Retail is once again stirring on El Paseo with new construction and stores launching on the street and business owners looking forward to a rosier retail picture for the coming winter season.

This week alone will see the beginning of construction on El Paseo Village — the long-awaited expansion of The Gardens on El Paseo — today, followed by two major openings. Chic shoe shop Stuart Weitzman opens on Thursday at 73-080 El Paseo and an Eileen Fisher women's boutique opens on Friday at The Gardens, 73-545 El Paseo.

“I think it's fair to say the signal we're giving is that things are looking up,” said Sara O'Flynn, marketing director at The Gardens.

The Village will bring 41,000 square feet of new retail and restaurant space to the street, already known for its mix of small locally owned boutiques and big-name luxury brands such as Tiffany, Gucci and Polo Ralph Lauren.

Located west of The Gardens, between San Pablo Avenue and Lupine Lane, the project has already been delayed a year and undergone a recession-driven redesign from two stories to one level. The project will be LEED-certified, O'Flynn said, and is set for a fall 2010 opening, with some serious retail draws of its own.

Owner Davis Street Land Company of Evanston has 80 percent of the space leased, pulling in trendy lines such as Kate Spade, Juicy Couture and Bebe. Banana Republic, currently at The Gardens, will move to new space at the Village.

Mastro's Steakhouse, an upscale regional chain based in Woodland Hills, will be the project's anchor restaurant.

Palm Desert officials hope the new construction “will spur significant reinvestment by retailers into the rest of the area,” said Ruth Ann Moore, the city's economic development manager.

“The fact that's it's leased with mostly new tenants to the desert continues to show the interest retailers have in the street and in Palm Desert,” Moore said.

But John Husing, an economic analyst who produces a yearly forecast for the Coachella Valley Economic Partnership, has a more cautious outlook, noting that the recession hit retail and shoppers across the board, even the high-end market.

“Nationally things are starting to look a little better; locally they're only a tiny bit better,” Husing said in an interview Thursday. “High end is a function of the market. The stock market was up today, and the folks that are relying on investments for income are benefiting.”

Retailers on the street are equally cautious, but hopeful. While it's early in the season, they say, shoppers are coming back

“Within the last week, my business has picked up tremendously,” said Chester Pompeii, owner of Pompeii's Men's Fine Apparel. “It‘s been consistent. They're buying several items, and it happened several times.”

At Christian Hohmann Fine Art, sales are also off to a good start, said owner Christian Hohmann, former director of the Hart Gallery owned by his aunt and uncle, Eva and Ed Hart.

A mainstay of the gallery scene on the street, the Hart Gallery at 73-111 El Paseo closed earlier this year, but Hohmann recently reopened under his own name at 73-660 El Paseo.

He wanted to stay on the street, he said, because “in Palm Desert, we've been the most successful and had the most fun. We were able to create real relationships with our patrons that go beyond simple gallery-client relationships El Paseo is just a great street.”

Keeping a good mix of local and national brands remains an important draw for shoppers such as Ginny Rowlette, a part-time resident of Palm Desert, who likes smaller boutiques and retailers such as Tommy Bahama.

“(That's) where you can find special things you don't see everywhere else, especially since their buyers know how to select merchandise appealing to people who live and vacation in the desert,” Rowlette said. “If (El Paseo) turns to all the ‘same old' chain stores you can find at any mall, forget it.”

Keeping the street unique for the desert's tourists, snowbirds and residents will be a focus, even for luxury brands, said Hanna Struever, the retail consultant for Chartwell Properties, formerly Churchill Pacific, who brought Gucci, Burberry and the new Weitzman boutique to El Paseo.

“(Weitzman) did a very special boutique concept,” Struever said. “The desert was missing a great women's shoe venue.

“This last 12 months was a reset opportunity for businesses to be stronger,” she said. “Everyone had to go back to basics and their core DNA and figure out who their customer is so when that man or woman walks through the door they feel special, someone who from start to finish will have a nice experience.”

K Kaufmann covers Palm Desert for The Desert Sun. She can be reached at k.kaufmann@thedesertsun.com or (760) 778-4622.