After more than 30 years on Madison Avenue, the retailer E. Braun & Company is packing up its $3,500 hand-embroidered tablecloths and $2,390 bedding sets and will defect in April for cheaper space on Park Avenue.

And it is not alone. New York’s most elegant shopping corridor, the Gold Coast of Madison Avenue, from 57th Street to 72nd Street, is pockmarked with vacancies as retailers flee sky-high rents. More than two dozen retail spaces are on the market and are either empty now or about to be. Windows that once showcased hand-tooled leather suitcases are now plastered with for-rent signs.

“This is as bad as I’ve ever seen it,” said Alan Victor, a broker who has worked the street for more than four decades and who is an executive vice president of the Lansco Corporation.

Another broker, Gene P. Spiegelman, an executive director at Cushman & Wakefield, said that 13 percent of the retail spaces on Madison Avenue were available either as a direct lease or a sublet. Not included are those with tenants who would move if the right offer turned up.

“There are tenants that say, ‘If you get me a good sublease, I’ll take it and run,’ ” said E. William Judson, a broker who is also the chairman of the Madison Avenue Business Improvement District, a group made up of property owners and retailers. “Some people are thinking, ‘Maybe I’ll either downsize or I’ll close the store.’ If they have a lousy day, they say, ‘Let’s get out of here.’ If they have a good day, they say, ‘Let’s stay.’ ”

Lately, the people who sell $2,400 leather bags and $1,600 satin-and-rhinestone evening sandals are more likely to have bad days. Of all retail chain categories, luxury stores had the greatest decline in sales in 2008, falling 7.5 percent from 2007, according to the International Council of Shopping Centers, a trade group. From 2004 to 2007, by contrast, the luxury sector outperformed all other categories by a wide margin.

The recent holiday season was the worst in four decades for the retail industry. Sales at Neiman Marcus’s specialty division, which includes Bergdorf Goodman, declined 31.2 percent. Tiffany reported that sales in stores open at least a year were down 24 percent.

“If you’re in New York, and you’ve got the financial services industry in a depression, how can you possibly do well in high-level goods?” asked Howard L. Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm.

Madison Avenue has traditionally catered to the wealthy, but until Polo Ralph Lauren opened at the former Rhinelander Mansion on 72nd Street in 1986, most of the shops were private boutiques like E. Braun. In 1998, the stretch on Madison Avenue known as the Gold Coast surpassed Causeway Bay in Hong Kong as the most expensive shopping strip in the world, Cushman & Wakefield reported, with annual rents averaging $550 a square foot. By then, Giorgio Armani had two 16,000-square-foot stores on Madison and Hermès was about to move there from 57th Street.

For many international retailers, a Madison Avenue address was viewed as essential for promoting their brand, even if sales were not robust enough to justify the rent. Often, part of the rent came out of the marketing budget — a practice that brokers say is fast disappearing.

Rents began escalating rapidly a few years ago, after the stores on the Madison Avenue side of the General Motors Building, at Fifth Avenue on 58th and 59th Streets, were expanded and began commanding annual rent of more than $1,000 a square foot, said Benjamin Fox, the president of Winick Realty Group, a New York retail brokerage.

In 2007, fancy jewelers clustered on the avenue, especially between 61st and 64th Streets. They were able to afford higher rents because their costly merchandise could fit into smaller spaces and more revenue could be squeezed out of every inch. Rents skyrocketed to $1,250 a foot or even more. (Even so, Fifth Avenue between 49th and 59th Streets is now ranked as the world’s costliest shopping strip, with asking rents as high as $2,000 a foot. Its luxury tenants share the avenue, however, with shopping-mall clothing chains like Diesel and Abercrombie & Fitch.)

Retailers typically expect their rent to equal about one-tenth of their sales volume. “In a prime location like Madison Avenue, most retailers will change that to 25 percent,” said Joel Isaacs, the president of Isaacs & Company, a retail brokerage. Even under that formula, a tenant paying $1.25 million for 1,000 square feet would need to have nearly $5 million in annual sales.

