Just east of Union Station, a church is turning what was a rundown, boarded-up building at the corner of F and Second Streets NE into what is intended to be a hip, neighborhood coffeehouse.

National Community Church, which has a largely young flock and holds its services in a movie theater at Union Station, bought the building that was once a diner for $325,000 in 2002 and is spending $2.2 million to fix it. Pastor Mark Batterson said the goal is to raise money for charitable projects and provide a gathering spot in a changing neighborhood.

"We're seeing people who have little kids moving in," said Christina Borja, who lives in the neighborhood and is overseeing the coffeehouse project for the church. "With all the development, it's starting to feel different."

A few blocks away, along the H Street corridor that runs from North Capitol to Bladensburg Road and 17th Street NE, office, housing and retail development costing more than $1.5 billion was recently completed, is under construction or is planned for the next few years.

The H Street corridor, once a popular shopping district, never fully recovered after the 1968 riots. The area became a hodgepodge of closed storefronts, empty lots and small shops. Change came slowly.

Local business owners and community leaders said they have attracted more than 30 new shops, most of them mom-and-pop businesses, to H Street in the past few years. The H Street Community Development Corp. and the District put up about $1 million about two years ago to redo a rundown corner at H and Eighth streets NE, according to D.C. officials.

They got a Foot Locker to come to the corner -- a major coup, they said. But some residents complain that there are now four shoe stores within a few blocks. Too many sneakers and not enough other retail, they say.

New development has been spurred by the District's strategic development plan for the area. It envisions an upscale strip of shops, sit-down restaurants and entertainment. Developers are following the lead of projects such as the Security and Exchange Commission's new 1.5 million-square-foot headquarters at Second and H streets NE and a $250 million project across the street from it by local developer Jim Abdo.

Abdo, who is best known for redeveloping parts of 14th Street NW, is turning the former site of the Capital Children's Museum into condominiums.

Developer Akridge plans to build more than 2 million square feet of office, residential, hotel and retail space on 15 acres above the train tracks behind Union Station. Louis Dreyfus Property Group is expected to build housing and retail in the 200 block of H Street. Another developer, D.C. officials said, is in talks to put a Harris Teeter grocery store on the former site of a gas station.

It's quite a turnaround, said Rockville-based developer Ronald Cohen, who has been acquiring land in the 200 block of K Street NE since the early 1990s. He had planned to build an office building there, then a hotel, but, he said, "it was on the wrong side of the tracks" and some longtime residents opposed new development. Cohen has since won support from some local neighborhood groups and is going through zoning approvals to build mostly residential and retail on the site. "The property has been empty for so long," he said. "It's been an eyesore."

Community leaders and competing developers are closely watching Abdo's project as an indicator of how fast the H Street area is taking off.

Abdo is asking $350,000 for a one-bedroom condo and up to $2 million for a larger unit. Twenty to 30 of the 460 condos will be for middle-income earners. Since September, he said, 80 of the units have sold.

The changes are welcome by some in the neighborhood. "I've seen it really bad here,'' said Loree Murray, 84, who has lived in the area since she was a teenager. "We need to get rid of that vacant and boarded-up stuff and bring in more housing and such."

But Anwar S. Saleem, chairman of the H Street Main Street, a program to encourage new businesses in the neighborhood, said the change is causing something "of a social, economic and cultural divide."

"You have older people who have been here a long time, and you have young people who want to see a place where they can live and work and shop together," said Saleem, who has run a hair salon on H Street NE since 1989.

Saleem said that as housing prices in the area have shot up to as much as $400,000 for a rowhouse, compared with $50,000 to $60,000 five years ago on some blocks off H Street, there has been a demand for amenities more high-end than a neighborhood sandwich shop.

"Any time you're paying that much for a house, you should be able to sit down at a restaurant," he said.

Closings

* A national investment fund paid $134.8 million for 1325 G St. NW, a 10-story office building of about 300,000 square feet. Cassidy & Pinkard represented the seller, Broadway Partners.

* Two sons of well-known D.C. developer Morris Cafritz sold one of their late father's last properties. Conrad and Carter Cafritz sold 1660 L St. NW for $52.3 million to the investment arm of a Korean industrial consortium. The 12-story building was built in the 1960s by their father and has General Motors Corp., Hyundai Corp. and the United Cerebral Palsy Association as tenants. Cushman & Wakefield brokered the deal for the Cafritz family.

* Grubb & Ellis Co. won the contract to help the Federal Deposit Insurance Corp. manage about 3 million square feet of office space in 95 locations around the country.

Dana Hedgpeth writes about economic development and commercial real estate.

Her e-mail address is hedgpethd@washpost.com.

Pastor Mark Batterson and National Community Church see potential in the building at F and Second streets NE.