Ragstock, a Midwest retailer of trendy used and new clothing for students and young adults, will help continue to make the East Liberty and South State Street areas in downtown Ann Arbor a fashion hub.

Ragstock signed a lease for 6,000 square feet of retail space in the street level floor of the Handicraft Building, located at 337 E. Liberty, across Division Street from the McKinley Towne Center and Google.

“We were looking at a variety of college towns around the Midwest and this opportunity came up,” said Michael Finn, Ragstock president. An added push came from Finn’s daughter-in-law, who attended the University of Michigan.

The clothing retailer will offer variety from the swarm of restaurants that have opened in downtown in recent, said Jim Chaconas, of Colliers International, who brokered the deal. “It’s a great concept,” he said. “It can’t all be restaurants (coming into that area).” The build-out is expected to start this week, Finn said, and the store is expected to open in early September. It will join a host of other clothing stores near the Liberty and State street intersection that cater to a college and younger crowd including American Apparel, Urban Outfitters, Orchid Lane, Poshh and most recently Pitaya, another regional clothing chain that targets the same demographic.

Ragstock offers inexpensive clothing for men and women and targets middle school, high school, college and young adults.

Ragstock, which started in Minneapolis in the early 1970s selling used clothing, has moved into other states, including Iowa, Illinois and Wisconsin. Today, it has 14 locations.

This will be the first Michigan store, Finn said, and one of two new stores that will open in 2010. The other opens next month in Mankato, Minn. The Ann Arbor store is expected to employ two full-time and six to 12 part-time staff members.

Finn said he hopes to open two more new stores next year, one of those in Michigan. That location has not been determined. Over the years, Ragstock has opened and closed a number of locations that didn’t work, including stores in Bloomington, Ind. and Columbia, Neb.

While frequently located in college towns with at least 7,000 students, Ragstock has been successful in other venues, including Mall of America, Finn said.

While there is no shortage of used clothing stores in the Ann Arbor area - from Value World in the Maple Village Shopping Center to the Ann Arbor PTO Thrift Shop - Ragstock is different, Finn said, focusing on a young, edgy look and combining new with used.

New clothing - basic and inexpensive T-shirts, tank tops, pull over sweatshirts, skinny jeans, Fedoras, sunglasses and more - account for about 75 percent of sales, Finn said. The used clothing is geared toward students and young adults looking to design their own hip look.

There are used kimonos and obis imported from Japan and used cowboy boots. College students in other towns come to Ragstock for Halloween costumes and campus events such as wearing Bill Cosby-like cardigan sweaters or Christmas sweater parties.

Ragstock will also be located close to other vintage clothing stores such as the Getup Vintage Clothing store on South State Street, a boutique that carries college trendy vintage as well as classic vintage from the 1940s through the 1980s.

Each Ragstock stores looks different, Finn said.

“Unlike the chains, we don’t have a cookie cutter look.” Each store has its own color scheme and décor, he said. “We play it by ear. We’ll hang things around the perimeter of the store and have racks in the middle. We’ll have our logo and probably some neon. And then we’ll do a little scavenger hunting to look for something unique like old chairs.”

The Handicraft building previously housed the KAPLAN testing center and a furniture rental store.