Byline: Sharon Edelson

NEW YORK — Store construction sites are bustling. Well-heeled, younger customers are crowding the street, and vacancy rates are way down.
Madison Avenue is hopping.
Long associated with exclusive boutiques priced beyond the reach of average shoppers, the avenue’s recent growth has been a neat trick: Its designer cachet is still intact, but an expanding roster of national chains is pulling in a new layer of customers.
As designers such as Calvin Klein and Giorgio Armani snapped up large spaces, vacancy rates began dwindling. They are now less than 5 percent, compared with 15 percent two years ago. Rent for prime retail real estate on Madison Avenue has held steady at $150 to $300 a square foot in the last few years, but brokers said that’s changing. With available space shrinking, most deals are being made at the higher end of the spectrum, they noted.
At the same time, Manhattan’s toniest thoroughfare has developed broader shopping appeal with national retailers like Eddie Bauer and Crate & Barrel. In August, Ann Taylor will join the crowd, relocating its flagship to Madison and 60th Street from 57th Street.
But it’s not only the big chains that are moving in. The real estate flurry, partially spurred by the opening of Barneys New York on 61st Street in September 1993, has brought some small players to Madison, as well, such as the Yumi Katsura bridal salon and Patrick Cox, the British shoe designer.
Retailers on Madison believe the street has maintained its mix of large and small stores, while Fifth Avenue and 57th Street are trending toward giants like Warner Bros., Liz Claiborne and Nike, which are dramatically changing the personality of the area.
Retailers and designers who have opened stores on Madison Avenue or expanded existing spaces say they’re serious about building real businesses, not just reputations. And there is business to be had.
Indeed, retailers all along Madison Avenue report that edgy, avant-garde fashion is selling along with traditional styles, and that they’re seeing less price resistance in the last six months.
“You can definitely feel a different pulse all the way up and down the avenue,” said Charles Fagan, managing director of New York stores for Ralph Lauren, which opened its flagship on the northeast corner of 72nd Street in 1986. “There’s a more diverse group. You can find so many different things.”
The activity hasn’t let up. More deals are expected to be made in the near future, but in the past six months alone, the following developments have taken place:
Goldpfeil, the German leather goods firm, recently signed a lease for a 1,400-square-foot store at 777-779 Madison Ave. Goldpfeil was forced to relocate from its 2,000-square-foot store at 711 Fifth Ave. when Disney bought out the lease.
Max Mara unveiled its flagship store on the northeast corner of Madison and 68th Street.
Krizia opened a new, company-owned flagship at 769 Madison yesterday. A franchised Krizia unit farther up Madison Avenue closed last July.
Giorgio Armani signed a lease for a two-level, 12,000-square-foot store on the northwest corner of 65th Street.
Calvin Klein began work on a large boutique on the southwest corner of Madison and 60th Street, the same block as Barneys New York.
Bogner is moving from 59th Street into a building of its own at 821 Madison, between 68th and 69th Streets, and Bally of Switzerland is consolidating its five small stores into one large unit on the southwest corner of 59th Street.
Last week, Crate & Barrel opened, with much hoopla, on the southwest corner of Madison and 59th Street. Also last week, Patrick Cox, the hot British shoe designer, opened a store at 702 Madison, between 62nd and 63rd Streets.
Etro, the Italian accessories manufacturer, is building a store on a lot between 63rd and 64th Streets, on the west side of the street.
Prada announced it will open a flagship on 70th Street, just off Madison Avenue, later this year. The 12,000-square-foot store will have three floors and a basement.
Lacoste has narrowed its search to a handful of sites on Madison, according to president Ari Hoffman.
Stuart Weitzman, the shoe designer, is opening its first company-owned freestanding store at 625 Madison Ave., in the former Gucci space, in August. The 1,700-square-foot store will house Weitzman’s extensive line of footwear, from sneakers to handjeweled evening shoes.
There have been reports that Kenzo signed a lease at 805 Madison Ave. in the former Krizia space.
Filene’s Basement is said to be seriously eyeing a major space in the IBM building at Madison and 57th Street.
