These are the words being used to describe one of New York City's hottest new retail spots. Encompassing only eight or so square blocks, the newly named retail location has nonetheless attracted the many exclusive, high-end retailers and avant-garde artists who have chosen to set up shop in the neighborhood now known as NoLita.

NoLita is an acronym for "North of Little Italy," which describes its location, although no one is quite in agreement as to who originally coined the phrase. In any case, the new name stuck - at least for newcomers and brokers marketing the area.

The neighborhood is bordered to the north and south by Houston and Kenmare streets, and to the east and west by Lafayette Street and The Bowery. Locals still think of the area as the northern part of Little Italy.

The attention being focused on the new shopping destination is not limited to New York City designers or even to U.S.-based luxury retailers with several store locations. A significant portion of the new faces in NoLita are European-based retailers, some of which selected NoLita for their first U.S. location.

Retailers say they are attracted to NoLita's cozy, neighborhood feel and Old World charm; the desirable balance of residential and commercial space; and the healthy supply of tenement buildings ripe for renovation and retrofitting into chic, European-style boutiques. Most of the new store spaces are small - about 1,500 sq. ft. in size - with 10-foot store fronts.

NoLita's central downtown location is another plus, as well as the fact that it is not "landmarked" under the New York Landmarks Preservation Commission. This means that tenants are not restricted in how they can change the original building storefronts, as they are in much of SoHo, which is part of a 26-block landmarked district. It also makes NoLita more affordable.

In addition to being less expensive, NoLita boasts another important advantage over the neighboring SoHo retail district: For the time being, it's less crowded.

"This is the year that SoHo went off the map price-wise," says Faith Hope Consolo, vice chairman of New York-based Garrick-Aug Associates. "For retail space, SoHo is running about $250 per sq. ft., compared with about $100 per sq. ft. in NoLita."

At that price, space in NoLita is already $25 per sq. ft. higher than it was only three months ago, Consolo says. "Leases are being signed so fast that rents are also rising quickly - $150 per sq. ft. by year's end is not out of the question."

One of the many retailers Garrick-Aug has helped bring to NoLita in the past year is a French manufacturer of fragrances and body care products called fresh, inc. The company renovated an old bakery on the corner of Lafayette and Spring streets into a 2,500 sq. ft. showroom - one of the larger stores in the area. It is the second New York location for the perfumer, the other being on Madison Avenue.

"NoLita is an extension of what SoHo used to be," says Alina Roytberg, fresh, inc. co-founder and creative director. "Its closeness to an ethnic neighborhood gives it a quirky character that we like." And its narrow streets limit car traffic and promote more foot traffic, keeping it a little quieter, she continues. Like many of the new designers in NoLita, fresh, inc. also wholesales to large, upscale stores such as Neiman Marcus and Bergdorf Goodman.

Shoe designer Mark Schwartz, who has a high-end, Italian-made women's shoe store called It's About Time on Spring Street, says the NoLita shopper is very direct and very discriminating. "They come to buy, not just to browse."

The latest wave of commercialism is not the first major change to grip this historic district.

Originally a gateway for Irish immigrants, the area later became a bigger stronghold for Italian transplants. But during the 1970s, many of the young families with improved financial situations sought greener pastures in the New Jersey, Staten Island and Long Island suburbs, making way for an influx of new tenants with more diverse ethnic backgrounds.

"There was a time when this was quite a blighted area," says Bob Marshall, a 35-year resident of NoLita. "Now, in the past five years, another major change has come as we've experienced the yuppification of the neighborhood. Old-timers miss the Mom-and-Pop operations, the corner deli and the local bakery. We've also seen our basic services disappearing: the local grocer, the dry cleaners, the newsstand."

Most of the new-store space is high-priced and geared toward the young, affluent and fashion-conscious, he points out.

Marshall admits there are positives, though, including a safer neighborhood. Also, many of the new retailers have taken over vacant space, turning long bricked-up buildings and old garages into attractive shops. Overall, the area has a new vitality, with cleaner streets and rising property values, he says.

As boutiques, galleries, cafes and even a few nightclubs have moved into the neighborhood, the demand for more residential space also has risen. Several new apartment buildings have opened or are under construction, including a seven-story building going up at 229 Mulberry Street that will include about 40 new units. Opening next year, the building also will include ground-floor retail.

Locally, residential rental rates have almost tripled in the past two years. An 800 sq. ft. apartment can go for $3,000 a month, according to Peter Braus of New York-based New Spectrum Realty Services Inc., who has closed 10 retail deals in the neighborhood over the past couple of years.

With the exploding popularity of the neighborhood, some long-time residents are concerned that NoLita will become a tourist strip as much of SoHo has become.

"SoHo had a lot of large, cavernous former manufacturing space which was easy to convert to shopping malls that could attract national retailers such as Victoria's Secret and Gap with 7,000 sq. ft. stores," explains Braus."The same can't happen in NoLita because the large spaces aren't there."

In NoLita, "landlords don't have as much of a need for a national tenancy," Braus explains. "The doors are not necessarily closed to a first-time retailer, especially where the tenant can show an annual wholesale business of $3 or $4 million."

In recent months, Braus, along with broker Beth Greenwald, have attracted such new NoLita retailers as Nancy Koltes, a New York-based wholesaler of fine linens; Kar'ikter, a West Coast-based retailer specializing in unusual gift items; and Atmosphere NY, a furniture and art gallery. Leases are out on several more deals, says Greenwald, including an unusually big 3,000 sq. ft. former garage on Prince Street.

"I have a list of people wanting to get in here," Greenwald says. "Nothing sits on the market long, and news travels fast through word-of-mouth."

Garrick-Aug also has a number of leases out for NoLita store rentals, including a Spanish shoe store, several apparel retailers and a day spa from the Midwest. One of the most recent leases signed was with Paris-based Le Tanneur, a 100-year-old company selling handbags and accessories. Their first store in New York will be on Spring Street.

"Right now in NoLita, the young, creative talent has the opportunity to help define the area, rather than be defined by the area," Consolo says.