The Demonet building, once in danger of being demolished, will be restored and incorporated into the plans for a 12-story commercial building directly behind it.

The fanciful, domed, Victorian-style building at the southeast corner of Connecticut Avenue and M Street will be renovated and turned into retail and office space, and the new building will be built on an adjoining lot facing M Street.

The building, once owned by a partnership managed by developer Dominic F. Antonelli, is being acquired for approximately $10 million by Second British American Inc., the U.S. branch of a real estate and insurance group in Great Britain. The renovation and new building will by done by Viking Property Group Inc., the U.S. subsidiary of another British development group.

The firm expects to begin work on the Demonet project--its first U.S. venture--in early spring after a final review by the Joint Committee on Landmarks of the National Capital.

"What was a negative to many people in the development community was a positive attribute to the Viking Group," said Philip S. Brown, local representative for Viking. "They thought it was worth saving and enhancing."

"Things look very promising. The plans sound very good," said Alison Luchs, who was active in getting the building designated an historic landmark.

Antonelli had gone to court to try to get the historic-landmark designation set aside so that he could raze the building. Last July, a D.C. Court of Appeals panel ruled against him. A&G Limited Partnership, managed by Antonelli, the founder of Parking Management Inc., wanted to build a high-rise office building on the site and have retail stores at street level.

The Viking building will include retail space on the first floor and office space above. Brick will be incorporated into the facade in an effort to make the appearance of the new building compatible with that of the Demonet building, Brown said.