A year ago, Manhattan real estate brokers faced a grim retail market. “It was deathly quiet,” says Eric Anton, executive managing director at Eastern Consolidated, a New York-based real estate investment services firm. “People were really scared. The phone wasn't ringing. It was a very tough year, one of the worst years in a decade or two or three.”

But now he is marketing a choice $36 million retail and office property at iconic Rockefeller Center. Owned by The Parkoff Organization, the nine-story, 43,744 sq. ft. building's retail portion offers dramatic 31-ft. ceilings fronting on West 51st Street, a short stroll from Radio City Music Hall.

“Things are picking up,” says Anton. “Money is flowing in and institutional and foreign investors are back in the market.” He recently sold a $37 million Manhattan property to a European buyer who plans to build a 100,000 sq. ft. mixed-use development, a hotel with about 8,000 sq. ft. of ground-floor retail space. The buyer paid nearly $375 per sq. ft., and much of the value was driven by the strength of the planned retail portion, says Anton.

“There's a bunch of little buildings that are going to be knocked down. There was a camera store, a deli. There were all kinds of little junky retail stores,” the broker says. The buyer plans to install an impressive hotel before bringing in national retail tenants.

Anton also sold a $10 million retail space at $2,000 per sq. ft. “That's a very high price. It's not a record for New York, but it's damn good.”

Although the New York retail market is showing fresh signs of health, not all areas of the country share in the city's good fortune. “We continue to be a little pessimistic about retail. Unfortunately, unless there's some kind of upside surprise, we definitely don't see things improving until around 2012,” says economist Ryan Severino of the New York-based commercial real estate research firm Reis.

Fundamentals pose a problem

Nationally, the first-quarter vacancy rate for community and neighborhood shopping centers rose to 10.8% from 9.5% in the same quarter of 2009, according to Reis. In the headier days of 2007, before the country plunged into recession, the first-quarter vacancy rate was 7.2%. The average effective rent fell to $16.62 in the first quarter from $17.20 in the same period of 2009.

The number of retail transactions across the U.S., meanwhile, plunged 34% in the first quarter of 2010 from the same period last year, and the dollar volume declined 18%, Reis reports. The decline was most dramatic in the Southwest, where the number of transactions fell 85% and the dollar volume dropped 93%.

“The market is still very cautious about investing in retail right now, given the outlook for the economy and the weak job numbers,” explains Severino. “We're seeing kind of a bifurcated market. The best, most compelling assets are trading and some of the worst, most distressed assets are trading,” he adds. The distressed asset prices are too low to resist, he says.

Josh Podell, founder and president of Podell Real Estate Advisors, a retail site selection firm based in white Plains, N.Y., says international retailers like Australia-based jewelry company Diva and apparel firm Cotton On are aggressively making leasing deals with malls. “H&M (based in Stockholm, Sweden) has been opening a lot of stores. They are really pushing.” But many U.S. markets are struggling, he says, notably in Nevada, California, Florida and Michigan.

Sacramento, Calif. is one of the hardest hit retail markets. Effective revenue per sq. ft., which includes rental income, declined 8.5% in the first quarter compared with the same period in 2009, according to Reis. In Las Vegas, the decrease was 10.5%.

Despite the challenges facing community and neighborhood shopping centers in the Southwest, Austin, Texas enjoyed rare retail success, as effective revenue increased by 0.2%. But in most markets, from Buffalo, N.Y., to Oklahoma City and Orlando, Fla., effective revenue fell.

Overall, the numbers mean that tough times have not ended. “I can't say that there's anywhere in the United States that has come out of this real estate downturn completely unscathed,” says Severino. “I can't point to any part of the country that's been able to escape the downturn without feeling some pain.”