NEW YORK — With the summer season in full swing, retail real estate in tony East Hampton has never been more sought after or expensive, creating a foundation for conflict.

Rents have risen to more than $100 per square foot on the two main shopping drags, Main Street and Newtown Lane, up from $25 a square foot a few years ago, real estate brokers said. Now the vacation spot for many of the rich and famous on Long Island’s East End is in a quandary because national retailers, which many residents oppose, are among the only companies that can afford to open there.

“In the Village of East Hampton, pretty much all of the mom-and-pop retailers are gone, replaced by upscale chains,” said Larry Cantwell, the village administrator. “The general local population is dismayed by the transformation because it’s not their market. They’re not the Gucci market. They might buy Coach, but high-end retail is not where they’re shopping.”

With jewelers on Main Street such as Tiffany & Co., London Jewelers and Mayfair Jewelers as well as Ralph Lauren and Gucci, some residents complain that East Hampton is starting to look like Madison Avenue or Fifth Avenue. On Newtown Lane, Calypso, Gems of the Past, Scoop Men and Scoop Women are among the shops.

Luxury retailers view East Hampton as a place where power, wealth and fashion intersect.

“Space on Main Street and Newtown Lane is leased very quickly when it comes up,” said Alan Victor, executive vice president of the Lansco Corp., a real estate firm specializing in retail. “Some stores can do $800 to $1,000 a square foot. Everybody is interested in what’s happening there.”

So far, East Hampton has managed to stave off most large national mall chains by limiting the size of buildings — although many locals were dismayed when the green-and-white Starbucks logo appeared at 35 Main Street.

Still, not all national chains want to be in East Hampton. “The market, while high-end, is not high-volume,” Cantwell said, pointing out that the village’s year-round population of 2,000 climbs to about 8,000 in the summer. “That economic force alone will prohibit larger retailers from locating here.”

This story first appeared in the June 21, 2006 issue of WWD. Subscribe Today.

Most retail spaces are small, another potential deterrent. “The village put restrictions on the total amount of square footage allowed for new buildings,” Cantwell said. “Unless the Gap wants to open a 2,000- or 3,000-square-foot store, they wouldn’t come here.”

Victor, along with Roger E. Eulau, Lansco senior director, leased 20 Main Street, one of the largest buildings in the village, to BCBG, which plans to open a two-level, 4,400-square-foot store next month.

“The rents are hefty,” said Candice Dobbs of Dobbs Associates, who represented BCBG in the deal, without providing details. Book Hampton, the previous tenant, moved to smaller quarters across Main Street “because the rents became too high,” she said.

BCBG, which has kicked its expansion effort into high gear in anticipation of a possible initial public offering in the future, sought an East Hampton address because “it’s just one of the hottest places to be,” a spokesman said, adding that the store will showcase the designer Max Azria collection, BCBG Max Azria and accessories such as handbags, shoes, sunglasses and watches.

Elie Tahari opened a boutique at 48 Main Street two years ago. The designer deemed the market so enticing that he purchased the building at 1 Main Street in February. The 4,500-square-foot, two-level space is now being prepared for a spring 2007 opening.

“For over two years we have had a great presence in East Hampton,” Tahari said. “A larger store at 1 Main Street is a natural evolution for us. There are always significant costs related to the most desirable locations…it’s a simple fact. Main Street is an upscale destination and a premier showplace for luxury brands. Plus, we can offer all our collections in the new address…women’s, men’s, accessories.”

Roberta Freymann this month opened a boutique at 66 Newtown Lane stocked with graphic pillows, beach totes, sun hats and colorful jewelry. Freymann, who has a shop on East 70th Street, said she simply followed her clients to the beach. “For years, customers have been asking for a Hamptons store,” she said.

As for availability, Victor said, “Older leases are coming due and will turn over, but…if a retailer doesn’t have the ability to open the store very quickly, their level of interest gets skewed to April 2007.”

The village is protective of its small-town ambiance. “We have very strict guidelines here with respect to architecture and signage,” Cantwell said. “The community has done as good a job in preserving its space and the character of the buildings. That tends to make it more desirable. Sometimes you become the victim of your own success, and East Hampton has become that. We might complain about [the stores], but you have to look at it as a mixed blessing. Thousands of communities would kill to have this kind of market.”

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