UPDATE 2-Target sees 1st-year Harlem store sales over $90 mln

* Target sees Harlem store sales of $90 mln in first year

* Says store was biggest investment ever in single store

* Sells local goods, suited for apartment living (Adds details on efforts to retain local flavor, background)

By Dhanya Skariachan

NEW YORK, July 21 (Reuters) - Discount retailer Target Corp (TGT.N) is expecting its first store in Manhattan to yield more than $90 million of sales within a year and become one of the top grossing stores in the future, a top executive said on Wednesday.

The store at a shopping center in East Harlem helps Target move into a key urban market for retailers looking to increase U.S. sales and one that has been hard for some to crack.

Target has several U.S. stores with annual sales of more than $100 million and expects its new store in East Harlem to become one of its top five grossing stores in the next few years, John Griffith, executive vice president of property development, told reporters during a tour of the store.

The Manhattan store is the "largest single investment" Target has made in any store in the company's history, he said, though he did not quantify the amount.

The company has been working for more than 13 years to open the site, Griffith said.

"As you can imagine, trying to find 3.5 acres of flat surface area in Manhattan is a little bit of a challenge...not to mention, extraordinarily expensive," he said.

Target's new store is about 174,000 square feet -- bigger than its average general merchandise store size of 136,000 square feet. With this store, it will now join big box retailers like Home Depot Inc (HD.N) and Costco Wholesale (COST.O) who operate in Manhattan.

In the last few years, many retailers including Target and rival Wal-Mart Stores Inc (WMT.N) have also been planning for smaller stores that fit in urban markets. Target's Griffith however did not give an exact timeline for Target's smaller format stores.

LOCAL FLAVOR

Target's Manhattan store carries more merchandise to suit shoppers who live in smaller spaces, use public transportation and prefer eating at coffee tables to large dining sets.

The store offers home basics geared for apartment living such as airbeds and storage containers. It also features more space devoted to fresh food and daily essentials, like detergent.

The retail chain is also working with local designers to retain Harlem's flavor in the merchandise it offers. More than half of the 430 store employees will come from the Harlem community, the company said.

"One of the things we try very, very hard at is... trying to weave yourself into the community long before you ever open the store," Griffith said. (Reporting by Dhanya Skariachan; Editing by Sofina Mirza-Reid)