Today, however, asking rents on Madison and elsewhere are dropping by as much as one-third, brokers say. And many landlords will offer more concessions than before, like additional months of free rent. “If you’re a good retailer and you’ve got a good product, the landlord wants you,” said Faith Hope Consolo, the chairwoman of the retail group at Prudential Douglas Elliman. “The word ‘no’ no longer exists.”

Taking advantage of the softening market, Lalique, which sells crystal goods, gave up its two-level store near 63rd Street — now occupied by the watchmaker Mauboussin — and is moving into smaller quarters five blocks to the south, with lower rent than it would have paid six months ago, Ms. Consolo said.

The astronomical rise in rents did not cause all the impending vacancies on Madison. Some tenants, like the jeweler Graff, have moved to larger quarters nearby. (Hublot, a Swiss watchmaker, recently came close to leasing Graff’s former store but got cold feet and withdrew, said Robert C. Fink, director of leasing for the landlord, the Winter Organization.)

William Friedland, the Gold Coast’s largest property owner, is emptying out a building that houses the restaurant La Goulue and several stores in order to redevelop it.

Frederic L. Barbatelli, a co-owner of E. Braun, said he was moving to be closer to D. Porthault and other Park Avenue purveyors of luxury home goods. But Ms. Consolo, who is offering a Mini Cooper to the broker who snags a lease for E. Braun’s Madison Avenue space, between 63rd and 64th Streets, said the store had been driven out by high rents.

Mr. Victor of Lansco said that lower rents would be good for Madison Avenue. “The market reached a crazy level,” he said. “A lot of people who wanted to look at Madison Avenue couldn’t make it pencil out. This may be a reality check. It will still be high-end, but it will be a healthier Madison Avenue.”

Tribe, the decade-old East Village bar, has closed, one in a slew of area businesses that have recently succumbed to a potent cocktail of skyrocketing rents and lower profits in the economic slowdown.

Tribe's final day was last Thursday, said owner Matt Wagman, senior partner at Riteon, a partnership that operates four other bars in Manhattan. While Tribe drew loyal crowds and "always turned in really nice numbers," the bar closed after negotiations failed with landlord Tara Allmen, who had asked for a "100 percent increase" in rent when Tribe's 10-year lease expired December 31, Wagman said.

Allmen, a physician, inherited the building from her mother, Renée Allmen, along with several other East Village properties, and recently completed renovating the four residential spaces in the building. She called Tribe "an eyesore."

"I want a classier place," she said, adding that Tribe "was not going to enhance the aesthetic of the building."

Asking rent for the space, located at 132 First Avenue at St. Mark's, is $150 per square foot, according to Daniel Wolf, a managing director at Lansco Corporation, who was familiar with the Dimucci Partners listing. Allmen said she is close to inking a deal with a new tenant.

In recent months, many nearby businesses have closed. They include East Village stalwart Love Saves the Day, famous for its cameo in the Madonna film "Desperately Seeking Susan," which announced it would close in January, though a satellite branch in New Hope, Penn. will stay open. Other casualties include Stanton Street vintage boutique Dulcinée, music stores Etherea Records and Mondo Kim's, and 45-year-old shoe repair shop A. Fontana. The East Village neighborhood blog EV Grieve recently counted 21 empty storefronts along Avenue B.

Many businesses in the area are falling victim to slowing sales in the economy, which make it hard to pay steep rents, said Robin Abrams, executive vice president at the Lansco. "A year or two ago, as the area gentrified and there was lots of new development, the asking rents significantly increased," she explained. "New tenants were paying very aggressive rents. With the economy now changing, it's becoming very difficult for [businesses] to survive down there."

But high rents are also problematic for longstanding businesses, like Tribe, which moved to the area when rents were much cheaper and cannot afford to stay when their leases expire, despite brisk business.

Tribe attracted a loyal following and was "pound for pound, one of the greater performers in our portfolio," said Lansco's Wagman, who is listing a retail space in the area. But at just under 900 square feet, the bar fit only 75 people and could only turn a profit with its rent at a certain price point.

"With 800 or 900 square feet, you have to have a cost-structure a certain way or it won't work," he said.