Goldpfeil, which is being forced to close its store on Fifth Avenue, sees the change to Madison Avenue as an opportunity to capture more business.
“We are very glad about the move,” said Stephanie Schmidt, vice president of Goldpfeil’s U.S. division. “Disney is doing us a favor, because Madison Avenue has become the upscale shopping mile within the last two years, while Fifth Avenue has changed a lot because of Warner Bros. Our customer is much more likely to be found on Madison Avenue.
“We are happy to have a smaller store,” Schmidt continued. “The one on Fifth had an impersonal feeling. We will definitely do more volume in a smaller store on Madison Avenue because it’s a better address for our customer.”
“We made a big commitment to Madison Avenue,” said Guglielmo Melegari, director of U.S. retail operations for Max Mara. “After the opening of Barneys there has been a lot more foot traffic. Because of the changing environment on Fifth Avenue and 57th Street, with the big chain stores moving in, we felt it was wiser to open our store on Madison Avenue.”
“Madison is the perfect place to attract both tourists and New Yorkers, whereas Fifth really just gets the tourists,” Patrizio Dimarco, president of IPI USA., the operating division of Prada, said last summer when the company announced its plans for a new store. “Besides, the intersection of Fifth Avenue and 57th Street is beginning to look more and more like Los Angeles with the Warner Bros. store.”
Barbara Weiser, executive vice president of Charivari, which opened a store at 1001 Madison Ave., at 78th Street, last year, also believes that some of the interest in Madison Avenue is a response to the changing complexion of other shopping areas.
“To see Tower Records or Warner Bros. Studio Store on 57th Street doesn’t feel like New York anymore,” Weiser said. “It could be any suburban mall.
“Perhaps with the reemergence of elegance [in fashion] it makes sense that an elegant street like Madison Avenue would have a new life to it,” Weiser added. “I notice more stores like Prada coming to Madison Avenue.”
Weiser, whose family operates Charivari boutiques on Broadway and Columbus Avenue, added, “We find that many of our clients from the Upper West Side prefer to shop with us on Madison Avenue. Maybe that’s because the experience of shopping has changed on the West Side. Stores like Filene’s Basement [on Broadway and 79th Street] and Today’s Man [on Broadway and 81st Street] don’t affect my business, but they change the neighborhood. Nobody sets out to discover the wonders of the Upper West Side anymore.”
No longer just the bastion of wealthy tourists and society matrons, Madison Avenue has a youthful energy these days.
Mad. 61, the restaurant inside Barneys, is beating with the pulse of fashionable working women. And Match, the trendy downtown boote, is planning to open an outpost on Madison.
Like other shopping areas in Manhattan, Madison Avenue is no longer a district with a singular identity. While it is peppered with popularly priced chains such as The Limited, Eddie Bauer, Timberland and H2O Plus, and the Ann Taylor flagship currently under construction, neighborhood retailers don’t think the street is in danger of being overrun by chains. Also, realtors pointed out that most of the large spaces are already taken.
“I think it’s just a question of interesting retailers,” Weiser said. “Crate & Barrel is a very exciting business for what it is. Ann Taylor seems to be really turning itself around. I don’t think everything has to be one price point.”
“Crate & Barrel and stores like that are very good for Madison Avenue because they bring another texture to the landscape,” said Gene Pressman, co-chairman and co-chief executive of Barneys New York. “There are a lot of clothing stores on the street. Crate & Barrel will bring a furniture venue. People like to buy a mix of price points anyway.
“Madison Avenue has become the most exciting shopping street in New York and maybe in the country,” Pressman added. “That, plus the advent of what’s happening on 57th Street, which is going a little more commercial, is making Madison much more special.”
“These diverse stores will co-exist because that’s how we shop today,” said Richard Seligman, senior managing director of Edward S. Gordon Co. Inc.
And retailers said the younger shoppers converging on Madison Avenue are definitely buying.
At Max Mara, a $315 short plaid dress with a pinstripe underskirt with the Sportmax label sold out “immediately,” said Lidia Marnier, the store’s mananger. So did a pair of $350 overalls in the same fabric.
