clouds have appeared on the horizon of what was an incredibly rosy future. Of course, the prophets of gloom and doom are out in full force, forecasting all manner of unpleasant things. But, I don't think so, I think that there is a still a lot out there to be glad about - ever the Pollyanna.

The economy has already experienced eight months of moderation, and my feeling is that this trend will continue for a short time, to be followed by an increasing expansion - assuming that the Federal Reserve continues to lower rates.

It is not in the best interest of the new administration to see the economy nosedive. It will make every effort to ensure a smooth recovery and a quick end to the current downturn. This will be done through stimuli, such as tax cuts.

The real estate industry, especially in New York, has been fortunate to remain strong, while a good part of the economy, such as autos, dot coms, and hotel occupancy, for example, turned sharply lower.

New York City, because of its special nature - the Capital of the World - will prevail as a mecca for business: the place to have a location, i.e. a flagship store, here. The market is still vibrant.

The City Comptroller's report suggests a slow growth, and although I'm not an expert in the arcane world of fiscal assumptions, it is my opinion that the
Real Estate Industry will perform better than others, due to a continued will
demand for space by everyone and anyone who is somebody to be here.

Because of the City's increasing dominance as the fashion center of the world: the paradigm and arbiter of taste and style - many companies express an almost fanatical desire to be represented here. I anticipate that even if sales aren't great, retailers still must be here. The magic number, average, anywhere, even in the East River, is $100 per square foot.

In the Financial District, or New Downtown, there may be consolidations, mergers, layoffs. But that may not be that bad after all - more space will become available for others. And after all, because the area is increasingly residential, the shock won't be as great.

Fashion retail is back, better than ever. Last year was a banner year: uptown moved downtown; downtown moved up, and more and more fashion retailers set up shop in New York City.

Fifth Avenue returned to its former glory. It lost Bugs Bunny and gained Louis Vuitton and more Louis Vuitton, plus a brand-new Gucci store. Club Monaco arrived, Cole Hann expanded, and Hugo Boss, Escada, and Hickey Freeman are coming to Fifth. Kenneth Cole has opened his first "concept store" on the Avenue.

Fifty-seventh Street became a street of elegance and chic again. The Street, between Fifth and Madison Avenues is the most expensive stretch of retail space in the world. One finds Van Cleef & Arpels, Tiffany & Co., Bulgari, Louis Vuitton, Tourneau, a new expanded Burberry, Chanel, a bigger Prada, and Christian Dior on Fifty-seventh Street. Jil Sander will be there soon, as well.

The Golden Mile, Madison Avenue, just got longer and longer: Selima Optique moved uptown to Madison Avenue, as did Creed and Anne Fontaine. Michael Kors, Carolina Herrera, Steuben, and Celine opened on Madison. Saint Laurent and Ungaro expanded. Coming soon, Dolce & Gabbana. Vera Wang is opening another store across from herself on the Avenue. More sparkle was added to the Gold with the addition of the jewelers: Graff, Chatila, and Links of London.

The big guns went or are going downtown to Soho: Helmut Lang, Louis Vuitton,
Chanel, Yves Saint Laurent, Cartier, Lancel, Polo Sport, Prada, Vivienne Woodward, Hugo Boss, Kenzo, Bottega Venetta,
to name a few.

Nolita became Soho's successful and charming companion with a little less money, and a younger , more avant-garde air. John Fluevog is opening in Nolita, as have Bill Amberg, Melissou, Rafe Totengco, SCO (SkinCareOptions), Calypso Beaute, and Borealis.

The Flatiron District continues to grow, especially with the beauty sector. Sephora is there, at 119 Fifth Avenue and Estee Lauder leased the entire ground floor of the Flatiron Building itself for Jo Malone, MAC Cosmetics, and Origins. Other beauty businesses in the area are Aveeda, The Body Shop, and Cosmetics Plus. The District is going to give Lipstick Alley (Soho) a run for their money.

The new 34th Street is now one of the most sought-after locations in the city by both national and international retailers. Here are some of the major retailers that have come to 34th Street and others that are expected in the near future: Banana Republic, The Children's Place, Disney Store, Zara, Steve Madden Shoes, The Athlete's Foot, Skechers, Old Navy, HMV, Kmart, Sephora, and Hennes & Mauritz.

Fourteenth Street is finding itself and will probably pattern itself after 34th Street. Union Square will be the place to go and shop, just as it was a long time ago. Diesel and Urban Outfitters will be coming soon to the Square. Hotel W, with a new watering place, Olive's, has just opened. Union Square may even be home to a new department store…

The upper East and West sides, from Third Avenue to Broadway, are evolving from sleepy neighborhoods into exciting ones with new residential construction and an influx of retail - food, fashion, and interior decoration.

Madison Square is undergoing a $10,000,000 reconstruction. The surrounding area, on Fifth and Madison Avenues is attracting new office tenants, restaurants, hotels, and retail. Another neighborhood returning to its former glory and distinction.

In the Garment Center, there is a fresh vitality in a sector that had basked in the stuffy stultification of one industry - forever. Now there are different owners, different developments. It has become home to some of the largest advertising agencies in the world. Other major companies have also taken office space. The names of some of the newcomers are: Bates Worldwide Advertising, Interpublic Group, Hazen & Sawyer, Data Broadcasting, and Metastream. This is the corridor between the New Times Square and the New 34thStreet. There is a necessity for major retail in the area.

What about the Media - it still drives New York. New York is the focus. From the Broadway headquarters of ABC in Times Square, NBC in Rockefeller Center, to Fox News in the Theater District, to CBS on Fifth Avenue, the World is watching.

Another thing, although last Christmas wasn't great, it was still a good one. We can't compare, really, to the previous year, for that was the millennium - one in a
thousand. Also, lots of people shopped Europe this year, because of the strength of the dollar.

Online shopping will continue to grow as retailers learn e-tailing. Because of the market correction, customers are not in such a rush to buy, but will, from merchants who look to differentiate themselves, either in quality or on cost.

Last year, we hit an all-time high, now, as I said before, there's a lull before things start to heat up again. Meanwhile, I hope you agree, there's a lot to be glad about.

Faith Hope Consolo
Chairman, Retail Leasing & Sales Division
Prudential Douglas Elliman
Tel: 212-418-2020 / Fax: 212-418-2005
e-mail: fconsolo@elliman.com