Forgoing fabulous on Fifth

Fifth Avenue in the 40s is in retail flux. Nearly a dozen spaces on the 10-block stretch are vacant or on the market, including the former Circuit City store and the former indoor mall at 575 Fifth Avenue and 47th Street. Meanwhile, new tenants like LittleMissMatched, the upscale children’s apparel store, have recently entered the area.

The strip includes the gateway to the Diamond District, along with the eastern edge of Rockefeller Center, and is dotted with camera and souvenir shops, as well as low-end food merchants. It has long been the dowdy stepsister to Fifth Avenue in the 50s, which is lined with tony tenants such as Saks Fifth Avenue, Tiffany and Bergdorf Goodman.

But in recent years, the stretch started attracting higher-end retail tenants, such as American Girl Place, Build-A-Bear and Aldo, the shoe store. In fact, many expected it to keep getting fancier.

The upgrade has, however, been stopped in its tracks by the recession. According to Cushman & Wakefield’s midyear report, the retail availability rate on Fifth Avenue between 42nd and 49th streets was 15.3 percent. That compares with a 3.3 percent availability rate on Fifth Avenue between 49th and 60th streets.

According to brokers, the most probable candidates for filling the empty spots dotting the 40s on Fifth are banks, service merchants and fast-fashion retailers.

“There is a lot of [vacant] space because people went out of business or closed,” said Faith Hope Consolo, chairman of the retail leasing and sales division for Prudential Douglas Elliman.

In addition to Circuit City at 43rd Street, she cited Kira Plastinina, the Russian teen merchant that closed shop at Fifth Avenue and 43rd Street, as a prime example.

“This is not fabulous Fifth Avenue,” Consolo said. The stretch is defined by “cell phone stores, drugstores, service stores like FedEx and electronics shops — it looks like 14th Street on a good day,” and is filled with “tourists in stretch pants and sneakers.”

“No-name” apparel merchants and service stores like UPS, along with retailers interested in opening up temporary stores, such as the edgy beauty shop Ricky’s, are likely to take on leases in the area, she said.

Consolo said she has several offers for the Kira Plastinina location, and expects a “cheap chic” international merchant akin to Zara or Mango to take it.

Asking rent is between $200 and $250 a square foot. In January, rents along the stretch were as high as $350 a square foot, “but the area doesn’t justify it,” Consolo said.

The debut of fast-fashion merchants H & M in 2007 and Zara this year have had an important symbolic effect on the stretch of Fifth Avenue in the 40s, paving the way for entry by similar retailers, said Darell Rubens, managing director of Winick Realty.

In addition to tourist traffic, the area has “an extremely dense office population,” he noted. Winick is marketing the former Bank of New York location at 530 Fifth Avenue at 45th Street. Asking rent is $450 a square foot for the ground floor; $150 for the mezzanine level; and $100 for the lower level — compared to $650, $150 and $150, respectively, for the same spaces a year ago.

The space has been vacant since January, but Winick had anticipated a 12-month marketing campaign for the location, Rubens said.

While the recession has slowed transactions all over town, the Diamond District has long been a snag in attracting retailers to Fifth Avenue in the 40s, said Christine Emery, senior managing director of the Lansco Corporation.

“Any time you have a kind of glitch … like the Diamond District — which is so particular unto itself — people have a strong association and kind of turn away,” she said.

However, she added, it’s only a matter of time before the next wave of higher-end tenants fill in vacant spots on the strip and replace “the schlock stores.”

For one, antique stores that dotted the area have been leaving over the last four years, while retailers such as Benetton and Sephora have moved in, she said. Also, asking rents are lower than to the north of Saks, where they are $900 to $1,200 a square foot, Emery said.

What’s more, the redevelopment of 575 Fifth Avenue and the renovation of the Empire State Building to the south should help revitalize the neighborhood, she said.

Metropolitan Life, the new owners of 575 Fifth Avenue, is currently reconfiguring the former indoor mall to offer roughly 14,000 square feet of retail space to a single merchant.

Robert K. Futterman & Associates, which is brokering the lease, is marketing the location as a “multilevel flagship opportunity.” The firm did not return requests for comment by press time.

Four blocks south, retailers such as CVS, Walgreens and fashion chain Forever 21 have all reportedly eyed the former Circuit City spot, brokers said.

“We’re in the middle of a recession,” Emery said, adding that vacancies in the area will fill in with higher-grade tenants, “so it’s not going to be lickety-split.”