Other examples include Vlada boutique, previously at 103 Stanton Street, which has now been replaced by trendy hair salon Pimps & Pinups. The boutique Shop moved after a decade at 105 Stanton Street to a new location at 94 Orchard Street, and was replaced by the designer boutique Yumi Kim.

Both Shop and Vlada were "good stores," Wolf said, but "couldn't renew because they couldn't afford to pay the rent," he said. Many have relocated to what he calls the "Lower Lower East Side," below Delancey Street, where rents are more in the $50 to $75 per square foot range rather than $100 to $150.

The problem is not limited to the East Village and the Lower East Side. It's so widespread that in June 2008, local politicians introduced the Small Business Preservation Act, sponsored by City Council member Robert Jackson, which would provide more rights for commercial tenants at lease renewal time.

But it's especially noticeable in the rapidly gentrifying East Village, where rents in some spots have quintupled in the past five years, Wolf said, thanks in part to the new Whole Foods and the John Varvatos store that replaced CBGB's on the Bowery. "Five years ago, it was more pipe shops and sex shops," he said. Now, "there are a lot more national tenants. That will bring the rents up no matter what."

That means smaller businesses like Tribe get hit hard, said Wagman, who moved to the East Village in 1988. "One of the great things about the East Village was how many small places like Tribe existed," he said. "Now that the Chipotles and banks and Starbucks have raised the bar, it makes it exceedingly difficult [for smaller places to operate.]"

Rents in the area are softening as the economic downturn strengthens its grip on Manhattan, but many landlords don't seem to have accepted that fact, Wolf said. Many landlords are still asking top dollar, he said.

"We're seeing a big disconnect between what asking rents are and what the deals are getting done at," Wolf said. "Landlords aren't really scared yet."

The unit with the biggest price cut today in Manhattan is a five-bedroom, four-bath condo in Extell Development's Rushmore, at 80 Riverside Boulevard and 64th Street. The unit was first listed in September at $8.85 million, and was just cut by $1.36 million to $7.49 million, an 11 percent decline, according to Streeteasy.com. Prudential Douglas Elliman's Ilan Bracha, whose group just split for the second time in two months, is listing the 3,072-square-foot unit.

Meanwhile, the most expensive unit to just hit the market is a $25 million co-op at Ian Schrager's 50 Gramercy Park North, part of the Gramercy Park Hotel. The three-bedroom, three-bath unit is listed by the Corcoran Group's Tim Cass and Trisha Lawton. The 4,235-square-foot apartment has a balcony and terrace.

IN this painful economic climate of layoffs and shrinking investments, there is a sliver of positive news: it’s a good time to be a renter in New York City. Prices are falling, primarily in Manhattan, and concessions like a month of free rent are widespread.

Although it is notoriously difficult to quantify the state of the rental market, rents fell in almost every sector of the Manhattan market last year, according to the Real Estate Group, a New York brokerage. The steepest drop was in one-bedrooms, down 5.7 percent in buildings with doormen and 6.53 percent in buildings without. The only category that rose: rents for two-bedroom apartments in doorman buildings, up just a bit, by 0.61 percent. But these numbers, like most available data, represent asking rents rather than the final price. Anecdotal evidence suggests that some people are negotiating rents as much as 20 percent lower than the original prices asked by landlords. These figures also leave out incentives, like a month of free rent or a landlord’s paying the broker fee, which can add up to real savings.

Fritz Frigan, executive director of sales and leasing at Halstead Property estimates that when these incentives are considered, rents are actually down some 10 percent to 15 percent since the market peak in mid-2007.

“In that really strong market,” Mr. Frigan said, “landlords didn’t have to do anything.” In 2008, that was no longer the case.

In January 2008, Halstead had about 90 listings for which the owner offered to pay the broker’s fee. By the summer, that number had pushed upward, hitting about 450 a month.

“Then, in September or October, the whole thing broke loose,” Mr. Frigan said.

In a one-month period, from Dec. 23, 2008, to Jan. 23, 2009, some 1,700 of Halstead’s 9,000 total rental listings included owner payment of the broker’s fee.

