(Bloomberg) -- In what has arguably been the deadest block in the deadest section of Manhattan, signs of life finally stir.

At the storefront on the southwest corner of Lexington Avenue and 59th Street, the giant for-lease poster has been torn down, ending a four-year period of abandonment for the entire block of retail stores triggered by the pandemic. The new tenant is Citigroup Inc. and signs of construction are now visible from outside.

It’s just one little bank branch in a sprawling neighborhood struggling to regain its footing in a work-from-home world, and yet the deal — and the way it was structured — highlight an important shift in the commercial real estate market in New York and other major US cities. Large-format stores like the ones that once occupied these parts of Midtown have fallen out of fashion, and landlords are finding they’re better off carving up large spaces to lure new tenants, brokers say.

“Savvy real estate owners are reconfiguring spaces to creatively accommodate retailers,” Ariel Schuster, a vice chairman at Newmark Group Inc., the broker for the building, said by phone. 

The Citi branch will occupy one of three new spaces planned for the more-than-37,000-square-foot (3,400 square-meter) plot where Gap Inc. previously had locations of both its namesake brand and Banana Republic, he said. 

But the rest of the block, and some of the storefronts directly across the street, have remained vacant since initially closing in 2020. (Bloomberg reporters get a daily reminder of how depressed the market is; the company’s headquarters are on the same block.) The neighborhood is missing out on a resurgence in retail that’s happening from Soho to Madison Avenue, with vacancies now at over a decade low. Just a short walk away, on a two-block stretch of Fifth Avenue., Gucci parent Kering SA and Prada SpA snapped up properties, while LVMH Moët Hennessy Louis Vuitton SE is in talks to buy a building, Bloomberg has reported.

Read More: An Entire Manhattan Block Is Frozen in Peak Pandemic Time

Brokers say the revival is being driven by sales of luxury items like watches and jewelry in boutique settings. Vacancies in the Bloomingdale’s area — which used to include Victoria’s Secret & Co., Zara and the Container Store — are about 30% or 40%, while those on Madison Avenue sit below 10%, said Steve Soutendijk, an executive managing director at Cushman & Wakefield Plc. 

In some cases, it will take multiple subdivisions to make large retail space attractive, he said.

“It’s not just taking a Gap space and throwing up a wall. It’s taking a Gap space and throwing up multiple walls,” he said.

The former two-story H&M location across Lexington Avenue was renovated to be a single-story Capital One cafe, which offers banking services in addition to coffee and pastries.

--With assistance from Natalie Wong and John J. Edwards III.

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