Economic Profile 2007

Introduction

An update on the retail environment is also presented in this year’s report, including
an analysis of the available retail potential and its probable impact on the ability to
attract quality retailers to the area. Lastly, we present new Pedestrian Count data
and compare it to earlier studies performed in 1996, 2000, and 2004.

The Fashion Center BID, established in October 1993, provides supplemental
services, maintenance, and capital improvements in the area to a Midtown
neighborhood known as the "Garment Center”. The success of the Fashion Center
BID and its crews has dramatically improved security and cleanliness in the District.
The BID has also implemented a streetscape and other programs, which further the
goal of physical improvements to the neighborhood.

The Fashion Center BID, directed to promote business retention and to attract new
business to the area, has initiated successful marketing tools, such as the
Information Kiosk, and a web site (www.fashioncenter.com). It also publishes a
newsletter that assists out-of-town apparel buyers and promotes access to the wide
variety of Fashion Center businesses. In addition, it has implemented an economic
development program to assist local businesses. In this regard, it is necessary to
measure the economic base of the BID area to give direction to the Fashion Center
BID for future economic development initiatives.

This update represents a continuation of various economic and real estate
measurements gathered since 1994. It updates the base data regarding the overall
business level of the “Fashion Industry”, and its employment trends. The report
also updates our previous measures of real estate usage, rental rates, absorption
and vacancy rates within the BID.

The Fashion Center BID covers an irregularly shaped geographic area that
ostensibly extends from 35th Street to 40th Street, just west of 5th Avenue to just
east of 9th Avenue. Because of its irregular shape, portions of 35th Street and 40th
Street are excluded, while portions of 41st Street and The Port Authority Bus
Terminal, which extend to 42nd Street, are included. A map indicating the specific
BID boundaries is presented.

The BID's irregular shape does not conveniently conform to existing governmental
geographic designations such as: census blocks, census tracts, special zoning
districts, or zip codes. Therefore, to measure some of the trends it was necessary to
either enlarge or reduce the area slightly to conform to these established
governmental boundaries. The changes are detailed in the appropriate sections of
the report and may differ for each element of the analysis, but remain relatively
consistent from year to year.

In our earlier assessments, certain assumptions had to be made in order to relate
the different data sources and definitions to each other. The particular assumptions
used throughout the analytical process are noted in the appropriate portions of the
text. However, it is assumed throughout the report, that all information obtained
either privately or publicly is sufficiently accurate for forecasting purposes, unless
otherwise noted.

Additionally, there a number of terms used in the retail market and employment sections of the report that may not be familiar to some readers. These terms are:

GAFO - This term refers to a combination of United States Department of Commerce categories for retail outlets comprised of General merchandise stores (including department stores), Apparel stores, Furniture and home furnishings stores, and the "Other" shopper goods retail stores.

Eating & Drinking - This term refers to the retail sales or retail potential for restaurants, cafes, coffee shops, taverns, and specialty take-out places. It does not include supermarkets or grocery stores.

Drug, Services & Convenience - These include establishments which serve the daily needs of their customers, such as drug, health & beauty aids, hardware stores, opticians, dry cleaners, newsstands, shoe repair and other personal service businesses.

Food at Home - This includes items bought in supermarkets, grocery stores, delicatessens, bodegas and such, primarily for consumption at home.

Per Capita Retail Expenditure - Represents that portion of an individual's total income, which is typically spent for consumer goods. It is categorized by store type.

Retail Potential - The total dollars available from trade area residents, employees, and visitors for various consumer goods by store type. More specifically, it is the multiplication of the population in each resident trade zone or market segment (i.e. employee and visitor) and their corresponding retail expenditures by store type. These dollars are available to all stores both within and beyond the trade area.

Untapped Retail Potential - Represents the remaining portion of the adjusted retail potential after an estimate of current sales by existing retailers is taken in account. In effect, it is the untapped or excess retail potential that is available to existing and prospective retailers.

SIC Codes - An acronym for “Standard Industrial Classification” reflects the industry classification that a business gives itself for the purposes of reporting governmental data. This system tabulated employment, payroll, number of establishments and other economic data based on the industry group that each business deemed itself to be in. All employees within the business were deemed to fall into that chosen classification. This methodology has since been discontinued.

NAICS Codes - An acronym for “North American Industrial Classification System” reflects changes made since NAFTA treaties were signed with Mexico and Canada. While businesses still give themselves a classification, all administrative, clerical and management functions within a business are tabulated separately. In areas such as manufacturing this has reduced the number of manufacturing employees to reflect only those in the production sector, as all accounting, administrative and clerical function are now reported separately.

Fashion Industry - This term refers to the fashion-related, industry sectors as defined by the Census and the NYS Department of Labor. The industries include Textile and Apparel Manufacturing, and Apparel Wholesaling. Under the SIC system of classification, Textile Manufacturing is SIC Code 22, Apparel Manufacturing is SIC Code 23, and Apparel Wholesaling is SIC Code 513. Under the NAICS system, Textile Manufacturing is NAICS 313 & 314, Apparel Manufacturing is NAICS 315, and Apparel Wholesaling is NAICS 4243.

Value Added - In brief, this measure of manufacturing activity is derived by subtracting the cost of materials, supplies, containers, fuel, purchased electricity, and contract work from the value of shipments (products manufactured plus receipts for services rendered). Value added is considered to be the best value measure available for comparing the relative economic importance of manufacturing among industries and geographic areas.

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