Jimmi Circosta, a vice president and associate broker at Citi Habitats, also saw a big slowdown in the autumn, which he pegs to the collapse of Lehman Brothers in September. “Once that news hit the marketplace,” he said, “it just got really quiet.”

Tom Botts and his wife, Libbie Rice, found all kinds of deals from landlords when they went apartment hunting this winter, and they were able to negotiate a reduction in the rent on the Upper West Side three-bedroom that they finally chose. They also encountered a symptom of the market that was simply unheard of in recent years: their previous landlord offered to lower their rent if they renewed their lease.

“We had a truly un-New York experience with our old landlord begging us to stay,” Mr. Botts, 39, said in an e-mail message. The owner offered a rent reduction of more than 10 percent, but the couple had already found an apartment they preferred and were committed to moving.

It’s impossible to say how often owners are lowering rents to encourage tenants to stay put, but anecdotes are starting to surface. “It’s not a common occurrence,” said Mr. Circosta of Citi Habitats, “but it is happening.”

Mr. Botts, a partner at Hudson Crossing, a travel industry advisory company, and Ms. Rice, 44, who does similar work as an independent consultant, hope one day to buy an apartment for themselves and their children, Tommy, 4, and Camille, 2. But they have decided to hold off for now. “The economy feels too scary,” Ms. Rice said.

They have a lot of company on the sidelines of the sale market.

“It certainly makes renting more attractive when the rental market softens,” said Gary H. Schatsky, a financial adviser in New York. “If people suspect — as most people do — that the New York City sales market will get much softer, and they’re able to rent in the meantime, then being able to negotiate a rental rate puts you in a better position.”

Teresa Hsiao found a kinder-than-expected rental market when she moved to Manhattan from Los Angeles last month.

“I was expecting to live in a box,” she said. She looked at more than 10 apartments and found lots of concessions on nice spaces that added up to substantial price cuts. “Everyone was paying the broker fee,” she said. “They were very flexible on their lease terms. One broker told me: ‘We’ll get it done for you. Just name your price and we’ll do it.’ ”

Ms. Hsiao, 23, and her roommate, David Liu, 24, settled on a two-bedroom two-bathroom apartment in Midtown on the West Side. It was listed for $4,200. They offered $3,650 a month and were accepted. After one month free and a $2,000 signing bonus, the total came to $3,215 monthly, and they did not have to pay the broker’s fee.

“This apartment was definitely a great find and a bargain compared to 1.5 years ago,” Mr. Liu wrote in an e-mail message. “It’s definitely a renters’ market now.”

The creation of jobs is one of the primary ingredients in a strong rental market, and people like Ms. Hsiao and Mr. Liu, who both moved to New York for work, used to be its lifeblood. Now their numbers are dwindling as the city has begun to shed jobs.

According to the New York State Department of Labor, New York City lost 49,100 private-sector jobs from December 2007 to December 2008, which helped send the unemployment rate from 5.1 percent to 7.4 percent.

“People assume when sale slows down, rental will pick up, but that depends on what the source of this is,” said Gregory J. Heym, the chief economist at Terra Holdings, which owns Halstead and Brown Harris Stevens. “When you’re losing jobs, the rental market is also going to suffer.”

While prices have started to slide in Manhattan, they are steadier in Brooklyn. Increasingly, however, there are deals to be found, especially in neighborhoods like Williamsburg that have seen a lot of new construction.

Last July, James McGuinness, 23, and his partner, Louis Kerscher, 25, moved into an apartment in Windsor Terrace, Brooklyn, for which the owner paid the broker’s fee. Adrian Cardona, a broker with the company they used, Rapid Realty, says he has seen more owner payments since the summer. “Absolutely,” he said. “They have no choice.”

Patrick McGrath, a managing partner at Taurus, which owns a recently converted luxury prewar rental building in Brooklyn Heights called the Standish, says the Brooklyn market has softened, but not a lot.

“We’re not renting as fast as we would have expected,” Mr. McGrath said. “We’ve had to provide concessions — a free month rent, we pay the broker fee. But rents are around where we expected them to be. We’re in the ballpark.”