“More young people are definitely coming to Madison Avenue,” said Diane Levbarg, executive vice president of Missoni USA Inc. “The things we sell the best are the most ‘typically Missoni’ pieces, even if they’re terribly young and terribly expensive. Price doesn’t seem to be a major problem.
“I’m seeing a more avant-garde customer coming into Missoni, which is wonderful because our collection is much more avant-garde than it used to be,” she continued. “We just sold out of two absolutely incredible pieces.”
One was a $900 bathing suit that can’t be worn in the water because its colorful cotton and nylon fabric is damaged by chlorine, but functions nicely at a pool party. The other is a minidress with fringe, for $1,180.
“When we first opened our Madison Avenue store, we felt we should be a little more conservative for the area,” Charivari’s Weiser said. “What we’ve found is that people really wanted more of what we do best, which is less conservative fashion.”
According to Weiser, Charivari is doing brisk business with a Jean Paul Gaultier zip-front, belted retro jacket with wide-leg pants, priced at $1,205 and $615, respectively; Ann Demeulemeester’s vertically ruched jacket and pants with faggoting down the side, $940 and $570, respectively; a cotton jacket with sateen panels by Irie for $630, and Prada’s belted jackets, ranging in price from $600 to $800.
One sign of a new confidence in Madison Avenue is the fact that retailers are looking for larger spaces. Prada, Armani, Ann Taylor and Crate & Barrel will all occupy two or more floors.
“Everybody wants to do multilevel deals,” said Faith Hope Consolo, managing director of Garrick-Aug Associates. “Barneys created such excitement and such focus that everything else is a domino effect. I’m trying to buy out existing leases to get the right space. That hasn’t happened in a long, long time.”
“Historically, retailers looked to be on the ground floor and one floor up, but the emerging trend has been the multifloor user,” Seligman said.
“Lack of space, the price of space and the economies of the Nineties have forced retailers to look at multifloor retailing. It brings greater value to what would be office space for landlords and aggregate affordability for the retailers.
“Nobody wants to build stores as loss leaders, as they did in the late Seventies,” Seligman added. “Fashion houses getting into retailing want an economically viable business that can stand on its own. They don’t want to build an edifice that puts them in the red at the end of every month.”
“For us, opening a store on Madison Avenue was not only a consideration of image, but also an economic and business consideration,” Melegari said.
“I think that it makes more and more sense from an investment point of view to be on Madison Avenue. Of course, it depends on the rent and the kind of operation that is being run.”
All the frenzy over Madison Avenue is not without its downside, however.
Benjamin Fox, executive vice president of New Spectrum Realty Services, said it will be harder for “start-up concerns who are hot in the marketplace but weak in the balance sheet department” to get leases.
“There are going to be bigger and stronger competitors,” he said. “The market has been very favorable, which is why you’ve seen the influx of national chains into the city. It’s a good news-bad news scenario. The good news is that there’s less space and the market is healthy. The bad news is it will stop demand from potential tenants who are actively bullish on the city.”
But for now, the new stores are pushing the geographic boundaries that traditionally defined upscale shopping on Madison Avenue, as the quest for space leads retailers further north.
Ralph Lauren was a pioneer when he opened his flagship in the Rhinelander building on the corner of 72nd Street in 1986.
His Polo Sport store, which opened across the street from the flagship in September 1993, has drawn younger customers with its mix of ski, hiking and outdoor clothing.
“There’s always been a buzz around the store,” Fagan said. “It certainly doesn’t hurt that there is a great feeling on Madison Avenue.
“It’s hard to make a bet on upper Madison because it still has a real residential feeling,” Fagan said, referring to the area above 72nd Street. “But I can’t imagine that it won’t be a draw. There hasn’t been a lack of growth on that part of the avenue.”
“With more and more stores coming, people are walking the whole of Madison Avenue, from 86th Street down,” Weiser said. “It seems that some of the boutiques are moving up further. I get the feeling that the thrust of the ‘better’ business is uptown.”