Owners with more property — and deep pockets — generally would rather offer incentives than reduce rents because when the market comes back, they start from a stronger bargaining position. But landlords of smaller buildings tend to just lower the rent.

Allison Gill and Hadley Hege, both 22, found that they had some bargaining power when they went apartment hunting late last year. Ms. Gill, a law student, and Ms. Hege, an actress, looked at a two-bedroom apartment in a three-unit building in Cobble Hill, Brooklyn, listed for $2,000. They took it for $1,900.

The rental market in Queens, meanwhile, is relatively stable.

“The prices are not going up,” said Donna Reardon, Queens divisional manager for Prudential Douglas Elliman. “They’re staying the same.” Concessions are still an exception rather than the rule in that borough.

It is in Manhattan, which saw steep price gains in recent years, where the discounts can be substantial now — even on the higher end.

Sara Nuttall, her husband and their 11-year-old twins relocated to New York at the end of last year from Dakar, Senegal, where they paid $2,500 for a five-bedroom house with a garden. They were looking for a three-bedroom apartment and started with a budget of about $6,000 a month.

Senad Ahmetovic, an associate broker and vice president at Halstead, showed them about 35 apartments.

“In my 10 years’ experience, I haven’t seen so many three-bedroom apartments on the market,” Mr. Ahmetovic said. “It just seemed endless. In the past, they weren’t being offered with incentives, because there were so few available at any given point.”

That, it seems, is no longer the case.

“We started to discover that there were incentives there for us,” said Ms. Nuttall, 52. “That made a big difference. It meant we could get something that was a bit nicer, a bit more what we wanted for the same price.”

They eventually settled on a three- bedroom three-and-a-half bath apartment in east Midtown. It was listed for $8,500 but they were able to negotiate the rent to $8,000 a month. They also received a free month of rent, and the owner paid the broker’s fee. Their monthly payment will be $7,400. That $1,100 decline represents a 13 percent decrease from the asking rent, not including the money saved on the broker.

Ms. Nuttall found the apartment in December, always a slow time in the rental market. But seasonal sluggishness does not explain the discounts that she encountered.

“In any last quarter, the rental market always adjusts — vacancies rise and prices dip, every year,” said Gary Malin, the president of Citi Habitats. “This year there was substantially less activity than you would normally see. There was an extra layer of pressure on the rental market — and the world at large — that forced prices down further and vacancy rates higher.”

Some landlords hope that adjusting leases to expire in summer 2010 will get a better price next time around.

Amy Baglan, 26, and her boyfriend, Johnny Muñoz, 28, found a one-bedroom apartment in a prewar building on the Upper West Side at the end of last year. They negotiated a cut of $200 per month in the rent and received a free month. (They connected with the owner on Craigslist and did not use a broker.) But they signed a 16-month lease, which will expire at the end of April 2010.

Mr. Muñoz wondered why his landlady was not offering a standard one- or two-year lease. “Do you want to make sure this is open and available during the prime season of rentals?” he said he asked. She chuckled and said yes, Mr. Muñoz said.

Mr. Muñoz’s landlady may get a boost from the warm weather, but no one knows where the market will be in 2010.

“My assumption would be over the next year that you’re going to see effective rents drop because of the increase in concessions,” said Andy Joynt, a real estate economist at Property and Portfolio Research, an independent research and advisory firm. “We’re forecasting that asking rents are also going to drop,” he added. “We’ll see if that ends up being reflected in the numbers.”

Marc Lewis, the president of Century 21 New York, has seen several recessions in his many years in the business, most recently after Sept. 11, 2001. “But in the past,” he said, “it always felt like it would be a few months and then it would be over. This one, we don’t have an answer yet.”

Many people — including President Barack Obama — are suggesting that the economy is likely to get worse before it gets better. And the rental market is unlikely to strengthen until the economy, and the job market in particular, turns around.

According to the Independent Budget Office of New York City, the outlook is bleak. The agency expects the city to lose 243,000 jobs from the peak of early 2008.

“Let’s hope this is a short-term problem,” said Vicki Been, the director of the Furman Center for Real Estate and Urban Policy of New York University. “You know, we prefer more affordable housing, until there’s a downturn. And then we panic.”